What main factors does the firm consider is developing the audit strategy?

The auditor should set an overall strategy for the audit which sets the scope, timing and direction of the audit and assists with the development of the more detailed audit plan. This will involve:

•identifying the characteristics of the engagement that define its scope, i.e. what reporting requirements are there, what financial reporting framework is the client using, what group companies are covered;

•ascertaining the reporting objectives of the engagement to plan the timing of the audit and the nature of the communications required;

•considering the factors that, in the auditor’s professional judgment, are significant in directing the engagement team’s efforts;

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Given that a recent Standish Group Report found that as many as 53% of projects will suffer from poor planning, budgeting, and resource management, how can you make sure you implement a system that succeeds, one that embeds your business processes, provides meaningful data, improves productivity, and—most importantly—meets your business objectives?

As a practitioner in Audit Management Solutions and Implementations, here are five key success factors I would recommend you consider:

1. Define success

It may sound obvious, but many projects begin without a clear definition of success. Take the time to determine what is driving your implementation and what you expect to achieve in business terms. Define how you will measure your results. Ask yourself this question: If everything goes well, what will things look like a year from now…and how will you know whether you are successful?

2. Prioritize your needs and wants

Regardless of the Audit Management system you have selected, there are undoubtedly numerous configuration options. Too often, organizations get caught up in the features and functions rather that starting with a business perspective. Take the time to ask yourself these questions. What is critical to you and your organization? What speaks to your strategies and operational processes? These will be the areas to focus on. And remember to think about what will make everyone’s lives simpler; simplicity means better user adoption, an important factor in long-term success.

3. Identify and document your desired business processes

Software systems enable business processes, and the best Audit Management systems provide great flexibility in implementation. Most can handle reasonably complex business processes. The success of your project lies in making sure that the processes you want are properly configured in the system and the best way to do that is to design and document those processes prior to the system implementation. And then, design, configure and document your “future state”. Take advantage of the opportunity to transform your organization by reviewing and improving processes that add the most value.

4. Ensure you have the right stakeholders with the right skills—and the right authority

Successful projects always focus on engaging with the right people at the right time. The Standish Group Report listed “User Involvement” and “Executive Management Support” as the highest-rated factors for success across any implementation project! Make sure you have committed executive sponsorship, strong project management, team members with the necessary technical and business skills, a broad approach to gathering feedback and input from those who will be using the system regularly, and a defined process for making decisions.

5. Communicate, communicate, communicate!

While often a cliché, the importance of communication cannot be overstated: the more you effectively communicate how and what the project team is doing, the project objectives, and the value to the organization, the more likely you are to succeed—particularly in the critical area of user acceptance. The best project teams communicate early and often, informing stakeholders frequently, consistently, and clearly.

While the above five factors are critical to success, there is one other compelling point to make: overall ownership and accountability—from everyone involved—is fundamental for project success. Your new Audit Management system is an investment—not only in time and resources, but in the future of Internal Audit within your organization. Gaining commitment and dedication from your stakeholders and project team is a sure path to meeting your overall objectives and the long-term success of your Audit Management solution.

Auditors may need to change an overall audit strategy during the course of the audit if they obtain any findings that require them to revise the audit plan. 

Purpose of Audit Strategy

The main purpose of the audit strategy is to minimize the audit risks and to perform the audit in an efficient and effective manner. It allows auditors to determine the number of resources needed and what level of experience and expertise is required in the audit work.

It helps auditors to put the right people in the right place; e.g. allocate the audit staff based on their skills, knowledges, and experiences. Additionally, it also allows auditors to determine how the resources should be managed, directed, and supervised.  In this case, the audit strategy can assist in setting the timing for meetings, guiding the team members on performing their tasks, and performing reviews of the audit work by the senior members of the audit team.

Audit strategy also involving in designing a suitable audit approach including the test of control and substantive test. For example, auditors may decide to perform the test of control and reduce some of their substantive works if they intend to rely on the client’s internal control. Or they may decide to go directly to substantive tests without placing reliance on internal control.

Matters to consider when establishing an audit strategy

After auditors assess the risk and determine the areas where misstatements in the financial statements may occur, they need to design and establish an appropriate audit strategy to respond to the risks and potential misstatements.

When establishing an overall audit strategy, auditors need to consider the following matters:

Matters to consider when establishing the overall audit strategyCharacteristics of the engagementFor example, what accounting standards client uses, which industry it is in, where is the location of branches or subsidiaries, any need for expert, what is reporting currency, etc.Reporting objectives, timing of the audit, and nature of communicationFor example, the timing for reporting, meeting with management, nature, and timing of communication with team members, any expected communications, etc.Significant factors and preliminary engagement activitiesFor example, determining materiality, risk assessment, evidence of management’s commitment and importance of internal controls, volume of transactions, any significant changes in business, industry, and reporting requirement, etc.Nature, timing, and extent of resourcesFor example, selecting the engagement team, assigning the work to the team members, and budgeting the engagement (e.g. how much time needed on a certain area), etc.

Contents of Audit Strategy

Contents of audit strategy may be different from one accounting firm to another. However, the audit strategy usually includes the following contents below:

What are important factors to consider when developing an audit plan?

What is the purpose of developing an overall audit strategy?