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Audit Checklist for Manufacturing

by Osmond Vitez; Updated September 26, 2017

A manufacturer is a company that produces consumer or business goods through a


variety of processes. Business owners and managers use audits as a performance
management tool to measure the effectiveness and efficiency of their operations. These
audits can be financial or operational. While the financial audit will typically review how
much money is spent on a process, the operational audit tests product quality and
production standards. Auditorsusually from a public accounting firmwill develop a
checklist to audit a manufacturer.

Initial Meeting
Companies that use public accounting firms for their manufacturing audits will typically
have an initial meeting to discuss the audit specifics. Audit scope, length, number of
auditors and cost are a few items to discuss in the meeting. Companies may have
several meetings and take bids to achieve the lowest cost for the best possible audit
team. Owners and managers will also use the meeting to determine the legitimacy of
the public accounting firm and its auditors. This allows companies to review the firms
track record and reputation in the business environment.

Planning Stage
The planning stage is where auditors will review the manufacturers operating manuals,
accounting policies or procedures and other pertinent documents. Auditors will also
determine which processes to audit and what steps to follow when conducting fieldwork.
Sampling is the specific step where auditors will request a certain amount of information
from the company. This information represents documents and notes the company has
put together during its normal operations. Auditors request this information to be on
hand prior to their arrival, so less time is spent gathering information during the audit.

Fieldwork
Fieldwork is the main testing stage of an audit. Auditors will observe the manufacturing
process, interview employees and test the sample documents. Observing production
processes allows auditors to see firsthand how the company operates and whether
each employee follows the procedures. Interviewing employees is a critical step
because it allows auditors to discover how well each individual understands her role in
the manufacturing process. Auditors can also question why the employee completes
functions a certain way. Testing the sample documents allows auditors to recalculate
information to determine its accuracy and validity.

Final Meeting
The final meeting is part of the wrap-up phase of the manufacturing audit. Auditors will
bring their audit notes and information to discuss with company management. Auditors
will discuss any variations or misstatements found in the audit. Official external audits
will result in an audit opinion, which is released to outside business stakeholders.
Internal audits may not include an official report; the final result might be a document
that outlines their findings and recommendations for corrections.