Auditing Audit Techniques – tryspring

By | January 7, 2019

Auditing – Audit Techniques

Evidences are very important for an Auditor to form an opinion
regarding financial statements. If Auditor fails to collect
proper evidence, it will reduce the reliability of audit report.
The method of collecting evidence is called audit technique.
Following are a few important audit techniques −


When the Auditor verifies accounting transactions with
documentary evidence, it is called vouching. Through vouching,
the Auditor verifies authority and authenticity of records.


Confirmation is a technique used by an Auditor to validate the
correctness of the transactions; for example, an Auditor obtains
written statement directly from debtors to confirm the debtors
balance as appeared in the books of client.


Reconciliation is a technique used by an Auditor to know the
reason of differences in balances. For example, to know the
difference in the bank book of the client and the bank balance as
appeared in the bank statement or pass book, the Auditor prepares
the reconciliation statement. The same method may be used for
debtors, creditors, etc.


Testing is a technique of selecting representative transactions
out of whole accounting data to draw a conclusion about all

Physical Examination

Physical examination requires verification and confirmation of
the physical existence of tangible assets as appears in the
Balance Sheet like cash in hand, land and building, plant and
machinery, etc.


Analysis is technique used by an Auditor to segregate important
facts and to further study their relationship.


By scanning of books of accounts, an experienced Auditor can
identify those entries which would require his attention. It is
also called scrutiny of accounts.


This method is used to collect in-depth information about any

Verification of Posting

To verify posting from books of original entry to ledger account
and confirm the balance, an Auditor is required to verify the
postings; for example, to verify a sale book, an Auditor may
verify postings from the sale register to the sale ledger. He may
further calculate balances of the sale register and the sale

Flow Chart

The Flow Chart technique is used by an Auditor to determine the
stages of transaction and the generation of documents at all
levels of transactions.


Through observation, an Auditor get an idea about reliability of
the process and the procedure of an organization.

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