What an auditor does (and what they don't do)
An auditor gives an independent report with an opinion on an organisation's financial statements and service performance information. This content is an important part of an organisation's annual report - and the auditor’s report is a guide for the reader about the reliability of the information in that annual report.
When the audit team looks at an organisation, they’ll be looking for accurate reporting of both financial and performance information.
The auditor’s report says whether you can rely on the information that’s gone into the financial statements and service performance information in the annual report. The auditor giving the opinion won’t have looked at everything, but they understand financial and service performance systems and reporting a lot better than most of us ever will. They will look at riskier and more significant matters to ensure that they are reflected correctly in the annual report.
The auditor will also report to governors and management with more detailed information and often suggestions about areas where an organisation can look for improvements in the future.
As a general guide, the primary audience for an auditor’s report is the organisation's stakeholders (generally the public). The primary audience for reports to governors and management are governors and senior management.
What will the auditor normally look at?
The auditor will look at:
- systems and controls used to spend, approve, or collect public money;
- samples of selected transactions;
- evidence, assumptions, and judgements about the value of items and disclosures made in the financial statements;
- evidence behind information disclosed in an annual report about how the organisation has performed in delivering services to the public;
- spending that might be sensitive; and
- anything else that catches their eye and could be of interest to the Auditor-General.
This scope is broader than a private sector audit. An auditor may also need to use some specialists to audit the organisation's procurement, contract management, and asset management systems or provide specialist tax or valuation advice.
What an auditor won't look at
There are some common misconceptions about auditing.
An auditor does not look for fraud
The focus of the audit is to give an independent report on an organisation's financial statements and service performance information. The auditor may uncover fraud during the audit but it won’t be a focus of the audit. The auditor will perform some work to establish that fraud has been considered by governors and management, because fraud controls are their responsibility. An organisation's control systems are the best safeguard against fraud.
An audit does not provide absolute assurance
An audit provides reasonable assurance that the financial statements and service performance information are free from material misstatement, whether caused by fraud or error. An audit is not intended to give absolute assurance or to detect all fraud or errors that may exist.
Auditors don't review every transaction
Auditors don’t look at everything. The auditor will rely on control systems in place, and statistical sampling methods to look at a small representative percentage of an organisation's transactions to test the overall accuracy. They will also use analytical techniques to test whether things are consistent with their expectations.
It isn't an auditor’s job to oppose management
The auditor is not the friend or the foe of public organisations. The auditor maintains professional scepticism so that they can exercise their independent judgement. For the same reason, they won’t tell an organisation how to fix their systems, or do the work for the organisation. They will point out gaps or when something doesn’t follow the correct policy, and they will make suggestions about areas that would benefit from improvement. However, it is important that the auditor and the organisation have a strong professional relationship. Good quality engagement leads to a good quality audit.
An auditor doesn't prepare the financial statements or service performance information
The auditor cannot help an organisation prepare reports. They must be able to maintain their independence. But they will discuss what should be prepared ahead of the audit and what documentation needs to be ready for the audit.
There's a lot an organisation can do to prepare for the audit and make the audit more efficient. We've got more information on this in our Resources section.
Page last updated: 24 January 2023