How Does the Annual Independent Audit Process Work?

The annual independent audit process is usually carried out at the end of the business's financial year and includes the following steps:

Planning: At the beginning of the audit process, the auditor contacts the business and prepares the audit plan. At this stage, the auditor works with the business to understand the business's operations and financial reporting processes. The audit plan determines the scope, objectives and methods of the audit.

Data Collection and Analysis: The auditor collects the data necessary to examine the financial statements and financial records of the business. This data includes information such as the financial situation of the business, its assets, liabilities, income and expenses. The auditor analyzes the collected data and evaluates its accuracy and suitability. It then checks the business's compliance with financial reporting standards.

Internal Control Assessment: The auditor reviews the entity's internal control systems. Internal control systems are a set of procedures and policies designed to control the financial transactions and reporting processes of the business. The auditor evaluates the effectiveness of internal control systems and identifies weak points and offers improvement suggestions to the business. Strong internal control systems increase the accuracy and reliability of the company's financial processes.

Audit Tests: The auditor performs audit tests to evaluate the accuracy and appropriateness of the entity's financial statements. These tests aim to confirm the accuracy of the business's financial data. The auditor examines income and expense accounts, asset and liability accounts, inventories, and other financial items. Additionally, the auditor evaluates the business's asset valuations, depreciation accounts, and other financial records.

Reporting: The auditor prepares an audit report as a result of his examinations and evaluations. This report states that the financial statements and financial records of the business have been evaluated by an independent observer. In the report, the auditor explains the company's compliance with financial reporting standards, internal control systems and the results of the audit process. The report also indicates any detected problems or suggestions, if any.

The annual independent audit process is an important mechanism to ensure the accuracy, appropriateness and reliability of businesses' financial statements. Thanks to this process, businesses strengthen their internal control systems, manage financial risks and give confidence to their stakeholders. It also plays a critical role in ensuring compliance with legal and regulatory requirements.