Blog: Auditing

The most common misunderstanding among first-year staff sent to an inventory count is about whose job it is.

You are not counting the inventory. The client counts the inventory. You are evaluating whether the client's count procedures produce a reliable result — and testing enough of it to conclude on that.

Which changes what you do on the floor. An auditor who spends the day counting boxes has generated a small amount of evidence about a few items. One who ...

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Auditing:
Payroll Audits: How CPAs Can Help Clients Avoid DOL Penalties8/3/2026

Start by separating two exposures the phrase "payroll audit" runs together, because they involve different agencies, different rules, and different remedies.

The Department of Labor enforces wage and hour law — whether employees were paid the required minimum wage and overtime, and whether records were kept. It does not assess payroll tax penalties.

Employment tax — withholding, deposits, returns, and the penalties for ...

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Auditing:
Data Analytics in Modern Audits: Using CAATs Effectively8/2/2026

There is a sentence that should precede every conversation about audit analytics, and it usually does not:

Testing 100% of a population provides no assurance if you cannot establish that the population is complete and accurate.

An auditor who extracts a transaction file, runs every test on all of it, and finds nothing has demonstrated something about that file — not about the client's transactions. If the extraction omitted a subsidiary ...

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Auditing:
Post-Filing Season Audit Prep: How to Get Ahead of Summer Audit Work7/15/2026

Audit quality is largely determined before fieldwork begins, and the window in which it gets determined is May through August. A firm that plans in June has a different autumn from one that starts when the client says they are ready.

Most of what follows is not glamorous and none of it can be compressed into October.

The Two Weeks After the Tax Deadline

Do this while the season is still fresh enough to remember accurately.

Debrief

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Auditing:
Auditing Related Party Transactions: Risks and Disclosure Requirements7/6/2026

Everything difficult about this area follows from one structural fact:

The primary source of the related party list is management. So an audit that relies on management's completeness assertion is circular — it tests whether management disclosed what management said existed.

Which means the work is an independent search, and a file whose only evidence of completeness is a management representation has not performed ...

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Auditing:
Auditing Cash and Cash Equivalents: Common Misstatements to Watch For6/27/2026

Cash is audited badly at more engagements than any other account, and the reason is a reasonable-sounding assumption: cash is confirmable, therefore low risk, therefore assign it to the newest person with a checklist.

The assumption inverts the actual risk. Cash is where fraud concentrates, the misstatements available in it are simple and material, and the assertions that matter are not the one a confirmation addresses.

The Assertion Most at Risk Is Not Existence

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Auditing:
Auditing Revenue Recognition Under ASC 606: A Practical Approach6/9/2026

Revenue is a significant risk on essentially every engagement, for three reasons that compound. It is usually the largest number in the statements. The applicable standard is judgment-heavy at nearly every step. And auditing standards direct the auditor to presume that improper revenue recognition is a fraud risk, which means the presumption has to be addressed rather than assumed away.

The practical problem is that most audit programs treat revenue as one thing, and ...

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Auditing:
AI-Powered Data Analytics Tools Every Audit Team Should Know5/16/2026

The interesting change in audit analytics is not artificial intelligence. It is that an auditor can now test the entire population instead of a sample, on an ordinary laptop, in minutes.

That shift changes what an auditor can conclude, and it changes what a reviewer should expect. Machine learning sits on top of it as a useful layer for a narrow set of problems — but a team that adopts anomaly detection before it can reliably extract and reconcile a complete general ...

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Auditing:
EBITDA vs Net Income: Which Metric Tells the Real Story?"5/12/2026

What Each One Is

Net income is the bottom line under the applicable accounting framework: revenue less all expenses including interest, taxes, depreciation, and amortization. It is defined, it is auditable, and it is what determines what shareholders actually earned.

EBITDA is earnings before interest, taxes, depreciation, and amortization. It is not defined by any accounting framework. It is a computed

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Auditing:
“op 10 Red Flags Auditors Should Never Ignore5/4/2026

1. Management Override of Controls

The single most common feature of financial statement fraud, and the one no control design defeats — because the person overriding the control is the person who designed it.

What it looks like: a transaction processed outside the normal approval path, a system limit bypassed with management authorization, a period-end entry that skipped review, or a control the client explains was "handled directly" for a particular

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