From reviewing original invoices to ensuring that monthly financial reports were initialed by your CFO, a finance audit checklist helps you get a clear overview of your business expenses.
We’ll share what you should include in your financial audit checklist, explain who should perform it, and provide a free generalized template that you can tailor to your company’s needs.
Plus, we’ll explain how to simplify your financial audit process by using digital forms, so your employees can edit, save and upload documents whether they’re in the building or on the go.
Your financial audit checklist should include:
- Budgets and financial statements
- Accrual accounts
- Expense approvals
- Trial balance
Table of Contents
What Is A Financial Audit Checklist?
A financial audit checklist is a document that contains list of tasks that must be completed during the financial auditing process, which is typically conducted once a year.
A financial audit checklist helps you:
- Examine your company’s income and expenses
- Ensure that all audits are conducted in the same way, even if different auditors are involved
- Ensure that important areas are not overlooked during the auditing process
- Communicate with management, audit committees and other stakeholders about the audit process, the results and any necessary follow-up actions
Internal Financial Audit vs. External Financial Audit
Both internal and external financial audits are used to appraise a company’s financial records.
The primary difference between the two is that internal audits are performed by employees, typically several times a year, while an external audit is conducted by an outside public accounting firm or other independent third party, like a CPA, once a year.
Internal audits generally focus on evaluating processes, procedures, and internal controls within the organization.
External financial audits typically go beyond this and involve a more thorough assessment of a company’s accounting records as well as its compliance with applicable laws and regulations.
An external audit is commonly used for year-end reports and annual tax returns required by regulatory bodies.
What To Include In A Finance Audit Checklist
From financial statements to expense approvals, here’s what your finance audit checklist should include:
1. Budget And Financial Statements
The first thing that your financial audit checklist should include is the budget that you established at the beginning of the year, outlining expected expenses and income.
It should also include all financial statements (including income statements and balance sheets) allowing you to track and assess your company’s activity over the year.
Auditing your budget and financial statements will help you identify discrepancies and gain visibility into your company’s cash flow and financial performance.
2. Accrual Accounts
Before you establish balance sheets for pending payments, your company’s accruals (expenses incurred or revenues earned) must be recorded.
For example, if you provided a service to a customer in January, but didn’t’ receive the payment until February, the profit earned from that service would be noted as an accrual in January.
As part of the audit, you’ll review service dates, payment dates and other details to make sure all transactions are properly recorded and accounted for.
3. Expense Approvals
Whether paid by cash or check, all expenses must go through a series of approvals.
Typically, an employee provides proof of the expense (a receipt, for example), then submits it to a manager. The manager confirms the purchase and approves the expense. Finally, the manager sends it to the finance team, who must also sign off on the expense.
During the audit, you’ll need to make sure that all company expenses went through the agreed upon channels for approval.
4. Trial Balance
A trial balance — a list off all your accounts and the balances for each account — will help your employees determine whether double-entry bookkeeping has been correctly carried out and ensure that debit and credit entries have balanced.
For example, let’s say your utility expenses include payments from four different bills, amounting to $2,000, $1,000, $1,500, and $3,000. In the trial balance, total utility expenses should be shown as$7,500.
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Example Of A Financial Audit Checklist
- Was all the income properly allocated and categorized?
Were all expenses properly allocated and categorized?
- Did all expenses come with supporting documents for each expense account, such as original invoices, receipts, purchase orders, and other agreements?
- Was there a proper bill or disbursement request/voucher (“paper trail”) for each expenditure?
- Was each expense a part of the company’s budget?
- Did the finance team record the receipts and disbursements in the system as they were submitted?
- Did the expenses match the original invoices?
Internal Revenue Service
- Did the company file a form 990N/990EZ or 990 with the IRS?
- Did the company file a Personal Property Return?
- Did two authorized unit officers properly sign all checks?
- Were all checks sequentially numbered?
- Were all checks accounted for?
- Were all bank statements properly reconciled on a monthly basis by the treasurer?
- Was all cash deposited in full and not used to pay bills?
- Was more than one person responsible for collecting, receipting and depositing cash?
- Did all bank deposits match receipts?
- Were receipts pre-numbered and documented in the general ledger?
- Were all disbursements paid by pre-numbered checks?
- Were VOID checks marked “VOID” and attached to the appropriate stubs in the check book?
- Did the CFO initial the statement of accounts and bank statements?
- Did the treasurer submit monthly written financial reports?
- Were all financial records in order?
- Was the statement of accounts reviewed on a monthly basis?
- Were all invoices approved and initialed for payment?
- Were monthly financial reports initialed by the CFO?
- Were there any unusual or unexpected accruals that need to be further investigated?
- Did estimates match the actual results?
- Did the accounting estimates represent a risk of misstatement (overstate or understate)?
- Were all accounts properly classified?
- Did the accrual account balance match the balance in the general ledger?
- Were the account balances accurately calculated and entered into the company’s accrual
- Were there supporting documents (such as invoices, purchase orders and contracts) for each accrual account?
- Were the accruals based on actual transactions and events?
- Were there any related party transactions that needed to be disclosed in the accrual accounts?
- Were there any known or potential contingencies that need to be disclosed in the accrual accounts, such as pending litigation or warranty claims?
- Were there any subsequent events that needed to be disclosed in the accrual accounts, such as changes in the status of pending transactions or events that occurred after the reporting period?
- Were accounts properly classified?
- Were all trial balance entries supported by documents?
- Were all accounts and balances included in the trial balance?
- Were there omissions or duplicates in the trial balance?
- Did each account in the trial balance match the balance in the company’s general ledger?
Streamline Your Financial Audits With doForms
At doForms, we offer mobile forms solutions that transform paper financial audit checklists into a simplified and paperless system.
Our paperless approach means that your employees don’t need to carry around a checklist when performing your quarterly or biyearly financial audit — which can easily get crumpled or misplaced!
Create custom checklists, edit forms and reports, and save and store all of your important documents in one, secure location for easy access.
The doForms mobile forms app allows you to access your checklists and forms from any location, even without WiFi! This means you can easily submit reports, fill out checklists, and manage timesheets and employee payroll whether in the office or on the road.
Digitizing your documents allows for better organization and cost savings — the average business spends $8,000 per year on paper alone!
See doForms in action in the video below:ARVE Error: src mismatch
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In addition to financial audit checklists, going paperless with doForms allows you to:
- Create a custom form or select from a pre-built library of templates
- Utilize automatic capture features, including photo and video to attach media to your checklists and reports
- Take images of financial statements, contracts, and more
- Build any type of checklist, from financial audits to preventive maintenance checklists
- Create a digital MDM policy for your company
- Schedule work shifts thanks to the calendar-based job scheduling feature
- Manage daily time logs, progress reports, payroll, employee schedules and performance reviews no matter where you are
- Eliminate the exposure of sensitive details — doForms keeps sensitive information safe thanks to security features such as HIPAA compliancy, multi-factor authentication, PIN-based logins, form field encryption and more
Wrapping Up On A Finance Audit Checklist
A financial audit checklist is a valuable tool that can help you gain visibility into your company’s expenses, identify discrepancies and provide assurance to your stakeholders that your company’s finances are in order.
With doForms, you can say goodbye to disorganized and costly paper checklists, and replace your auditing process with digital forms that can be easily edited and securely stored.