Joanna A. van der Vant on How to Design an Audit of Documents and Records

 

Joanna A. van der Vant

Joanna A. van der Vant

Joanna A. van der Vant is currently pursuing a Masters of accounting and finance with an emphasis on CPA studies. With an MBA and certification as a bookkeeper, Joanna A. van der Vant already knows the importance of regular auditing of a business’s financial processes. Below, Joanna A. van der Vant discusses how to audit documents and records.

Q: The first step to designing an audit process is understanding how it works. What documents and records do most businesses have?

Joanna A. van der Vant: Eight functions have been identified within the typical business cycle. Those are: processing customer orders, granting credit, shipping goods, billing customers and recording sales, processing and recording cash receipts, processing and recording sales returns, writing off uncollectible accounts, and providing for bad debts.

Q: What is the auditor looking for in customer billing and recording?

Joanna A. van der Vant: Each transaction should have billing for shipment, with amounts on the invoices accurate and no double billing.

Q: What about companies that do business overseas?

Joanna A. van der Vant: More companies are now doing business internationally. These transactions can often undergo more severe scrutiny than domestic transactions.

Q: Are cash receipts transaction logs and journals helpful?

Joanna A. van der Vant: For auditors, written transaction documentation of any kind can be very helpful. These logs tend to be increasingly more electronic these days.

Q: What methodology will an auditor use to audit my documents and records?

Joanna A. van der Vant: The auditor will note the internal controls for each item and determine if those controls are adequate to prevent risk.

Q: What are some examples of internal controls that would pass an audit test?

Joanna A. van der Vant: An auditor might look at who reconciles accounts each day. One key measure will be whether or not your business has an independent staff member do the reconciling to protect against internal fraud.

Q: What are auditors searching for when reviewing sales returns?

Joanna A. van der Vant: An auditor will review these similarly to the way he or she audits sales. It’s important to have adequate documentation.

Q: I know that auditors search for completeness in the auditing process. What does this mean?

Joanna A. van der Vant: Completeness refers to a transaction being followed through all the way to the end. If an auditor cannot trace a transaction to the end, it can signal a finding.

Q: What type of paperwork can I expect an auditor to ask for?

Joanna A. van der Vant: Receipts, journals, electronic records…all are compared against each other to find any duplicate entries or misinformation.

Q: How does an auditor search for theft of cash? Isn’t that hard to track?

Joanna A. van der Vant: The hardest cash theft to find actually happens before the transaction would have been recorded. Much of this theft has to be found by management watching the employee or having more than one person handle each transaction. For instance, one person could open the mail while the other recorded the cash.

Joanna A. van der Vant is responsible for SOL Property Management’s accounting department, where she handles accounts receivable and payable, among many other activities. A member of the American Institute of Professional Bookkeepers, Joanna A. van der Vant is also a licensed managing broker.

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