Strategies for Small Audits

Many firms are realizing that profitability on small audits can’t always be obtained by utilizing the “one-size-fits-all” practice aids purchased from major publishers. Profitable small audits require unique engagement strategies.

An audit strategy for small audits that includes compliance with generally accepted auditing standards and that, at the same time, maximizes engagement profitability will normally include the following components:

• Making and responding to client acceptance and retention evaluations.
• Completing only core planning practice aids.
• Reading the client’s general ledger account activity to provide low-cost substantive evidence and risk-assessment procedures.
• Preparing internal control flowcharts and memos that can be carried forward.
• Performing systems walk-procedures to reduce the assessed risk of material misstatement.
• Performing maximum analytical procedures during planning, engagement performance and engagement review to reduce detailed tests of balances.
• Performing only necessary tests of control and tests of balances procedures.
• Determining tolerable misstatement by financial statement classification to minimize auditing procedures.
• Making decisions not to sample to save time.
• Completing a planning document to facilitate planning meetings and the audit team leader’s involvement.
  
  

My Small Audits Documentation Manual is being built around these strategies and should be available later this fall. In the intervening months, I’ll be sharing the contents of the Manual with our subscribers. Please visit our website, www.cpafirmsupport.com, to learn more about our Subscription Plan.

Larry Perry, CPA