Avoid the Risk of Over- or Under-Auditing Using Caseware Software

Avoid the Risk of Over- or Under-Auditing Using Caseware Software

OnPoint Audit helps practices engage in audit risk mitigation.

When conducting an audit, it’s important to make sure you prioritize the right issues. Unfortunately, it’s all too easy to over-audit by dedicating too much time to low-risk issues or to under-audit by not giving enough attention to high-risk issues. You might even fall prey to over-auditing and under-auditing within the course of the same audit.

Of course, an audit is an important tool to help your clients make their next financial decisions. When you over- or under-audit, though, you run the risk of misrepresenting the important issues within your client’s finances. They may then act on poor information and increase corporate risk. 

Fortunately, the right audit software, like Caseware’s OnPoint Audit, can help you engage in audit risk mitigation. Read on to learn more.

What does over-auditing or under-auditing look like?

It’s important that audits are precise, so it only makes sense that many accountants are meticulous when it comes to going over financial statements, potential risks and relevant documents. However, this level of thoroughness can often lead to the pitfall of over-auditing. 

Over-auditing involves using too large of a sample size for your audit in the hopes of being thorough. This might include creating an excessively long checklist of issues to review or taking into account every single file, regardless of whether or not it relates to a high-risk issue or the subject of the audit. 

Under-auditing, on the other hand, often consists of skimming over the high-risk issues that relate to your clients or your firm. It is often characterized by using too small of a sample size for your audit or having too few requirements, resulting in a more surface-level audit that does not investigate the deeper risks. Sometimes, a tight deadline might prompt teams to rush, under-auditing the things that matter most. 

The dangers of over- or under-auditing

Over-auditing can be a serious issue that could hurt your firm – in the case of an internal audit – or your clients in the case of an external audit. At the very least, over-auditing wastes time. 

You likely have a set amount of time in which to complete your audit. If you spend too much time focusing on small issues, you may leave the rest of the audit rushed and half-done. An over-audit may also waste time for your clients, as well. If you over-emphasize the risk of smaller issues in your audit, clients may decide to prioritize those issues rather than focus on higher-risk issues that need more attention. 

Over-auditing is also an easy way to burn out the accountants at your firm by focusing too much on tedious work with relatively small rewards. This could increase your turnover and lead to less consistency in the quality of your work.

On the other hand, under-auditing could mean that you miss or understate a high-risk issue when communicating with executives of your accounting firm or your clients. This might mean that they make poor decisions based on the poor information that they were given. If they realize that your audit was insufficient, they may feel less satisfied with your work and decide not to continue utilizing your services.

Unfortunately, if your accounting firm is struggling to meet a tight deadline or spent too much time on other portions of the audit, you may later end up under-auditing higher risk issues – such as severe financial misstatements or fraud risk. A burned-out team, overburdened with their workload, might also be tempted to cut corners when auditing.

Caseware’s solutions to help prevent under-auditing or over-auditing

Caseware has a suite of software designed to make an accountant’s workload smooth and seamless. There are two programs in particular that may help your firm if you struggle to strike the right balance with auditing: OnPoint Audit and OnPoint EBP. Luckily, because these are both cloud-based programs, they make collaboration easy for the whole team.

OnPoint Audit

OnPoint Audit is comprehensive, risk-based audit software that relies on smart technology to help you optimize your audit process. It comes with built-in analytics and alerts so you can see the areas that require the most attention. You can highlight issues that stand out so you make sure they’re not overlooked. At the same time, you can use the many review tools to plug in financial statements or build checklists and run diagnostics. 

OnPoint EBP

OnPoint EBP focuses on helping you conduct a robust and thorough employee benefits plan audit, which can often be a challenge even for accountants with years of auditing experience. It provides alert icons to notify you of risk indicators and prevent any chance of under-auditing – or over-auditing as you spend a great deal of time attempting to catch every little detail. 

The software breaks your audit down into a handy document map with risk factors and assumptions, general audit procedures, a planned approach for the audit itself and (finally) the conclusion of the audit. It also offers many of the same review tools as OnPoint Audit, so your audits will be clear, thorough and effective. 

Eliminate the risk of over- and under-auditing with OnPoint Audit and OnPoint EBP

Unfortunately, it is all too easy to fall into the trap of over- or under-auditing, or even doing both at the same time. These issues have serious consequences, but fortunately, you can mitigate the issue with help from Caseware’s offerings. Want to learn more about how we can help you prepare for your next audit? Contact Caseware today to request a demo. We have a plethora of software solutions to take your auditing to the next level.