Accounting principles are the rules and guidelines that companies must adhere to when reporting financial data. Below are the basic principles for trust-worthy financial statement audit.
Integrity, Objectivity & Independence: The three are the foundation of professionalism. The auditor should be impartial and possess the qualities like straightforwardness, honesty, and sincereness to prepare the audit fair and square.
Confidentiality: Security of information is of utmost importance for every company. Maintaining confidentiality throughout the process becomes the first priority of the appointed auditor. He should not share any confidential information to a third party no matter what.
Skill & Competence: They should be skilled to conduct the audit with due professional care. Financial statement audit demands extensive training, experience, and competence.
Team Work & Job Delegation: The auditor can task other auditors and experts with some of the work. But in the end, they will be accountable for their opinion on financial information.
Documentation: All the document matters pertaining to the audit should be documented by them.
Planning: The auditor should plan their work to perform an audit in an effective and timely manner. Plans should be established on knowledge of the client’s business.
Audit Evidence: Evidence-based approach is a rational method for reaching reliable and reproducible audit conclusions in a systematic audit process. The auditor you have hired should perform compliance and substantive procedures to acquire adequate and appropriate audit evidence that will help them to draw reasonable conclusions.
Accounting System & Internal Control: Internal control system ensures that the accounting system is sufficient and that all the accounting information has been duly recorded. The auditor should be able to interpret the accounting system and associated internal controls adopted by the management.
Audit Conclusions and Reporting: The auditor should go over and assess the conclusions drawn from the audit evidence obtained through the performance of procedures. The audit report should feature a clear written expression of opinion on the financial statements.