We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is an Audit Cycle?

By Osmand Vitez
Updated: Feb 20, 2024

The audit cycle is the accounting process auditors use to review a company’s important financial information. Companies use audits to verify their financial information is accurate and valid prior to releasing financial statements. Internal audits may be conducted by the company’s accounting staff for the purpose of management review. External audits are usually conducted by public accounting firms or private certified public accountants (CPA) to provide an objective opinion on the company’s financial and accounting processes. The audit cycle usually includes several steps, such as the identification process, audit methodology, fieldwork, management review meeting and the remedial audit process.

The identification process of the audit cycle determines the accounting processes needing to be reviewed per the company’s direction. This identification process usually involves company managers meeting with auditors and discussing the highest risk areas needing to be audited in the financial or accounting department. Company management will also discuss the goals needing to be achieved during the audit cycle. Once this step is complete, auditors will move into the audit methodology stage.

The audit methodology is stage helps auditors determine how they will collect information for review during the audit. Auditors may decide to interview company employees to determine how well they are trained and understand their role in the accounting process. Auditors may also request certain financial information from the accounting department that will be reviewed during the audit cycle’s fieldwork stage.

The audit fieldwork stage is where the bulk of work is done by the auditors; they will usually test the accounting samples collected during the methodology stage. As they review these samples, the auditors will notate any variations from the company’s accounting policies and manuals. If too many variations are found in the initial accounting samples, auditors will be forced to pull a second sample for testing. Once the second sample has been reviewed auditors will move on to the management audit meeting.

During the management meeting process of the audit cycle, auditors will review the information regarding the accounting issues discovered during the fieldwork phase. Auditors may also suggest changes to the company’s internal accounting processes to limit the number of errors or misstatements in future accounting information. Significant changes resulting from material accounting misstatements may require auditors to schedule a remedial audit.

The audit cycle uses remedial audits to verify that any changes suggested by auditors have been properly implemented by the company. Remedial audits usually test the changes suggested by auditors during the initial audit’s management meeting. Once the company passes the remedial audit, auditors will close out the current audit cycle and issue an opinion on the company’s accounting processes.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.