What Are the 10 Audit Procedures?

Audit procedures are the tools an auditor uses to obtain sufficient evidence to substantiate the opinion of the auditor on the financial statements. They can vary by type, client, and audit area but include a variety of techniques, which can be classified into several categories.

Inquiry – The first and simplest method of collecting audit evidence, inquiry involves questioning people to collect verbal information that can be used for different parts of the audit. However, this information isn’t strong enough to support the opinions of the auditor on its own, so it needs additional supporting documents and proofs to be considered valid.

Inspection – The most commonly used audit method, inspection requires the auditor to conduct physical examinations of a client’s assets and documents. This may involve looking at a company’s buildings, IT equipment, vehicles, and other types of physical items.

Observation – A less common but more thorough technique of collecting audit evidence, observation involves observing the client’s processes and operations in order to identify weaknesses and potential fraud. This includes examining the organization’s business processes, protocols, and internal controls.

External confirmation – Auditors may reach out to third parties, such as banks and credit agencies, to confirm that the client’s accounting records and financial information are accurate.

Recalculation – This is an audit technique that involves the auditor cross-checking and comparing the information presented by the client against their own calculations, usually for checking mathematical accuracy.