Ensuring the accuracy and integrity of financial statements through auditing is crucial. However, it can be a time-consuming and costly process for businesses. So, companies must find ways to optimize the audit process while minimizing costs.
In this article, you'll learn six ways to improve audit efficiency. So, whether you're an auditor or a business owner, these strategies will help you get the best results from your auditing process.
Let's dive in!
1. Automate Repetitive Tasks
Auditing is a time-intensive process that requires significant effort. The good news is that automating repetitive tasks like data entry and extraction, report generation, or calculations can speed up the auditing process. According to PWC, about 45% of auditing tasks in your workforce can be automated.
For instance, for a well-informed audit, you must gather and analyze data from multiple sources like system logs, financial statements, expense reports, and invoices. Gathering data manually will be time-consuming and more prone to input errors. However, audit management software like TeamMate+ or AuditBoard will help you effectively collect data from different sources.
Also, you can use Robotic Process Automation (RPA) software like UiPath or Blue Prism, which allows you to automate auditing tasks. RPA tools use robots to execute repetitive tasks through a set of predetermined rules. For example, the image below shows specific areas of your auditing process that can be automated with RPA tools.
RPA software is especially helpful in areas of your auditing process that may require human intervention. Once you have configured the rules, the software flags cases that deviate from the rules you created. Then, you can go ahead and resolve these cases. In other words, the bulk of work you must do is reduced.
When setting up your auditing automation, test your configurations to see that the bots execute their tasks as required. Additionally, continue monitoring your automation to ensure that it remains efficient. Sometimes, you may need to add a new set of rules to your configuration.
2. Streamline Your Workflow
Streamlining your workflow involves identifying and eliminating redundant activities in your auditing process. A streamlined audit process workflow allows you to navigate the audit procedure and tasks more easily. A simplified workflow is also a lot easier to monitor. As a result, you can avoid errors and inconsistencies that would otherwise occur.
So, here are some crucial ways to streamline your workflow:
Audit planning helps you effectively manage audit efforts and processes. It’s an excellent way to minimize risks, save costs, and achieve the desired objectives. The audit planning process involves identifying tasks, allocating resources, and choosing team members based on the requirements of the audit process.
When planning your audit, be sure to have clear documentation of how things should be done. This should be in the form of written plans and policies that guide your audit team.
Highlight risks or auditing conflicts that are likely to occur. Indicate how they should be handled. This way, your audit team knows what to do at every step. It removes the unnecessary back and forth in audit engagements.
Setting timelines for auditing activities will help you and your team work faster. The timelines should be relevant to activities like delivering documents, testing financial audits, reviewing financial statements, updating relevant details, and recording reports.
Finally, set up a structure for reporting findings from the audit. One way to do this is to work with an effective collaboration platform.
3. Leverage Other Technology
We’ve briefly discussed how RPA and audit management software can help you automate repetitive tasks. However, note that these aren’t the only tools you can use to ensure audit efficiency.
With the emergence of technologies like Artificial Intelligence (AI) and Machine Learning (ML), analytics tools, cognitive technology, and so on, it’s safe to say that your auditing process can only get better. This shows why 95% of auditing executives say advanced technology has helped them meet client expectations.
The image below shows an auditing process that adopts technology for maximum results:
Based on the image, here are other technologies you can integrate into your auditing process:
Utilize process mining software in your auditing process to continuously inspect your activities. Celonis and Mint are examples of process mining software you can adopt.
Typical process mining software allows you to upload models or rules on specific activities. Once configured, the software learns the model and uses it to assess future events—in the event of any contradiction to the uploaded model, the software will automatically detect this. The software also has tools to help you see where the deviations come from.
These tools also allow you to get real-time visualizations of your business process. This way, it’s easy to identify and address loopholes.
Data analytics software like Power BI or Tableau lets you quickly analyze large data. So you can easily identify trends, patterns, and differences in financial data. You can also use this to test the accuracy of financial statements.
