The International Standards for Auditing (ISA) were developed to provide one set of guidelines that businesses should apply when conducting a financial audit. With the recent introduction of GDPR, many businesses in every sector should have undertaken some sort of internal audit at least to prepare for the regulation and ensure their companies were compliant.
One of the most efficient ways to make sure of this and to conduct a reliable and effective audit would have been by following ISA guidelines. Whenever your business needs auditing, it is highly important that these standards are followed.
Universal Appeal and Application
In recent times the auditing industry has been placed under a lot of scrutiny, especially with the likes of the Carillion collapse and Philip Green’s retail empire. Both of these events saw the auditors and the auditing processes called into question, with PricewaterhouseCoopers hit with a record fine for the latter. Further examples of auditing practices exist from other parts of the world too.
With ISA this creates a universal standard that professional auditors and businesses themselves should be following, for both internal and external audits. A big advantage of ISA is that it has input from many different cultures, meaning it isn’t biased towards one particular region and reflects purely the attitudes of that area.
Plus, it makes it a lot easier for auditors to apply the same set of principles when dealing with multinational firms. Otherwise they would have to take into account all the differences across the various regions the company works in. This can make the job a lot longer and far less efficient, whereas using one standardised auditing system makes proceedings a lot easier for everyone involved.
As ISA has been developed by professionals in the industry, it provides clear guidelines for auditors to follow. This can create a more cost-effective model for many businesses, as they may be able to use someone internally to conduct an internal audit, rather than encountering the expense of hiring someone externally.
The good news is that the recognition of a consistent auditing framework across the global business environment seems to be going on, as RSM mention that 80% of jurisdictions worldwide have adopted the ISA. Following standard guidance also helps combat some of the ethics issues that occasionally crop up when auditing is discussed, especially in the aforementioned Philip Green and Carillion cases.
Sticking with the ISA whether using an external or internal auditor is the safest choice for all businesses, which should make processes work a lot smoother and avoid any potential issues arising. Being able to prove these have been implemented can help put your company in the best position possible going forward.