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How To Perform an External Audit

Updated on September 2, 2020

Accountant with Auditor

Accountant with Auditor
Accountant with Auditor

An external audit is an audit performed by a certified public accountant that is not affiliated with the company and has no financial interest to the accountant. It is done on top of an internal audit by the accountant of the company. It is done periodically to determine whether the company is performing financially and if the current financial situation is favourable to the business. It also makes sure that the records entered by the company’s accountant are true and accurate. An external audit requires records to be accessed. If you are asked to do an external audit, this article will show you how.

  • Meet with the company’s executives. By the time that you are commissioned to perform an internal audit, it is necessary to meet with the executives or the internal auditor to talk about the work ahead. Draw up a contract regarding the audit and work up a fee.
  • Determine the type of audit to be performed. The company will be the one that will tell you what type of audit you will be doing. It may be a financial audit, supplies audit, etc. If you are asked to do a financial audit, you have to determine the company’s financial standing.
  • Request for access to important documents. Documents and data that are essential in the audit must be accessed. If you can have the internal audit, you can use it as a reference on your own audit. See if you can get hold of the internal auditor’s audit. Documents and data may be in different forms. They may be paper works or data stored in computers. Ask for assistance from the company to help you gain access to computer data stored in the company’s system. Print the data so it will be easier for you to refer to them.
  • Organize the data. Once you have gathered all the necessary documents and data, organize them such that they are easy to look at and refer to. Use a work table that is big enough to lay down all the papers related to the audit. This way, you work faster and more efficiently. Double check all the data you enter into the audit to make sure that they are correct. Review your work closely prior to submitting it to the company.
  • Compare your audit work with the internal auditor’s work. When you are done with the external audit, compare it with the audit of the company’s auditor. See if they match. If not, consult the executives and show them your work and tell them that there are differences between your work and the internal auditor’s work.

Whenever you are asked to perform an external audit by a company, the company executives must give you full access to pertinent documents and data necessary for the audit. If they keep important documents from you – whether they are doing an illegal operation or they do not want people outside of the company to know of the company’s under-the-table transactions, an external audit will not be done.

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