In carrying out an audit the following are the main stages. However, note that the steps followed will vary from client to client and from auditor to auditor.

• Determining the scope of the audit work. For statutory audits the scope is clearly laid out in the provisions of the Companies Act and is formally contained in the letter of engagement.
• Ascertain nature of the client’s business. The auditor seeks to obtain some background information of the nature of the client’s business.
• Planning the audit; the auditor prepares a planning memorandum that shows the general strategy in to be followed in conducting the audit.
• Ascertaining and evaluating clients accounting systems and internal controls, use of flow charts and evaluating using key questions.
• Carrying out tests of controls: This enables the auditor to determine the level of reliance to be placed on the internal control system and therefore reduce the level of substantive testing.
• Planning the level of substantive testing and formulating the substantive tests to be carried out.
• Carrying out substantive testing on the selecting account balances.
• Carrying out the final analytical review and concluding whether the financial statements show a true and fair view.
• Drafting the audit opinion and any other reports to be issued under the terms of engagement e.g. the management letter.