AZ Checklists
Ultimate Financial Audit Checklist: Save Time & Avoid Errors

Ultimate Financial Audit Checklist: Save Time & Avoid Errors

Audit Checklists
100 Items
Comprehensive financial audit checklist covering audit planning, internal controls, revenue, expenses, cash, inventory, fixed assets, liabilities, and financial statement presentation.

Financial Audit Checklist

Complete financial audit checklist covering all essential audit procedures including engagement planning, internal control testing, revenue verification, expense analysis, cash reconciliation, inventory valuation, fixed asset review, liability assessment, and financial statement presentation to ensure comprehensive audit coverage and compliance with auditing standards.

1. Audit Planning & Engagement Setup

1Confirm and sign the engagement letter (scope, objectives, responsibilities)
2Define audit objectives, materiality thresholds, and risk tolerances
3Identify key stakeholders, auditors' point of contact, and internal liaisons
4Gather prior-year audit files, management letters, and known issues
5Map the organization's business structure, operations, business cycles
6Identify accounting systems, software, and data sources to be audited
7Develop the audit timetable and milestones (fieldwork dates, reporting deadlines)
8Allocate audit team members and define responsibilities for each
9Perform preliminary risk assessment (inherent, control, detection risks)
10Prepare a planning memo / audit program covering major audit areas

2. Understanding and Testing Internal Controls

1Document key internal controls over financial reporting (authorization, segregation of duties)
2Walk through significant transaction cycles (e.g. revenue, purchasing, payroll)
3Test design and implementation of controls (control testing)
4Test operating effectiveness of control procedures (sample testing)
5Evaluate control deficiencies and classify them (significant, material)
6Verify access controls and IT-system controls (user permissions, change logs)
7Confirm segregation of incompatible duties (no single person handles full cycle)
8Review management review controls and exception reporting
9Confirm that authorizations, approvals, reconciliations are timely and documented
10Consider whether control reliance is appropriate or whether additional substantive tests are needed

3. Revenue & Receivables

1Obtain and inspect contracts, invoices, and supporting documentation
2Review cut-off procedures to ensure revenue is recorded in correct period
3Recalculate and trace a sample of recorded revenue transactions
4Confirm receivable balances with customers (direct confirmations)
5Analyze aging schedule of receivables for collectability / allowances
6Assess adequacy of allowance for doubtful accounts
7Review credit policies, credit approvals and write-offs during period
8Test journal entries or adjustments relating to revenue
9Compare gross margin patterns over periods for anomalies
10Consider disclosures regarding revenue recognition policies

4. Purchases, Payables & Expenses

1Obtain purchase orders, supplier invoices, goods receipt notes, and payment vouchers
2Test cut-off: ensure liabilities and expenses are recorded in the proper period
3Review large or unusual payable balances and accruals
4Reconcile accounts payable ledger with general ledger balances
5Test sample of expenses to ensure proper authorization and supporting documentation
6Analyze expense trends, comparing to budgets, prior periods, benchmarks
7Examine accruals, prepayments, and prepaid expense schedules
8Inspect vendor statements and reconcile with company records
9Review related party transactions for propriety and disclosure
10Ensure appropriate classification of capital vs. expense costs

5. Cash, Bank & Investments

1Obtain bank statements, canceled checks, deposit slips, and reconciliation schedules
2Reconcile bank balances per books to bank statements (bank reconciliation)
3Confirm bank balances and lines of credit with financial institutions
4Inspect outstanding checks and deposits in transit and aged reconciling items
5Review and test cash cut-off procedures around period end
6Examine cash receipts and disbursements for unusual items
7Check investments, their valuations, maturities, interest accruals
8Test reconciling adjustments and transfers among cash accounts
9Review restricted cash or cash held for specific purposes separately
10Assess adequacy of disclosures for cash and cash equivalents

6. Inventory & Cost of Goods Sold (for manufacturing/trading)

1Observe physical inventory count or inspect inventory count procedures
2Reconcile physical counts to inventory subledger and general ledger
3Test cut-off: shipments and receipts around year end
4Review methods of valuation (FIFO, LIFO, weighted average) for consistency and appropriateness
5Assess obsolescence, slow-moving inventory and include write-downs if needed
6Test inventory cost allocations, overhead absorption, and product costing
7Confirm quantities with third parties (e.g. consignment, in transit)
8Review any adjustments or inventory provisions made during period
9Analyze gross profit margins trend and compare with prior periods/industry
10Ensure disclosure of inventory policy, valuation method, and carrying amounts

7. Fixed Assets, Depreciation & Leases

1Obtain fixed asset register, additions, disposals, and depreciation schedules
2Trace major additions to supporting invoices, contracts, approvals
3Inspect disposals, write-offs, or impairments, and verify gain/loss calculation
4Recompute depreciation for sampled assets and confirm consistency of rates
5Test capitalization policy: whether items are correctly capitalized vs expensed
6Evaluate useful lives, residual values, and review for impairment indicators
7Review lease agreements (operating vs finance) and confirm correct accounting treatment
8Test lease payments and reconcile lease liabilities
9Compare fixed asset balances to insurance schedules and physical existence
10Assess adequacy of fixed asset disclosures (depreciation methods, net book values)

8. Liabilities, Debt & Equity

1Obtain loan agreements, debt schedules, interest computations, and amortization schedules
2Reconcile balances per books with lender statements and confirmations
3Confirm debt covenants compliance and check for covenant breaches
4Review accrued liabilities, provisions, and contingent liabilities
5Test interest expense calculation, accruals, and payments
6Verify related party borrowings, guarantees or commitments
7Examine equity transactions (share issuance, dividends, capital injections)
8Trace changes in share capital, retained earnings, reserves
9Review schedule of guarantees, commitments, and contingent liabilities
10Ensure disclosure of debt maturity profiles, interest rates, security, and risks

9. Financial Statement Presentation & Disclosures

1Review draft financial statements (balance sheet, income, cash flow, statement of changes)
2Check consistency of accounting policies, changes and disclosures
3Verify footnote disclosures (accounting policies, contingencies, related parties)
4Reconcile schedules and supporting workpapers to the statements
5Confirm compliance with reporting standards (IFRS, US GAAP, local GAAP)
6Check subsequent events and confirm whether adjustments or disclosures are needed
7Review subsequent period transactions up to audit report date
8Assess classification, aggregation and offsetting in statements
9Review management's disclosures: risk, liquidity, capital, segment information
10Obtain management representation letter confirming balances, completeness, disclosures

10. Audit Wrap-Up, Review & Reporting

1Review of audit findings, misstatements, and required adjustments
2Aggregate uncorrected misstatements and assess materiality
3Obtain management responses to findings and planned corrective actions
4Evaluate whether the financial statements, as adjusted, are free from material misstatement
5Review workpapers and ensure documentation supports audit conclusions (per ISA 230)
6Conduct partner / quality review of audit file
7Prepare audit report draft, including opinion, emphasis of matter, other matters
8Review disclosures of subsequent events and management representations
9Issue final audit report to the board, management, and regulators
10Archive audit file and document retention, perform post-audit follow up
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