Unit 4

Financial Systems and Auditing

Unit 4

Auditing Techniques

Structure
4.1 Audit Techniques
4.2 Audit Planning and Control
Learning Objectives
After reading this unit one should be able to understand:

The methods or techniques followed in the auditing process.

The steps to be taken before starting audit.

Planning and Control of an Audit.

4.1 Audit Techniques The techniques by which an auditor

collects evidence are known as techniques of auditing. The

auditor employs
the

following

techniques for carrying out his audit procedures.

Inspection of documents and records.

Physical inspection of tangible assets.

Observation.

Inquiry.

Confirmation.

Computation and retracing book keeping procedures.

Analytical procedures

1.

Inspection of Documents and Records: This is one of the most important

techniques of auditing. An auditor examines a large number of documents during

the course of an audit, particularly in an audit of financial statements. This is
because the accounting system of most enterprises are so designed that there
are appropriate documents to support each transaction. e.g., a cash memo and a
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cash payment voucher in the case of a cash purchase. Inspection of documents