Why is conducting a walkthrough with stakeholders important in the audit process?

Conducting a walkthrough with stakeholders is crucial in the audit process primarily because it ensures a comprehensive understanding of the processes and controls in place. This practice involves engaging with stakeholders—such as management, staff, and other relevant parties—to discuss and observe the operational workflows and internal controls.

By walking through various processes together, auditors can gain insights into how operations function in practice, which may differ from documented procedures. This engagement not only helps in verifying the effectiveness of controls but also identifies any potential gaps, inefficiencies, or misinterpretations. Engaging stakeholders directly fosters transparency and encourages collaboration, facilitating discussions about risks and control measures.

Furthermore, by ensuring that all parties have a shared understanding of the controls in place, auditors can effectively assess compliance and determine areas where improvements may be required. This collaborative approach can lead to better audit outcomes and strengthen the relationship between auditors and stakeholders, which is essential for fostering a culture of accountability and risk awareness within the organization.