ACCOUNTS AUDITING TECHNIQUES
ACCOUNTS AUDITING TECHNIQUES
The auditor performs audit tasks through several methods, and all these methods included in (ACCOUNTS AUDITING TECHNIQUES), and it may be used during the implementation of a particular task, or the auditor may use only some of them during the implementation of the tasks, and the most important of these methods:
Auditing Techniques: Observation
This method depends on the direct observation of the auditor while he is carrying out the task, so that the auditor’s view of the shortcoming or violation is relied upon without the existence of documentary documentation. Rather, the auditor’s view is the documentation.
Most of the uses of this method take place during the implementation of administrative audits, and this method is appropriately reconciled to verify the application of controls during operations within their cycle in time, as some controls must be applied at the time and in the event of their application later, they are useless.
Auditing Techniques: Inspection
This method is based on the documentary audit of the financial and operational processes and the procedures for their documentation, in addition to auditing the documentary cycles, verifying the implementation of the procedures according to these cycles, and identifying the deficiencies in them, if any.
It is worth noting that this method requires a relatively long time compared to other methods, and it also requires a great effort from the auditor during its implementation.
So to reduce the time and effort used in this method, computer reports are used. Exception Reports It is through which information to be checked on the computer is extracted.
Note that this method is widely used in operational auditing and auditing financial reporting items.
Auditing Techniques: Confirmation
Auditors resort to using this method to endorse accounting balances in the company’s books from external parties, for example, for an internal auditor of a company to endorse the current account balances in the company’s books by sending endorsements to the items in which these accounts are opened.
For an internal auditor at a bank to endorse Balances of correspondent bank accounts in the books by sending confirmations to the concerned correspondent banks.
Auditing Techniques: Comparison
This method is based on the auditor checking by making comparisons of balances and financial statements during periodic periods of time, and the auditor uses this method when checking items of a consistent nature.
For example when auditing expenses that there are periodic expenses that have a special consistency such as monthly electricity expenses or Monthly salary expenses, or regular revenue accounts.
The auditor makes a comparison between the expenses, or the monthly revenues with each other, or a comparison between the expenses, or the monthly revenues of the current month.
as an example, with the similar month of the previous year, and sometimes the auditor resorts to comparing the financial items for a particular branch of Branches of the institution with other similar branches, or a comparison between the institution and similar institutions in the same sector.
Auditing Techniques: Analysis
This method depends on the auditor performing some analyzes of the accounts and items of the financial statements and linking them with each other to reach certain conclusions that constitute an added value to the audit operations of the institution.
Also its known as the analytical audit procedures stipulated by the international auditing standards within the international standard No. 520. .
These Procedure about accounts auditing techniques is applied exactly at our firm (Wall Street Consultancy)..
you can check it here External Audit – Wall Street (wallstreetinv.com)
Within this method, the auditor resorts to recalculating some of the numerical calculations that were calculated, whether they were calculated manually or by computer.:-
- Calculation of depreciation.
- Calculation of interest and commissions.
- Calculating stock and bond returns.
- Calculation of the inventory value of the goods at the end of the period.
- Calculation of salaries and wages.
- Calculation of cost of goods sold.
This method depends on the auditor inquiring about some processes or issues that are difficult to verify documentary, and the auditor can inquire through investigations prepared for this purpose, or by oral inquiry, and this method is often resorted to when the auditor is assigned to audit an activity, or a labor center that has not He has previously audited it, and there are no organized work procedures for it.
The auditor can also inquire from other administrative bodies about some issues or operations when there is ambiguity or contradiction in them, and here it is recommended that the inquiry be in writing.