How Flowcharts Help Auditors Improve

how auditors use flowcharts

Photo by RODNAE Productions

“The auditors will look at that and the entire software program and always find something, then report it to the management. If anything is out of line, we are going to find it.” – Andrew Beveridge

Auditing is possibly one of the trickier and tougher functions within any company. It is a time-consuming process given the amount of detail and ‘fleshing out’ required. Even though tedious, drawing flowcharts help auditors improve and gain tons of information while and post preparing them. The job of an auditor deals largely with gathering evidence to determine whether financial and other statements are true and correct.

They also check whether they contain even the smallest errors or manipulation. Auditors give an opinion and report on the reasonable assurance of the accuracy of financial statements, the financial reporting system, and other reporting in place in an organization. A positive opinion lends credibility to the financial status and statements of a company. It can possibly lead to enhanced confidence in the integrity and authenticity of the company in the customer base, investors, and other stakeholders. A tool you can use for product knowledge is interactive decision trees.

Do you want to know how you can use flowcharts as an auditor? Let’s get started.

Auditors use flowcharts to draw auditing visuals

With such an enormous and important responsibility, it would make sense to have some tools in order to enhance the productivity and speed of their work. As one such tool is a flowchart. Auditors use it to draw auditing diagrams with respect to money and financial management. They also use it for accounting, financial inventories, and entries, tracking information, and documenting Six Sigma and Quality business processes. The good news is that this tool has several software and built-in templates, samples, and a collection of shapes to enable any user to create the required auditing flowchart.

Auditors reuse flowcharts

Flowcharts help auditors and finance-related specialists. The audit flowcharts are easily reusable by simply editing previous ones, to match the current project/audit. Flowcharts are a great tool that helps to visualize the complex systems of a company. That makes them less cumbersome and time-consuming than long and complicated narratives. The visual representation of a company’s internal accounting and financial practices in a flowchart makes it easy for auditors to see a surplus, making it easier to provide relevant solutions.

It clearly outlines a transition

One of the most important ways that flowcharts help auditors is the ability of this tool to depict transitions with information in an unambiguous and precise configuration. This enables the auditor not only to locate a problem but also to assess its root cause. The resolution is more robust, fast, and effective.  

Easy to update

Another significant manner through which flowcharts help auditors is the ease by which the user can update the information contained in the diagram. It saves time and effort that would otherwise be required to explain the causes of problems and why something would be incorrect. Redirection of a symbol is a quick and easy method to resolve the confusion of an underlying issue.

Using cross-functional flowcharts

Cross-functional flowcharts help auditors since they are divided into swim lanes. Each lane represents the team / individual responsible for performing the required tasks in the ‘lane’. One of the responsibilities of auditors is to identify who controls certain activities and who would be responsible for making decisions.  Such flowcharts help auditors quickly identify those responsible, and are able to pose questions to specific personnel without wasting time.

Flowcharts are fast and structured

It is easy to add the dimension of cycle times involved in flowcharts. It includes the time required for a process (beginning to end), the time required for each step in the process, and the waiting/transition time between each step, easily represented within the box symbols. This dimension in flowcharts helps auditors to have a clear understanding of the speed and possible obstacles/causes of delay in the process.

While ‘inside-the-box time’ is value-added time, all the time depicted outside the boxes represents wasted time due to delays and transitions. With a clear understanding of how much time is being wasted, auditors could suggest improvements in the process. As a result, it leads to a fast and more efficient process and the productivity of those involved. Flowcharts do not serve their intended purpose if they are inaccurate, or if those responsible for providing the inputs for them are not completely engaged and knowledgeable about the process.

Those participating in the project/process must have the ability to provide accurate data and describe fully the process steps/project stages and requirements.

Flowcharts give more insights

Flowcharts help auditors and those who use them by providing deeper insights into the process/project stages. This is extremely valuable to gain holistic knowledge. The various paths within a process depicted on a flowchart, and the percentage of undertakings ‘flowing’ through each path, serve as a major revelation for those involved in the process/project. The fact is that the top management is not involved in the day-to-day processes.

Hence, they are unaware of the undercurrents and subtleties involved. But through flowcharts, the dynamics become apparent and easy to understand. The various ‘paths’ in flowcharts help those involved in the projects/process remain aware of the numbers involved. For management, these paths serve as risk aggregators. They tend to become ‘storerooms’ of exceptions to policies and things that only management should have the authority to override/cancel/ change.  

Auditors are able to make inquiries

Flowcharts help auditors to place inquiries about returned transactions or backflows. There are several reasons for these backflows. A lack of required and critical information, errors, missing attachments, and or lack of supporting documentation. Auditors find it simpler to understand the most common causes of returned transactions. They are able to suggest ways to eliminate them, which serves to significantly improve processes.

How Companies use audit flowcharts

Audit flowcharts not only help auditors. They also help companies to understand and compare the activities, the persons performing them, the reviewers of the processes, and those who approve such transactions. Such clarity helps management decide whether the allotment of and accomplishment of duties is taking place as intended. An imbalance in the division of work could lead to overwhelming a few individuals while others may have a much lighter task. Such an imbalance not only causes errors and delays but also leads to lowered morale and absenteeism.

Flowcharts help auditors to understand the flow of activities and handoffs (transfer of activities from one individual to another) occurring during a process. Too many handoffs could be one of the major reasons for flaws and problems within the processes. With each ‘exchange,’ there is a very real risk of delays and errors that could go unnoticed. It could lead to some serious problems in the future.

Flowcharts help to explain the amount of time

Flowcharts can aid auditors in interpreting the reasons for the amount of time ‘inside and outside the box’. If certain steps inside the box seem to be taking too long, or the transition periods appear longer than usual, it would be clear that either the personnel is not trained. It could also mean the level of complexity is high of the process steps, or the staff responsible for a certain activity is engaging in other activities. So that takes away from the sense of ownership.

How do auditors use flowcharts?

Auditors can help with suggestions on rearranging job responsibilities or setting priorities. They have tough and highly responsible jobs. Flowcharts are a great tool to help them quickly understand processes within the various companies and industries they operate. They help them ask targeted questions. They can work cohesively and collaboratively with process owners and business managers. It adds and provides value-added recommendations that affect holistic improvement.

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