What does an auditor examine and how does an audit proceed?

An audit does not mean checking every receipt and invoice individually. Its purpose is to obtain sufficient assurance that the financial statements give, in all material respects, a true and fair view of the company's financial position and performance, and that its administration has been properly conducted.

In practice, the work is based on planning, risk assessment, materiality and selected audit procedures. Even similarly sized companies can therefore have audits with different priorities.

1. The auditor gets to know the business

A sound audit starts with understanding what the company sells and to whom, how sales, purchases and payments work, how accounting is organised, who makes key decisions, what systems are used and what significant changes occurred during the year. The auditor considers not just the numbers but how they arise.

2. Risk guides the audit

The auditor assesses where material misstatements might occur. Risks may relate to complex revenue recognition, inventory, an unusual transaction, major investments or limited internal controls. A risk does not itself mean something is wrong; it means enough work must be directed at that area.

3. Materiality sets the scale

Not every euro is equally important to a user of financial statements. The level of materiality depends on the company's size and nature and may be based on profit, turnover, total assets or another relevant measure. It is not permission to make errors: it helps the auditor focus on matters that could affect users' decisions.

4. What is examined in the accounts and financial statements?

The scope varies, but typical areas include:

revenue and its allocation to the correct period;
purchases and accrued expenses;
receivables and payables;
bank accounts and financing;
fixed assets and investments;
inventory;
payroll;
taxes;
changes in equity;
related-party transactions; and
notes to the financial statements.

The auditor may inspect documents and contracts, reconcile figures, use analytical procedures, request external confirmations and test internal controls. Not every document is examined: procedures and samples are selected based on audit risk.

5. Examining administration

A Finnish statutory audit also covers administration. The auditor may review board and general-meeting minutes and assess decisions relevant to the audit. The aim is to identify whether management has acted in accordance with applicable rules and company decisions in a way that affects audit reporting.

6. Some work can be done during the financial year

In a small company, most work often follows completion of the financial statements. In larger companies, auditors may examine processes and controls, review administration, analyse transactions and prepare year-end work during the year. This can ease scheduling pressure and reveal issues earlier.

7. The work is documented

The auditor documents the work and conclusions so the basis of their opinion is clear. In Finland, PRH (the Finnish Patent and Registration Office) supervises auditors, audit firms and quality management. Legislation, good auditing practice and applicable professional standards guide the work. PRH does not dictate every procedure; the auditor plans them using professional judgement and risk assessment.

8. The outcome is the auditor's report

At the end, the auditor evaluates the evidence and forms an overall conclusion on the financial statements. The auditor's report is the visible output, but the client can also benefit from findings made during the process. Where appropriate and consistent with independence, the auditor may discuss shortcomings or potential improvements with management.

Audits today are largely digital

Paper folders are largely a thing of the past. Much of JTT's work can be performed electronically and remotely. For clients, a good digital process means clear requests, secure transfer of information and less unnecessary manual work.

How should you prepare?

Our document request lists show what is typically needed. Reconciled accounts, completed financial statements and documents delivered together help the audit proceed efficiently. Read when a Finnish company needs a statutory audit or explore our audit services.