Importance of Audit Checklist – 6 Importance Points You Need to Know

Audit Checklists

Checklists are audit tools of quality assurance professionals in the field of inspections and audits. The audit professionals have the task of verifying and checking compliance with various accounting standards and adhering to their auditing standards. However, the wide use of checklists can question the auditor’s discretion in many audit works. The alternative procedures must be performed to complement the use of audit checklists.

The use of audit checklists confirms compliance against a particular standard in an organized manner. Further, the way it works may sometimes lead to overlooking various aspects of inspections and audits. More advantages lie in the fact that it helps to prepare audit reports in a systematic fashion.

Types of audit checklists

Depending on the auditors’ objectives, they must devise a way to come with a list of checklists that would suit their purposes. Various types of audit checklists are mentioned below :

  1. Optional checklist: These checklists have to be ticked and come in three options as affirmative, negative, and not applicable.
  2. Alternative checklist: There are two answers to this checklist, which are opposite or complementary.
  3. Graded checklist: In this type of checklist, the score is graded systematically. The assessment needs to be thoroughly done to grade the checklist.
  4. Multiple choice checklist: Various options are available in the order of the most common answer. The other option is also available to put in the comments if necessary.

Depth and scope of audit checklists

The depth and scope of the audit would vary with each audit requirement. The auditor shall start inspection and auditing, beginning a comprehensive set of audit checklists asserting every small and essential audit detail.

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But the audit checklists need to be kept concise and should cater to the discretion of auditors to be used. The checklist shall be used in the system and in computerized.

This would help auditors to input the answers quickly. The other advantage would be that checklists can be easily incorporated into the audit report as and when required.

Importance of audit checklists:

The audit team shall review information relevant to the audit assignment and prepare work documents for reference and record audit proceedings. This shall include audit checklists and audit sampling plans. Audit checklists are just audit tools.

Many organizations shall use the audit checklists to address the scope of the audit. The importance of audit checklists is given below:

  1. Checklist for specific audit industry: The chief auditor shall review the information that is relevant to the audit assignment and make documents as necessary for reference. Such documents shall include checklists and audit sampling. This shall also extend to forms of recording information as audit findings and minutes of meetings. Further, the use of checklists and forms shall not restrict the extent of audit activities. The audit checklists shall promote audit planning, ensuring consistency across all auditing levels. It should also act as a way to plan the duration of the audit.
  2. Assistance to audit process: The audit process consists of complex tasks, and they need to be completed in a systematic and timely fashion. Audit checklists consist of them the tasks that need to be followed in a system, and that would allocate a particular time slot to complete the task within that time.
  3. Training of auditors: Various checklists items require the highest level of due diligence. Areas may include plant verification and vouching of receivables. The checklists make sure that these tasks are performed by auditors with the required expertise and professional competence.
  4. To provide structure and continuity to audit: The audit checklists provide a list of items to be checked in the audit. The list may not be comprehensive and may allow for audit discretion. However, these checklists provide a sense of structure and allow the audit to continue based on a set of rigid lists that can be subject to discretion as and when required.
  5. Information base for planning future audits: Suppose that the audit firm has recently been given the task of statutory bank audit for which it has little experience. Although the audit members have the capacity and professional competence, the firm lacks the heritage of rich experience. The firm shall carefully list out the items to be checked, taking into account of various items of banks that are important as loans and advances. Hence, audit checklists also act as an information base for planning future audits.
  6. It provides evidence that the audit was performed. Comprehensive audit checklists provide the list of audit items checked, date of checking, the person who was entrusted with the responsibility, and the process within which he conducted the required procedure. The audit checklists form part of audit working papers and can be used as evidence in case of disputes arising after the audit.
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