Audit Procedure Template for England and Wales

An Audit Procedure is a detailed set of steps that auditors follow to check an organization's financial records, internal controls, and operations. These procedures help ensure businesses comply with UK accounting standards and the Companies Act 2006, while detecting potential errors or fraud.

Good audit procedures might include checking bank statements against reported balances, confirming customer accounts, or reviewing expense documentation. Auditors in England and Wales must follow standards set by the Financial Reporting Council, adapting their procedures based on the company's size, industry, and risk level. This systematic approach helps deliver reliable audit opinions that stakeholders can trust.

Use Audit Procedures when your organization needs systematic verification of financial records or operational processes. These procedures become essential during annual statutory audits required by the Companies Act, when preparing for potential mergers or acquisitions, or after discovering accounting irregularities.

Financial services firms regulated by the FCA need robust Audit Procedures to maintain compliance. They're also vital when expanding operations, implementing new accounting systems, or responding to stakeholder concerns about financial accuracy. Many companies run regular internal audits using these procedures to catch issues before external auditors arrive.

• Financial Statement Audit Procedures: Detailed steps for reviewing accounts, checking transactions, and verifying financial reports according to UK GAAP standards
• Internal Control Audit Procedures: Focus on testing company processes, risk management, and compliance with regulations like the Companies Act
• IT Systems Audit Procedures: Examine digital security, data integrity, and system controls under UK data protection laws
• Compliance Audit Procedures: Verify adherence to industry-specific regulations, particularly important for FCA-regulated firms
• Performance Audit Procedures: Evaluate operational efficiency, value for money, and achievement of organizational objectives

• External Auditors: Independent professionals who design and execute Audit Procedures, typically from certified accounting firms regulated by the FCA
• Internal Audit Teams: Company employees who implement regular audit checks and maintain ongoing compliance
• Financial Directors: Oversee the audit process and ensure resources are available for proper execution
• Audit Committee Members: Review and approve audit procedures, monitor their effectiveness, and report to the board
• Company Staff: Provide necessary documentation and follow procedures during audits while maintaining daily operations

• Company Information: Gather details about organizational structure, business processes, and financial reporting systems
• Risk Assessment: Identify key risk areas and control points that need specific audit attention
• Regulatory Requirements: Review current FCA guidelines and UK accounting standards applicable to your industry
• Resource Planning: Determine staff availability, timeframes, and technical tools needed for audit execution
• Documentation Systems: Set up clear recording methods for audit evidence and findings that meet UK compliance standards
• Review Process: Establish how findings will be evaluated and reported to management and stakeholders

• Purpose Statement: Clear objectives and scope of the audit, aligned with UK accounting standards
• Methodology Section: Detailed steps for evidence collection, sampling methods, and testing procedures
• Risk Assessment Framework: Specific criteria for evaluating control effectiveness and materiality thresholds
• Documentation Requirements: Standards for recording findings, maintaining work papers, and storing evidence
• Reporting Protocol: Format and timeline for communicating results to stakeholders
• Compliance Statement: Reference to relevant FCA regulations and Companies Act requirements
• Quality Control Measures: Review processes and oversight mechanisms ensuring audit quality

An Audit Procedure differs significantly from a Compliance Procedure in several key aspects, though both play crucial roles in organizational governance. While Audit Procedures focus on systematic verification and testing of specific areas, Compliance Procedures establish ongoing rules for maintaining regulatory standards.

• Timing and Frequency: Audit Procedures are typically conducted at specific intervals or triggered by events, while Compliance Procedures operate continuously as daily operational guidelines
• Primary Focus: Audit Procedures examine past activities and verify accuracy, whereas Compliance Procedures guide future behavior and preventive measures
• Implementation Scope: Audit work involves detailed testing and evidence gathering, while Compliance work centers on policy setting and monitoring
• Documentation Requirements: Audit Procedures generate specific findings and recommendations, while Compliance Procedures create ongoing records of adherence to rules