External Financial Audit Checklist Example

Financial audits provide an unbiased assessment of a business’s financial reports and reporting procedures, and are typically administered by an impartial committee within its ranks.

An effective audit relies on having strong working relationships and comprehensive work papers, and Process Steet’s audit checklist templates can help you achieve these objectives.

Budgets and Financial Statements
Financial auditing is an objective and impartial way of reviewing a company’s financial reports and procedures in order to ensure adherence with regulatory requirements as well as boost transparency within business operations.

Budgets and financial statements are tools used by businesses of all kinds and sizes to monitor and assess their financial health. Budgets detailing anticipated revenue and expenses should be set at the beginning of every year and should be monitored on an ongoing basis. Financial statements typically include the balance sheet, income statement, owners’ equity statement and cash flow statement.

Financial audits must ensure that actual spending on accounts payable matches its budget, and this can be accomplished by reviewing bank statements, receipts and spending diaries. Likewise, it is vital to verify whether amounts shown as receivable reflect what was budgeted using customer balance data in a subsidiary ledger.

Inventory Management
Inventory management requires striking a delicate balance between revenue, cost and risk. Classified as a current asset on your company’s balance sheet, inventory consumes cash and requires ongoing oversight to maximize turnover while preventing stockouts. A physical audit and associated accounting procedures can ensure that inventory on warehouse shelves matches inventory numbers in your system for smooth cash conversion cycles.

Financial auditing is the practice of conducting impartial and objective assessments on the financial reports and procedures of a business or organization, using an audit template that streamlines this process by offering an organized checklist of items to be reviewed; eliminating room for error while freeing auditors to focus on analyzing results and making improvements. Furthermore, audit templates foster transparency and integrity in corporate reporting which will ultimately enable organizations to achieve superior and more sustainable financial performance over time; making the template an indispensable resource for organizations required to meet stringent regulatory standards.

Cost of Goods Sold (COGS)
COGS financial audits can help identify cost-cutting opportunities within your business and give you an accurate picture of its performance, especially when comparing actual numbers to budgeted ones on a monthly basis.

Cost of goods sold (COGS) refers to the total expenditure a company incurs on materials required to make its products sold, such as raw material and component parts; direct labor costs; manufacturing overhead expenses; container/packaging and storage expenses. Other expenses not directly related to selling their product (such as sales & marketing costs) are excluded from this figure.

Small steps towards lowering COGS can have a substantial effect on your profitability and help you meet long-term financial goals. Utilize this checklist from Process Steet to ensure your firm abides by standard reporting procedures, avoids fraud, mistakes and financial irregularities, boost transparency and cultivate an environment of accountability.

Trial Balance
After closing the general ledger at the end of each accounting period, accountants prepare a trial balance. A trial balance provides a consolidated overview of all accounts within a ledger by listing debit and credit balances at period’s end as well as listing each account’s ending balance that includes assets, liabilities and equity.

Trial balances are used to test the mathematical accuracy of company books between full audits. A trial balance helps assess whether there are any accounting discrepancies; debits and credits should ideally tally up in double-entry bookkeeping systems.

An external financial audit checklist typically comprises a trial balance, new fixed asset purchases with receipts, expenses with proof of payment documents, loan statements and stock subscriptions. Process Steet’s financial audit checklist template offers a handy framework for these and many other questions commonly seen during audits; making this an indispensable resource in your arsenal.