Busting Small Audits Myths
Posted by accountingweb on 1078
Increasing profits on small audits requires breaking free of some of the things we’ve been taught that are not true. Here is one of those myths: Professional standards are increasingly complex and the small practitioner can’t keep up with all the changes. To make sure we comply with all the standards, we have to use all the practice aids in major publishers’ audit guides even though they create time budget overruns. It’s true. This is one way many practitioners comply with professional standards. Unfortunately, it’s the most expensive way! Common sense is still alive in spite of all our rules! Years ago, we obtained understanding of our clients, identified internal control strengths and deficiencies and designed audit programs to mitigate risks and accomplish audit objectives, all without auditing standards. Audit quality and efficiency was attained then by relying on our professional judgment, even on small audits! The same is true today. Auditing procedures and documentation must be tailored to every engagement to maximize efficiency. Tailoring requires an understanding of auditing standards and how to apply them to engagements. Required procedures and documentation are based on these standards. We need only to gather enough evidence to satisfy our audit objectives and verify management’s assertions in financial statements. This rarely requires the use of all practice aids in an audit guide for every client! We can make money on small audits in today’s world. To do so, we must know what applicable auditing standards require and the most efficient way to design auditing procedures and documentation. It will take an investment in restructuring our audit strategies and plans, but the returns are worth it!