The primary goal of businessmen and entrepreneurs is to maintain and develop their money. Therefore, despite the existence of the Internal Control and Audit Department, they must hire an accredited accountant who reviews the reports of those departments, ascertain their credibility and help him develop plans for the company’s business. This person is the external auditor
The work done by the external auditor is not as easy as you may think. It requires a lot of knowledge, experience, patience, wisdom, and knowledge, especially since with the development and large size of companies, many accounting offices that conduct external audits have resorted to developing their services and providing them with the latest technology tools.

?What is the definition of an External Auditor

An external auditor is a specific person or entity who is used by the President of the company or its general assembly to carry out the tasks of checking, auditing, reviewing, and analyzing all records, lists, documents, and account books or what they specify, to ensure the authenticity of those documents and the safety of events. Using international auditing principles and standards, the transactions recorded therein are recognized. It is also obliged to submit a detailed, fair, and utterly impartial report on the external audit results to the author to assist it in planning and making appropriate decisions for the company’s situation.The external auditor has many names, such as the auditor, controller, or examiner, but the most famous is the External Auditor.

ما هو تعريف المراجع الخارجي؟ | ECPA

?What are the conditions to be met by an external auditor

According to the Egyptian General Authority for Capital Markets, several conditions must be met by the person applying for registration as an external auditor. One of the provisions required to register the auditor includes:

A scientific and practical qualification that requires at least five years of registration in the Ministry of Finance register for accountants and auditors.

The applicant must have one of the following conditions: obtaining a Ph.D. in accounting from an Egyptian university or an equivalent certificate from a foreign entity, membership in the Egyptian Accountants Association.

Membership in the accounting profession is restricted to the Trade Union.

Clean criminal record and the absence of any judicial decisions against him, and the external auditor has a good reputation.

There are no warnings, irregularities, or disciplinary provisions obtained by the applicant from the Egyptian Association of Accountants and Auditors.

Complete all the required conditions related to professional suitability.

It is strictly forbidden for the auditor or a team member to have a direct or indirect interest or relationship with the establishment or company that receives its review. It is also prohibited for an auditor to join the management of any of these companies, invest his funds in them, or possess bonds or shares.

The external auditor's obligation to apply the standards of international accounting and auditing law, professional rules, and traditional ethics.

 Commit to conducting the examination and applying audit rules with the required quality and responsibility. 

External Auditor Tasks

The functions and roles of the external auditor are considered to be one of the biggest and most important tasks within an enterprise. The auditor performs many tasks such as:

Examine and audit the form of accounting books and all company financial statements and information with a report on the result of the examination.

Ensure that the company’s financial statements are safe from any theft, embezzlement, and the like, and in case of this, write a report on the source of manipulation.

 Provide suggestions and recommendations suitable for the company situation.

Assess the company’s financial situation and compare it with previous financial periods.

Monitor the company’s internal operations, the extent to which the company’s employees adhere to the pre-established process itinerary, and the extent to which what has been implemented is consistent with the plan.

Assess the validity of the tools and methods used by the company during the financial period to implement its plans and the extent to which they secure risks.

Evaluate and examine all departments and identify weaknesses and strengths of each department with stimulating or modified recommendations.

Ensure the integrity of financial statements and the correctness of budget and accounts.

Plan the audit process and contribute to developing future initial plans for use by the external auditor in future financial periods.

Ensure the quality of the internal audit process. 

A simplified video illustrates the concept of external audit and its role in the success of major companies, addressing all weaknesses and increasing their productivity. 

External Auditor worksheets

The worksheets of the external auditor directly help increase the quality of the external audit process. They are also considered a supporting documentation tool that proves the validity of his work results. It is also an essential guide for any future planner or other external auditor used in the future to understand the reasons for the opinion Issued by the current auditor for the financial statements for that period.

External auditor’s worksheets are personal rights only, and the client or anyone else is entitled to access them except by court order if they are used as official evidence. 

One of the working papers provided by the auditor

Brief minutes of meetings with board members or company directors.

Review reports for each list, section of the company, and what has been reached.

Copies of the origins of messages were made.

Reports of former auditors and auditors and communicate with them if necessary.

Copies of evidence on which external references relied.

Detailed discussions of issues.

The organizational structure of the company and maps set for the planned objectives.

Graphs explaining the most critical customer’s key processes.

Questionnaires were conducted by the external auditor with the customer or company employees, if any.

A summary of the form of accounting books.

It is customary that external reviewer worksheets are divided into two types of files,

permanent file: It includes all continuous data during the review of the current period and all periods.

Current file: It concerns review papers for the current period only.

Stages of the audit process

The external auditor’s work goes through several stages to reach his final report. However, these stages can be limited to the following steps:

The planning phase of the auditing process.

The implementation phase of the plan was developed for review.

The stage of preparation of the final audit report.

Planning the audit

Planning the audit  process is the most critical stage of external audit on which the rest of the stages depends for several reasons

 Get enough review guides.

 A guide to the audit itinerary to be found to achieve the review’s objectives.

References control costs.

To avoid any skirmishes and misunderstandings between the reviewer and the client. 

تخطيط عملية المراجعة الخارجية | ECPA

audit planning stages

The external auditor begins to understand the nature of the company or client's business and the accounting system. It also begins to design a detailed review program that suits the circumstances and nature of the company, which is also called “audit procedures and tests.”

At this stage, the auditor agrees with the client on the date for the audit, whether during the financial period, after its completion, or after the budget. The auditor also allocates a number of his assistants to assist him in the external audit process.

Steps for planning the audit process

Select client type: Is it an old or new customer?

Collect reliable information about the nature of the business of the company or project and the business sector it belongs to.

See the accounting system followed within the company and what accounting procedures and policies are in place.

Outline the overall strategy and evaluate the company's internal control system initially.

Follow analytical and detailed study.

Determine the relative importance of each control purpose and make estimates as necessary.

Develop an audit plan and start implementing its program.

The ECPA Office is one of the most prominent offices in Egypt and the Middle East. We provide accounting and auditing services to thousands of clients in Egypt and the Arab world. We have a pro team of certified accountants who specialize in external auditing who have professional certificates and membership of the Association of Accountants Auditors in Egypt are familiar with the latest scientific studies and training courses in the accounting and auditing profession.

The team of “ECPA” provides annual, semi-annual, quarterly, and periodic audit services, committed to providing all audit reports by Egyptian and international standards for auditing.

We offer the first consultation for free, so take the opportunity and contact us now 

our team - Amer Ibrahim

Member of the Board of Directors for Auditing