5 Tips to Prepare For Your First External Audit For Companies in the UAE
An audit is a formal check of financial accounts of an individual, business or organization. An internal audit is conducted by members of the same organization or business, and an external audit may be conducted by a regulatory agency or governmental agency. There are six specific steps in the audit process that should be followed to ensure a successful audit.
An effective financial audit is very important for companies in order to make their cash flow and business process streamlined. Here are the six important steps that audit firms use for an effective financial audit.
Every external audit is different, depending on the scope and the standard against which you will be audited. There are a few key actions that can help you successfully prepare for your first external audit and achieve a favorable outcome. Here are five management tips to help you prepare for an external audit.
Understand the standard
An audit is a compliance report based on an external standard. Take the time to read and understand the standard you will be compared to. This is critical to understand the approach the external auditors will take. Moreover, it will help you avoid taking unnecessary actions by revisiting topics outside the audit’s scope. Also, having a general understanding can help you manage the external audit more efficiently.
Identify your Subject Matter Experts (SMEs)
No one knows your internal processes better than your own SMEs. Based on the standard you need to comply with, determine which of your employees have the best knowledge to help the external auditor understand and evaluate your business and information security processes. Make sure you explain the importance of the upcoming audit and present them your understanding of the standard, so they can lend their knowledge and experience to prioritize actions for preparation.
Make sure to allocate sufficient resources to your experts
Usually, experts and specialists in every field are fully engaged with their normal day-to-day activities. Acknowledge that supporting an external audit requires significant time, energy, and effort from your SMEs. Make sure that all necessary resources are available; otherwise, your organization will struggle to be responsive to audit requests.
Determine your internal procedures
Gather your SMEs and go through internal processes relevant to the controls that will be examined during the upcoming audit. The goal is to identify any gaps where processes do not exist or do not sufficiently meet the standard you’ll be audited against. In other words, make sure that all the controls required by the standard are in place in your business.
Senior management and key administrative staff are then invited to an open meeting during which the scope of the audit is presented by the auditor. A time frame for the audit is determined, and any timing issues such as scheduled vacations are discussed and handled. Department heads may be asked to inform staff of possible interviews with the auditor.
Gather documentation for your procedures
Having all internal procedures in place is a great starting point. However, external auditors will ask for supporting materials as part of the audit process, such as policy documents, financial statements, and process artifacts. Based on the business processes determined in the previous step, make a list of documents that demonstrate the current internal control structure and review these documents. This is another form of gap analysis to determine if your documentation is accurate and complete.
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