The Methodology of Auditing

PROCEDURES DISCIPLINE ATTITUDES

Correlation Between Procedures, Discipline, and Attitudes

The methods followed in different disciplines, each has developed an attitude and procedure peculiar to itself which has
important characteristics and significant differences. As each discipline develops into maturity, it continually experiments
and modifies its procedures and attitudes until it finally devises a method approporate to its particular needs and essential
to its activities.
 ATTITUDES PROCEDURES

Component
of Method
PROBLEMS JUDGMENTS DATA
The Attitude of Auditing

Like social scientist, auditors have both problems of fact and Restriction
problems of value on which they must make judgments.
For interest and inquiry primarily to matters on
which judgment is requested

Adoption
Of a position of impartiality in formulating and
expressing judgments

Basing
For judgment formation and expression on
such evidence as is reasonably available
Methodological Approach

It has developed a systematic procedure of thinking which

may be described in the following steps :
3

2 Use of previous knowledge

1 Observation of facts

Formulation of the problem

Consideration of the
preliminary data
Methodological Approach (Cont’d)

It has developed a systematic procedure of thinking which

may be described in the following steps :
7

6 Conclusion : confirmed or
disconfrimed

5 Testing of the hypothesis

Deduction of the implication of

the hypothesis

Formulation of the hypothesis

Methodological Procedure in Auditing
(4)
(3) (5)
Determination of available evidence
Subdivision of the pertinent to each individual problem Selection of applicable
composite problem into audit techniques and
individual problems development of
appropriate procedures

(2) (6)
Observation of facts relevant to the Performance of procedures to
problem obtain evidence

(1) (7)
Recognition of the Evaluation of evidence
composite problem
(8)
Formulation of judgment
Differences of Scientific Methods and Auditing Method
Quality of Evidence Required
The auditor must frequently be content with
something less than the best possible evidence
pertinent to a given problem
Possibility of Controlled Experiments
Only under unusual conditions would an audit
be performed twice and even if it were, the
results would not be equivalent to running a
laboratory experiment twice
Basic Assumptions or Postulates
Not at all well stated
Quality of Evidence Required
The scientist can be satisfied only if he
confident that he has conclusive evidence
Possibility of Controlled Experiments
Auditing Scientific Testing of hypothesis is frequently but not
Method Methods always, performed through laboratory
experiments under which some conditions can
be controlled so that the effect of a given
factors can be more clearly noted
Basic Assumptions or Postulates
Well stated
Methodological Procedure for Value Judgments
Evaluation of possible solutions
a. By drawing upon past experience
b. By considering consequences
Formulation of possible solutions c. By considering compatibility

Statement of the problem

Formulation of
judgment

Recognition of the
problem