The average business owner should know about the different types of audits they face. There are certain general procedures that every internal or external auditor should go through. Every auditor should know precisely how to carry out a professional, legitimate audit.

Choose the Type of Approach

There are four types of approaches to make for your audit: substantive procedure, balance sheet, systems-based, or risk-based approach. Selecting the right one depends on the type of content you’re reviewing.

The substantive procedure is designed to check for accuracy, validity, and completeness at the assertion levels. The balance sheet approach is a thorough analysis of the company’s balance sheet over all other types of financial statements. In most businesses, the balance sheet is the most important financial record that lists the business’s current assets, debts, income, and capital over a certain period of time.

The systems-based audit approach focuses on reviewing the different systems of an organization to determine the effectiveness of each one. The specific process within each system is identified, evaluated, and analyzed to see if any corrections are needed. A more precise technique for auditing is the risk-based approach that is made to identify, analyze and mitigate risks to the organization.

Prepare for the Audit

Planning an audit in advance is helpful in deciding which type of approach to take. This includes knowing the areas or departments that contain the most errors and require the most detailed analysis. During the planning, auditors should review and keep up to date on different auditing standards, also known as generally accepted auditing standards (GAAS). They should review the results of past audits and decide the type of software to use for organizing their data.

Some companies create timelines for audits that continue for several days or weeks. For a complex, time-consuming audit, you can form an auditing team and assign roles to different workers.

Be Better Prepared for Next Time

An audit is a normal procedure that is included when conducting any type of business. The first step is to know the resources that an auditor needs to succeed, including the tools and approaches that must be made. Make sure that the rest of your audits run as smoothly and efficiently as possible.