Question 1

How long does an audit take?

Accepted Answer

This can be a difficult question to answer, because just like people, each organisation is unique and therefore needs to be approached differently. However, the length of time will depend on factors such as:
 • The number of different revenue streams or business units
 • The types of assets, are these complex or unique, is there stock or inventory
 • The types of liabilities, are these complex or unique
 • The size of payroll
 • The reporting framework you are required to follow, i.e. General Purpose or Special Purpose Financial Statements
As with any project, the preparation the organisation has already undertaken, the availability of information and the availability of the key staff become major influences on how long the audit will take and if it can be prepared efficiently.

Question 2

What documents do I need for an audit?

Accepted Answer

At the beginning of an audit, we would need all documentation around structure and internal policies and procedures – how you do things. This helps us design the framework for the audit and to obtain an understanding the organisation and its purpose. 
 
Then across the balance sheet we need documentation to support the key numbers – so that could be bank statements, asset acquisitions, depreciation schedules, financing documents. Then for the profit and loss statement we will review a sample of transactions across key balances – for example, we may request around 23 invoices to support a selection of transactions. We don’t want you to send all of your invoices on Day 1 – we will pick them, send you a list and then you send back what is needed. It’s a similar process for revenue stream, payroll, employee files, timesheets and other standard documentation.
 
Any other audit requirements will depend who the organisation is reporting to, such as a government department (either at state or federal levels), members etc.

Question 3

What determines the price of an audit?

Accepted Answer

The key factors that influence the price of an audit include:
 • the size and complexity of the organisation
 • whether we can conduct the audit from our office or need to travel (and what the travel entails e.g. regional or remote areas will mean increased travel expenses)
 • how organised the entity is – while the fees aren’t entirely time-based, extra time spent on administration is a factor
 • the number of offices, revenue streams or business types within an organisation 
 • how quickly a client responds to our queries – as with any consulting or advisory process, if a response to a number of queries takes 3 weeks, it will take extra time to review the file and pick things up again after the lag time, whereas if queries come back in 24 or 48 hours, the process moves along more quickly and efficiently.
We try to reduce costs for the client by sending out the lists of requirements up front and ensuring our own processes are efficient. For example, we will sit down and do as much as we can on the file before sending further queries. We also try to keep clients on track by sending through reminders when needed.

Question 4

Who will be working with me?

Accepted Answer

The audit team will be made up of at least one senior auditor and one more junior auditor. The junior auditor undertakes the more straightforward testing and the senior auditor tackles  the more complex, judgement-based work and provides guidance to the client. Sometimes we have teams of more people going out because of the size or complexity of the organisation, or because the team visits the organisation and we wish to reduce the amount of days and avoid unnecessary disruption time for the client.
 
The Engagement Partner is across all audits and files, as they are responsible for making key decisions and signing-off the audit.
 
At any level, we are accessible!

Question 5

Do we need an audit or a review?

Accepted Answer

Entities should assess if the annual financial statements are required to be reviewed or audited on an annual basis.
 
The Australian Charities and Not-for-Profits Commission sets the reporting guidelines for registered charities. The need for an audit vs a review is determined by the annual revenue of the organisation, not the structure.
 
For more information, see our article, Do I need an audit in 2021?(https://www.auditpa.com.au/post/do-i-need-an-audit-in-2021) (https://www.auditpa.com.au/post/do-i-need-an-audit-in-2021)Advice for NPFs and Charities.

Question 6

What are the parameters of the auditor’s responsibilities?

Accepted Answer

The responsibilities of the auditor are clearly set out the in the audit report which states the following:
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
While it is clear what we are responsible for, it is worth noting the things we don’t do as auditors:
 • We don’t check every figure in the financial report – an audit is based on selective testing
 • We don’t provide advice around the activities or strategic decisions of an organisation
 • We don’t audit every transaction – this is neither necessary nor economically viable
 • We only audit the financial statements; we don’t audit the other information provided in the annual report

Question 7

Why does my auditor need to be independent?

Accepted Answer

The auditor’s role is very important in terms of providing credibility and assurance to a set of financial statements as well as protecting the public interest. The person providing that opinion needs to very clearly have no vested interest in the organisation they are auditing. This allows the auditor the freedom to raise questions, qualifications, or breaches, and bring issues to the board’s attention without fear. 
 
If your organisation or SMSF engage an auditor, make sure they have met the independence requirements so you can have confidence to rely on the audit report and the advice they provide.  
 
For more detail, see our article, Why does my auditor need to be independent?(https://www.auditpa.com.au/post/why-does-my-auditor-need-to-be-independent)

Question 8

Do SMSFs need an audit every year?

Accepted Answer

Your SMSF must be audited annually before the annual return can be lodged with the ATO. The SMSF must appoint an approved SMSF auditor no later than 45 days before you need to lodge the SMSF annual return.

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