1. General Ledger and Accounting Records
- Review of the general ledger for accuracy and completeness.
- Verification of the trial balance and reconciliation with the general ledger.
- Analysis of journal entries and their supporting documentation.
- Check for unusual or unauthorized journal entries.
- Review of the chart of accounts for consistency and proper categorization.
- Verify that all income and expenses are appropriately recorded.
- Review of opening and closing balances for each accounting period.
- Scrutiny of adjustments and corrections made to the ledger.
- Evaluation of accounting software usage and access controls.
- Audit of any manual bookkeeping procedures.
2. Cash Management and Bank Accounts
- Reconciliation of bank statements with the general ledger.
- Verification of cash balances, both physical and electronic.
- Audit of cash receipts and disbursements.
- Review of cash flow management and forecasting processes.
- Examination of petty cash management and reconciliation.
- Validation of bank account access controls and signatory powers.
- Analysis of deposits and withdrawals for legitimacy.
- Review of transfers between bank accounts.
- Review of bank fees and charges for accuracy.
- Checking the timeliness and accuracy of cash handling procedures.
3. Receivables and Accounts
- Review of accounts receivable aging report for accuracy.
- Confirmation of customer balances and accounts.
- Examination of credit policies and adherence to them.
- Analysis of bad debts and write-offs.
- Review of allowance for doubtful accounts.
- Verification of sales invoices and corresponding payments.
- Scrutiny of customer refunds and adjustments.
- Evaluation of revenue recognition policies.
- Analysis of uncollected or overdue receivables.
- Review of credit terms and conditions.
4. Payables and Accounts
- Review of accounts payable aging report.
- Verification of supplier invoices and payment terms.
- Scrutiny of overdue or unpaid invoices.
- Review of expense accruals and provisions.
- Examination of vendor contracts and agreements.
- Verification of the accuracy of payments made to vendors.
- Scrutiny of purchase order matching and invoice processing.
- Confirmation of payment approval procedures.
- Review of discounts and early payment arrangements with suppliers.
- Review of reconciliations of accounts payable.
5. Payroll and Employee Expenses
- Audit of payroll records for accuracy and compliance.
- Verification of payroll calculations and deductions.
- Examination of employee benefit programs (e.g., pensions, health insurance).
- Review of payroll tax filings and payments.
- Scrutiny of overtime, bonuses, and other incentives.
- Verification of employee expense reimbursements.
- Examination of payroll approval processes.
- Review of employee contracts and compensation structures.
- Checking for unauthorized or duplicate payroll entries.
- Validation of timekeeping and attendance records.
6. Revenue and Income
- Review of sales invoices and receipts for completeness and accuracy.
- Verification of revenue recognition policies.
- Examination of any deferred or unearned revenue.
- Review of income from grants, donations, or fundraising.
- Confirmation of proper documentation for non-recurring income.
- Review of revenue reports for trends or anomalies.
- Scrutiny of income reporting in line with accounting standards.
- Examination of income diversification strategies and their accuracy.
- Review of intercompany or related-party revenue transactions.
- Validation of sales returns and allowances.
7. Expenditure and Expenses
- Review of expense reports and documentation for legitimacy.
- Verification of operating expenses and their categorization.
- Examination of fixed asset purchases and depreciation.
- Analysis of overhead costs and their allocation.
- Scrutiny of administrative and general expenses.
- Review of capital expenditures and their financing.
- Examination of any non-recurring or one-time expenses.
- Verification of tax deductions and contributions.
- Validation of spending limits and budget adherence.
- Review of employee reimbursements and expense claims.
8. Internal Controls and Compliance
- Evaluation of internal controls related to financial reporting.
- Review of segregation of duties within the accounting and finance functions.
- Verification of compliance with relevant accounting standards (e.g., IFRS, GAAP).
- Assessment of internal audit procedures and effectiveness.
- Review of fraud prevention measures and policies.
- Verification of compliance with tax laws and regulations.
- Examination of financial policies and procedures.
- Review of compliance with external audit recommendations.
- Scrutiny of compliance with donor, grant, or funding requirements.
- Validation of records retention policies and practices.
9. Fixed Assets and Depreciation
- Examination of the fixed asset register and verification of asset existence.
- Review of the valuation and depreciation methods used for fixed assets.
- Verification of asset disposals and their impact on the financial statements.
- Scrutiny of capitalized expenses and asset capitalization thresholds.
- Review of maintenance and repair costs related to fixed assets.
- Audit of leases and rental agreements.
- Validation of asset insurance coverage and claims.
- Examination of asset impairment and write-down procedures.
- Review of asset revaluation processes.
- Checking for proper authorization of asset purchases and disposals.
10. Financial Reporting and Statements
- Review of the balance sheet for accuracy and consistency.
- Verification of the income statement (profit & loss) entries.
- Examination of cash flow statements for completeness.
- Scrutiny of statement of changes in equity.
- Validation of financial statement notes and disclosures.
- Review of consolidated financial statements (if applicable).
- Examination of financial statements for adherence to accounting standards.
- Scrutiny of variances between budgeted and actual financial performance.
- Validation of intercompany transactions and eliminations.
- Review of financial statement presentation to ensure clarity and accuracy.
These areas are vital for assessing the integrity of financial records, ensuring proper financial management, and identifying potential risks or discrepancies within an organization’s financial systems. Conducting a thorough audit of these aspects helps strengthen internal controls and provides assurance to stakeholders.