Risk and compliance management
GRC software (Government, Risk, and Compliance) allows you to examine your clients' risk management and compliance procedures. It includes features that enable you to identify risks and determine the likelihood of occurrence. It also shows you the potential impacts of these risks. GRC software helps initiate controls for reducing or removing the event of identified threats.
Additionally, the software provides a central repository of your compliance-based data. So you can quickly identify compliance risks. You can ensure regulatory policies and audit codes are followed.
By leveraging these other technologies in your auditing process, you’re continuously improving your ability to provide more accurate financial audits.
See how Fyle enables you to be audit-ready and eliminate fraud.
- How Can an Expense Tracking Software Help with Audit-Readiness
- Detailed Expense Audit Trails in Fyle: How to Detect Fraud and Maintain Compliance
4. Communicate Effectively
Effective communication is essential to your auditing process. For one, it helps you ensure that all stakeholders clearly understand the audit objectives, reports, and recommendations.
To achieve and maintain audit efficiency, set up multiple communication channels to facilitate information flow in your audit engagements. Think emails, instant messaging, calls, memos, etc.
Here are some ways to optimize communication in your auditing process:
- Start by clearly defining the entire audit objectives and expectations to stakeholders.
- Use plain language when sending messages or memos to your stakeholders. You want the message to be well-understood. A good content generator or AI writer can help you simplify complex professional terms where necessary.
- When you have data or complex information, you can use visual aids like graphs, tables, and charts for more clarity.
Additionally, when explaining your audit findings and recommendations, indicate how they are connected to the audit objectives. This way, stakeholders can easily understand the relevance of your information.
5. Prioritize Your Tasks
Another way to improve your audit efficiency is to prioritize your tasks based on their importance and urgency. When tasks are not properly prioritized, you may be in situations where you spend more time on a specific activity. The result? You overlook other areas that are also important (or even more important).
So, how do you prioritize tasks? First, define the objectives and scope of the audit. Doing this will help you highlight the critical areas of your auditing process.
Now let’s look at some crucial factors that will help you prioritize your audit tasks effectively:
- Risks - Based on a thorough risk assessment, it’s advisable to prioritize tasks with the highest risk.
- Materiality - Refers to how much impact errors in a financial statement item will influence the validity of auditing results. Prioritize tasks related to items with more materiality so that you can give ample attention to them.
- Timing - You also want to consider internal and external deadlines like regulatory reporting requirements or investor expectations.
- Resources - Consider the availability of resources like technology, budget, and personnel. Tasks that require fewer resources should be prioritized.
- Dependencies - Typically, you should prioritize tasks that depend on the completion of other tasks later. This universal principle applies to other industries, whether B2B sales, marketing for non-profits or legal education. You can only create a good audit report if you have good data. Prioritize data gathering then so you can finish your audit report.
With these factors in mind, you can create an audit plan with the proper flow of tasks in your auditing process.
6. Continuously Improve
You need to improve to keep your auditing process on track continuously. You can do this by measuring internal audit performance and gathering feedback. Again, audit documentation is vital. This way, you can quickly identify and address issues that slow down the process.
Capitalize on feedback from clients and other members of your teammates. These help you identify areas of the auditing process that need improvement. Additionally, ensure the software you use is constantly updated. If there are changes in requirements, adjust the relevant configurations.
Finally, continue to define and assess your internal audit key performance indicators. These will give you more insights into what you can do better.
Auditing is a sensitive process that relies on a good level of accuracy. Therefore, you need to put in more time and invest in the best resources. Thankfully, there are ways auditors can meet client demands in a timely and cost-effective manner.
In this article, you learned six ways to improve audit efficiency. Automate repetitive tasks, streamline your workflow, leverage other technology, and communicate effectively. Don’t forget to prioritize tasks and improve continuously.
With these tips, you can go ahead to create a well-optimized auditing process.