GOOD PRACTICE Company audit - how does it work?

It can be inevitable and often it causes irrational fear. In fact, it is a great opportunity to help your business grow. An audit in a company is always a serious undertaking. However, it is worth trying to make it as beneficial to your company as possible.

Some say there are as many types of audits as there are enterprises. We can audit a specific process, service, department, production line or a sphere (e.g. information protection, health and safety, etc.) in a company. Then, the functioning of these areas may depend on many different factors, unique to each enterprise. Therefore, the auditors’ approach is always individual. After all, no two companies are the same. However, there are some features common to every audit. One of them is an attempt to find an answer to the basic question: how to improve the functioning of the enterprise?

The advantage of an audit is primarily the participation of an external specialist who is able to objectively determine which areas of the company’s operations require improvement. For this purpose it uses i.a. comparative analysis methods, conducts interviews and indicates norms and regulations. What is invisible to an entrepreneur can, with the help of an auditor, take specific shape and become a task to be carried out. Therefore, it is worth using the possibility of auditing not only when it is necessary (e.g. legally required), but also when the company does not encounter major problems in operation – after all, there is always some room for improvement.

Audit in a company should, therefore, be perceived as a precise optimization tool, by which a specialist will help reveal new opportunities, not a means of pointing out an entrepreneur’s error.

During the audit, information on a given problem is collected and analyzed. This problem can be summarized in the form of a question, for example: “Are there proper procedures for processing personal information in the company?” or “how to make the process of introducing a new product to the market faster?”. The entire procedure will then be conducted from this angle. It does not involve all areas of the enterprise, but only those that have an impact on solving a given problem. In part, its purpose is the same as the Vendor Due Diligence study. It, too, measures company’s efficiency, although such a study will usually cover the entire organization. Aleksandra Prusator, CEO at FORDATA, writes more on this topic in the article Vendor Due Diligence – the value of negotiation preparation.

Traditional form of the audit assumes physical visits by a statutory auditor at the headquarters or on the company’s premises, where an analysis of the collected documentation is also made. Today’s audit takes new forms, which is also greatly influenced by the ongoing pandemic. From the point of view of the provider of the Virtual Data Room tool, which auditors use in their remote analysis of documentation, we can especially speak of the process of audit digitization.

Due to the pandemic restrictions, it has become one of the most important challenges facing the industry. Bartłomiej Kurylak, partner and statutory auditor at Polska Grupa Audytorska, writes more about these challenges in a separate article on our blog. According to Bartłomiej Kurylak, today there are situations in which the owners refuse to let the auditor into the company’s premises due to the epidemic threat. Some companies then decide to use a drone and this is no longer an unprecedented situation.

Also in the case of documentation analysis, companies increasingly use digital tools, such as Virtual Data Room, as they significantly affect the acceleration of the process and information security.

According to Bartłomiej Kurylak,

“Auditors and customers had to quickly learn how to use the available tools for remote communication, as well as the use of cloud solutions, virtual disks or document signing applications, such as Autenti. The revolution in the use of technology is still ahead of us, and the pandemic has only opened our eyes to these issues and will probably slightly accelerate some processes of digitalization of the financial audit. I am in the group of statutory auditors who see these changes as an opportunity, not a threat.”

The PGA expert also believes that “The revolution in the use of technology is still ahead of us, and the pandemic has only opened our eyes to these issues and will probably slightly accelerate some processes of digitalization of the financial audit. I am in the group of statutory auditors who see these changes as an opportunity, not a threat.”

Regardless of the form of auditing, its purpose remains unchanged. Due Diligence audit, legal audit or tax audit are studies that strengthen the company’s operations. However, some entrepreneurs’ concerns related to the audit result not only from the fear of being penalized for negligence, but also from the lack of understanding of the form and procedures of the audit. Technology can provide a solution in this area as well, as it will enable easier organization, transparency and security of such a process.