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| Consider the contributions of the managament and audit committee in the audit assessment also. |
An effective audit must also include:
- An audit process tailored to the risks facing the entity, the business structure and the regulatory environment.
- An audit team that is technically strong, perceptive, intellectually curious and independent-minded — bringing an informed professional skepticism to bear on management’s approach and assertions.
- An audit approach that is based on an understanding of the control environment, including the role of information technology in supporting the financial reporting process.
- An audit culture that seeks continuous improvement and increased quality.
Fundamentally, an effective audit must deliver the right audit opinion, in which shareholders will have confidence.
Two more important characteristics are:
- Communications and reports to those charged with governance that reflect the audit team’s thought processes and rationale for conclusions. These should discuss management’s approach, alternatives considered, relevant comparators and a clear articulation of the final conclusion.
- Effective interaction with management and the audit committee throughout its performance — everyone must understand what the ‘audit issues’ are, why they are ‘issues’ and how they will be resolved.
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