It is not really possible to run a business or a government agency properly without an effective auditing process. This is because an auditor is a professional whose job includes making sure that the financial records of a company are in good shape. Based on the foregoing, it is clear that the right auditing process is one which aims at making sure that the financial records of a company or a government agency are not being manipulated by workers in the organization.
In the real sense of the expression, auditing does not refer to financial records alone. For the purpose of clarity, it would be right to describe an audit process as a systematic and methodical review of the operating mechanisms adopted by a company or an agency of government. Actually, auditing involves a series of steps. These steps are taken to ensure that the financial and operational records of an organization comply with certain laid down standards. The most important norms are the Generally Accepted Auditing Standards (GAAS) and the US Public Company Accounting Oversight Board rules.
A typical audit process will include an examination of financial records, operational records and other vital documents. Contrary to the popular belief of most people, auditing is not done to catch people in the act of cooking the books. It is done to ensure that things are being done the right way.
Typically, the steps of this process are planning, fieldwork and reporting. The planning stage is usually the first step of the process. At this stage, the company which requires the services of an auditor discusses the type of service they want. The fee for the auditing team is also discussed at this stage. The fieldwork is the actual hands-on review of information by the auditors. The final stage is the reporting stage. At this stage, the audit team discusses the company management. The auditors can make recommendations but leave the decision to the management team.
In some cases, there may be another step entirely. This is called the follow-up step. This step usually comes in if the company fails the audit process at the initial stage. This is what the auditing process is all about.