Practices                                          

                                                            AUDITING

To become an Registered Auditor according to the Italian law a professional must be listed in the relative directory managed by  the Ministry of Justice. A person who has gained a three-year university degree can register with the Auditor trainees' role and become auditor after a three-year training and after succeeding in an appropriate examination, in compliance with the CEE 8th Directive.

The qualification of Dottore Commercialista (Chartered Accountant) directly allows to be registered as Auditor as well. Accordingly, members registered as Chartered Accountant  can provide audit services according to the 8th Directive, but a formal registration (although automatic) in the ministerial role is required.

A financial audit is performed before the release of the financial statements (typically on an annual basis), and will overlap the 'year-end' (the date which the financial statements relate to).

Our Auditors drive the client through the stages of the audit:

Planning and risk assessment

Purpose:

to understand the business of the company and the environment in which it operates

to determine the major audit risks (i.e. the chance that the auditor will issue the wrong opinion).

Internal controls testing

Purpose:

to assess the internal control procedures (e.g. by checking computer security, account reconciliations, segregation of duties). If internal controls are assessed as strong, this will reduce (but not entirely eliminate) the amount of 'substantive' work the auditor needs to do.

Substantive procedures

 

Purpose:

 

to collect audit evidence that the Management Assertions (actual figures and disclosures) made in the Financial Statements are reliable and in accordance with required standards and legislation.

Methods:

Where internal controls are strong, auditors typically rely more on Substantive Analytical Procedures (the comparison of sets of financial information, and financial with non-financial information, to see if the numbers 'make sense' and that unexpected movements can be explained).

Where internal controls are weak, auditors typically rely more on Substantive Tests of Detail (selecting a sample of items from the major account balances, and finding hard evidence (e.g. invoices, bank statements) for those items)

Finalisation

Purpose:

to compile a report to management regarding any important matters that came to the auditor's attention during performance of the audit, to evaluate and review the audit evidence obtained, ensuring sufficient appropriate evidence was obtained for every material assertion and to consider the type of audit opinion that should be reported based on the audit evidence obtained.