There are five stages to the financial statement audit-

Planning

The auditing firm's official acceptance of the customer is one of the initial preparatory actions. It serves to-

• Check to see if the independent requirements are being followed;
• Forming a team for the audit; and
• Performing additional procedures to establish the timing, type, and scope of methods that must be supplied to efficiently conduct the audit.

Risk evaluation

Auditors apply their skills and industry knowledge to the firm. To identify and evaluate the risks facing the organization, they consider the environment in which it operates. This kind of risk calls for the auditor to have a large amount of information and expertise, as well as a high degree of analysis and perception. Additionally, it means that the auditors must have a thorough understanding of the organization and the environment in which the business operates, including what its customers, suppliers, and government authorities are up to.

Plan and strategy for audits

The auditors construct an overall approach and a thorough audit plan to address the risks associated with the substantial misstatement in the financial statements after assessing the risks. This method for financial statement audit comprises, among other things, creating a testing strategy for various financial statements, determining the validity of the business's internal controls, creating a thorough schedule, and assigning responsibilities to the auditing team.

Gathering information

Throughout the audit, the strategy and plan are continually reviewed and modified to reflect new facts. Using a mix of the company's internal controls, the auditors gather and assess the evidence during the financial statement audit by following the disclosures and amounts in the financial statements to the company's supporting books and papers.

Finalization

Finally, after using their expertise in financial statement auditing, the auditors draw a conclusion. The audit opinion is based on the findings. Throughout all of the aforementioned audit's phases, auditors communicate with the organization. The management, at both the senior and operational levels, is often discussed and met with. The auditors contest the management's claims on the figures and disclosures in the financial statements using their expert knowledge.