The final issue for maximizing engagement efficiency is considering what type of auditing technology is the most cost-beneficial, considering a smaller reporting entity’s financial reporting system and engagement facts and circumstances.
The nature, size and complexity of a reporting entity should ordinarily guide managements’ decisions about financial reporting and other software applications. Many managers, however, want mid-tier software systems for out-of-the-box prices. Finding the world doesn’t usually work this way as most smaller reporting entities operate with out-of-the-box software. A few may purchase mid-tier systems which contain developmental or modification applications.
An auditor’s decision-making about the right investments in electronic audit applications should begin with consideration of the entity’s financial reporting system and the auditing procedures that can be applied considering an entity’s software system.
Using Common Applications
Following are a few significant auditing procedures and illustrations of electronically assisted applications that are cost/beneficial:
1. Specialized flowcharting software
Some of us “gray-hair” auditors remember the plastic template with punched-out symbols we used decades ago to prepare internal control flowcharts by hand. Many of us became proficient in drawing rough flowcharts using these templates while interviewing reporting entity personnel. Sometimes this took less time than preparing memo documentation.
Since those times, reasonably priced, specialized flowcharting software has become available. Standard symbols, drop-down lists, column formatting and draw capabilities have made the use of electronically-prepared flowcharts for documenting an entity’s financial reporting and internal control systems one of the major ways to produce audit quality and efficiency, perhaps even facilitating an era of the rebirth of audit flowcharting.