Walk Through Audit Procedure

The general nature and purpose of a “walk-through” audit procedure.

The walk-through procedure used by auditors as a tool that most, annual risk assessment procedure and it is stated in the auditing standards. The walk-through procedure performed via tracing out data and documents that can be found in the financial reporting system from the commencement of transaction cycles until termination of a company operating activities. The main aim of this procedure is to provide a good understanding of the company accounting system and any internal control of the company and overview activities for risk assessment purposes. To execute this procedure normally five to ten transactions of a company will be selected; selection of more transaction will

Prepare a flowchart about the payroll accounting system and conduct interview that convenient for client personnel. The tickmarks or other means on the flowchart or other accompanying documentation indicates the key controls performed at the entity and activity levels.

Procedure 2. To start the walk-through process, auditor will select randomly five, ten, or fifteen time cards and other records of time worked for a cross-section of employees.

The selection based on greater number of units, then only able to generate greater substantive evidence from the procedure. The auditor’s should planning the objective for gathering sufficient evidence from risk assessment procedures in order to reduce the more costly tests of balances procedures or to reduce risk if misstatement to a level that is less than high.

Procedure 3. The selected documents number and description will be identified and recorded that initiate transactions in the payroll cycle. The documents will be inspected during procedure or make a similar record of identifying numbers or descriptions of all other

Preparation of a memorandum that contains, or internal control systems, operation of the entity’s accounting, document on the flowcharts and a conclusion about the design.

1. For walk-through procedures limited number of transactions were selected in order to verify that no significant changes were made from the prior year’s acceptable design and no changes were found in operation of the internal control system and the conclusion would be that the prior year’s evaluation of control risk could be used for the current year. 2. During the planning auditor determines that internal control systems are operating properly regarding given nature, size, and complexity of entity and internal control systems are designed. For the walk-through procedures a larger number of transactions will be selected, the objective to gather substantive evidence that the internal control systems are designed and properly able to operate. Conclusion, as the results are acceptable that would resulting an audit strategy that plans for reductions in the tests of balances that cause more cost.

If the results are unacceptable will require either more substantive tests of payroll and related account balance or more detailed tests of payroll