Audit techniques

Audit techniques

Auditing techniques that we discuss in this section.

Evidence is very important to the auditor’s opinion on the financial statements.

If the auditor fails to gather appropriate evidence, it reduces the credibility of the audit report.

The method of collecting evidence is called audit technique.

Below are some important auditing techniques:

Warranty

When the auditor confirms accounting transactions with documentary evidence, it is called a guarantee.

Confirmation

Verification is a technique used by an auditor to verify the authenticity of transactions.

For example, the auditor receives written statements directly from the debtors to verify the debtors’ balances as they appear in the client’s books.

_Match

Reconciliation is a technique used by the auditor to find out the reason for differences in balances.

for example:

The auditor prepares a reconciliation statement to find out the difference between the customer’s bank accounts and the bank balance mentioned in the bank account statement or bank passbook.

The same method may be used for debtors, creditors, etc.

_Test

The test is a technique used to select representative transactions from the total accounting data in order to draw conclusions about all items.

Physical examination

A physical examination requires verification and verification of the physical presence of tangible assets.

which is stated in the balance sheet.

such as cash in hand, land and buildings, factories and machines, etc.

analyze

Analysis is a technique used by the auditor to separate important facts and study their relationship further.

_scan

By scanning the accounting books, an experienced auditor can identify those entries that need attention.

It is also called checking accounts.

_Inquiry

This method is used to gather in-depth information about each transaction.

Send confirmation

An auditor is required to verify the postings from the main entry books to the ledger account and verify the balance.

For example, to verify a sales ledger, an auditor might verify postings from the sales register to the sales ledger.

He may further calculate the sales register and sales ledger balances.

Flow Chart

The flow chart technique is used by the auditor to determine the steps of the transaction and produce documents at all levels of transactions.

_observations

An auditor gets an idea about the reliability of an organization’s process and procedure through observation.