Audit Stages: The Interim Phase
With the start of the season after the summer, in financial auditing we begin the analysis of the 2020 financial year.
Audit stages
A financial audit consists of three fundamental stages:
Planning: Includes the preliminary review of the client, understanding processes and internal controls, and allocating the work (in accordance with ISA (Spain) 300 / NIA-ES 300).
Execution: Involves analysis, verification, and obtaining audit evidence. This stage is divided into two parts: before year-end and after year-end.
Issuance of the report: Performed after reviewing the prepared annual accounts.
In this article, we focus on the interim phase within the execution stage, which typically covers the months from October to December. During this period, analytical procedures are performed and key qualitative aspects of the financial statements are reviewed.
Importance of the interim phase
The interim phase makes it possible to bring forward part of the audit work before year-end, easing the workload in the final phase. At this stage:
- Analytical procedures are performed and internal controls are evaluated.
- Relevant procedures that could affect financial information are reviewed.
- Early substantive tests are carried out, such as verifying tax settlements and expenses using physical documentation.
This phase is essential to build confidence in the entity’s internal controls and provide the auditor with reasonable assurance over overall transactions. Effective internal control makes it possible to design specific tests for areas such as revenue or payroll expenses, obtaining sufficient evidence to support the figures presented in the annual accounts.
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