Types of Audit procedures:

1) Analytical procedure → consists of comparison of relationships among data

e.g. (calculation and use of sample ratios, vertical analysis, comparisons of
actual amounts with historical data) Analytical procedures produce
analytical evidence.

2) Inspecting → Involves detailed examination of documents and records and

physical examination of tangible resources, Inspecting provides a means for
evaluating physical evidence.

3) Confirming → a form of inquiry that enable the auditor to obtain info.

Directly from independent source outside the client organization,
confirming procedure provides confirmation evidence.

4) Inquiring → involves either oral or written inquiry by the auditor. Inquiries

may be internally to management or employees or externally, as inquiries to
lawyers. Inquiry procedure provides either oral or written representation
evidence.

5) Counting → can be done through (1) physical counting of tangible assets

such as the amount of cash and inventory and this provides a physical
evidence (2) accounting for prenumbered documents, and this provides
documentary evidence. Counting achieves completeness assertion.

6) Tracing → the auditor determines that info. In documents is properly

recorded in the accounting records (journal entries and ledger). It is useful
in detecting understatements in accounting records. Tracing procedure
provides documentary evidence and achieves the completeness assertion.

7) Vouching → involves selecting entries in the accounting records and inspect

documentation that served as the basis for the entry to determine the
validity of the recorded transactions. It is useful in detecting overstatements
in accounting records. Vouching procedure provides documentary
evidence and achieves the existence assertion.

Course Coordinator: Dr. Sameh Reda

TA Fatèma Hosny
 8) Observing → the auditor obtains direct personal knowledge
of the activities. Observing procedure provides physical evidence.

9) Reperforming → reperforming calculations or reconciliations made by the

client e.g.(depreciation). Reperforming procedure provides mathematical
evidence and achieves the valuation or allocation assertion.

10) Computer assessed audit techniques → when the client’s accounting

records are maintained on electronic media, the auditor may use computer
assessed audit techniques for example the auditor can use computer audit
software to perform the calculations. Computer assessed audit techniques
procedure provides electronic evidence.

Three classifications of audit procedures

1) Procedures to obtain an understanding of internal control structure.
The 2nd standard of field work (GAAS) requires the auditor to obtain an
understanding of the client’s internal control structure sufficient to plan
the audit in order to meet this standard, the auditor may obtain
knowledge about internal control structure by observing the entity’s
activities.
These procedures are required in every financial statement audit.
2) Test of controls
Test of controls are made to provide evidence about the effectiveness of
the design and operation of internal control structure policies and
procedures.
The performance of test of controls is not required in the financial
statement audit, however they are performed in most audits.
3) Substantive tests
Consists of a) Analytical procedure → involve the use if comparisons.
b) Test of details of balance → examining support for ending
balances directly
c) Test of details of transaction → examining support for
individual debits and credits posted to an account

Course Coordinator: Dr. Sameh Reda

TA Fatèma Hosny
 When the auditor uses test of transactions and test of
controls it is called dual purpose test

Working papers:
Records kept by the auditor of the procedures applied, the tests performed,
the info. Obtained and the pertinent conclusions reached in the audit.
Importance of working papers:
- Support for auditor’s report
- A means for coordinating and supervising the audit.
- Evidence that the audit was made in accordance with GAAS.
Types of working papers:
- Working trial balance
- Schedules and analysis
- Audit memoranda and documentation of corroborating info.
- Adjusting and reclassifying entries
Two categories of working papers:
1) Permanent file → Contains data that are expected to be useful to the
auditor on many future engagements with the client.
Items found in the permanent file:
- Charts of accounts
- Organization charts
- Copies of articles on incorporation and bylaws
- Terms of capital stock and bond issues
- Summary of accounting principles used by the client.
- Plant layout, manufacturing processes, and principal products
- Copies of long term contract, such as leases, pension plans and profit
sharing
2) Current file → corroborating information pertaining to the execution of
the current year’s audit program.
Working papers belong to the auditor, but the CPA should not disclose
any confidential information obtained during the course of a
professional engagement, without the consent of the client.

Course Coordinator: Dr. Sameh Reda

TA Fatèma Hosny