The audit methodology to assess the health of a company

To audit the health of a company each professional has their own method of carrying out their tasks. However, there is a certain similarity in their way of proceeding. These similar traits will therefore be developed in this article for a better understanding of the audit methodology.

Who conducts the audit?

Audit the health of a company is a complex job that often requires the intervention of a audit firm, already an expert in the field. Like the Prevention company.

What are the steps of an audit methodology?

1st Step: Knowledge of the general context of the company

For audit the health of a companyinitially, thelistener must take cognizance of the general context of the company and assess the main risks to which it is exposed. Then, it is according to this knowledge that he will plan and direct his various actions.

During this first stage, the auditor will set up or completion of the permanent file. He will write up his action plan in that.

In addition, he will engage in dialogue with all the key people in the company. At the same time, it will exploit all documents and accounts (sales journal, salary and tax payment slips, point of goods in stock, etc.) attached to it.

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2nd Step: internal control assessment

In this second step, thelistener identify the various risks and analyze the nature of these, referring to each clue found. To do this, a study of the procedures of internal control is essential, it will lead to the production of financial accounts.

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Indeed, for audit the health of a company the implementation of a risk approach is important, it allows the‘listener to concentrate well on the risky points and not on all the financial accounts. Knowing that its objective is to give a reasoned opinion on the regularity, the sincerity and the faithful image of the financial information transmitted to it. Proving the veracity of this information is not his fate.

To achieve the set objective, he will establish a meaning threshold (numerical limit). The latter will inform him about any errors or omissions affecting the regularity, the sincerity and the faithful image of the annual accounts. Thus, during his mission, he will use this threshold to program the extent of the soundings and assess the severity of abnormalities can be raised.

But it should be noted that this notion remains subjective. It takes on meaning depending on the quantitative (net profit, shareholders’ equity, etc.) and qualitative (intuition based on analysis carried out) criteria analyzed by the auditor. This requires a real capacity for analysis on his part.

3rd Step: review of financial accounts

Once the two previous steps have been completed, the continuation of the actions to audit the health of the company takes concrete form through the meticulous analysis of the accounts in order to identify anomalies that may be significant for the company.

For better control of accountsthe auditor must find ways to validate the audit assertions. These are criteria that financial information must meet in order for it to be regular and sincere.

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Generally, there is 6 assertions : exhaustiveness, reality, property, correct evaluation, separation of fiscal years, correct imputation.

The auditor will therefore put in place audit procedures so that these assertions are validated. It is thereafter that he will note the work carried out in a work file.

This file will allow him to optimize his mission from the follow-up of the progress of the works. He will also be able to control the work of his auxiliaries, provide justifications for the conclusions drawn and prove the diligence carried out.

Last step : statement of the auditor’s opinion

The last step to audit the health of a company relates to the statement of the auditor’s opinion. In accordance with the law, the latter is obliged to establish a report in which his opinion will be exposed and justified. This will determine the outcome of all actions taken during the mission. During the annual general meeting, this reportt will serve as an intermediary when communicating the opinion of the CAC to all partners/shareholders.

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