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Auditing is a very structured field, with different audit requirements that can be used in virtually every industry and business process. The primary purpose of an audit is to test, validate, and confirm that policy is being followed. Many people assume that the main purpose of auditing is to identify theft, but this is not the case. In fact, identification of theft or misappropriation of funds is a very small subset of the work completed by auditors.
There are four primary audit requirements consistent across all different audit types: define audit scope, collect data, test data set, and validate conclusions. These requirements apply to financial, information technology, safety, and all other kinds of audits. It is important to note that these concepts are well tested and have very detailed methodology and critical thinking processes behind them.
Defining the audit scope is the first audit requirement and is typically completed during the initial consultation. This term is used to clearly define what the auditors will look at and to what level of detail. For example, a safety audit in a manufacturing plant may have a limited scope, focusing on compression and heating machines, instead of overall plant safety. The level of detail is also important to clarify, as this impacts the time and cost required to complete the audit.
Once the scope has been defined, the auditor needs to collect data. This typically involves obtaining direct access to all files, reports, and staff involved in the process. All auditors have strict rules surrounding the procedures used to gather data. In general, the auditor must access the information directly and not rely on third-party reports or secondhand information.
The auditor applies a series of tests to the data set. This area of audit requirements varies depending on the type of audit. Standard tests include evidence of appropriate approval, the use of the correct account, and following the standard processing guide. A statically sound data set is used to allow the auditor to make certain judgments about all the documents, without necessarily testing them all.
One of the most important of all the audit requirements is the validation of auditor conclusions. After applying various tests to the data set, the auditor arrives at specific conclusions. Further data selection is often completed to confirm that these conclusions are valid. This additional check is often performed by a different member of the audit team and provides additional quality assurances.