Audit procedures - Audit

Audit procedures

Audit procedures

The audit procedure is a specific order of the auditor's actions to obtain the necessary evidence at a specific audit site.

Distinguish the following audit procedures: tests of internal controls, substantive procedures. Test ( check ) of internal controls - is a list of actions taken to obtain audit evidence on the proper organization and performance of accounting systems and internal control. The auditor performs tests of internal controls both on the basis of his professional judgment and in accordance with the requirements of federal auditing standards, for example, FPSAD No. 8, FSAD 5/2010.

Substantive procedures - audit procedures for detecting significant distortions at the level of statements, are of two types: analytical procedures and detailed tests of operations, balance of accounts, disclosures. The purpose of the substantive review procedure is to obtain audit evidence to identify material misstatement in the financial statements.

The list of audit procedures established by FSAD 7/2011 & "Audit Evidence", and their contents are presented in Table. 6.9.

Table 6.9

Procedures for obtaining audit evidence



Content of the audit procedure


Check records, documents on paper or electronic media, as well as physical inspection of tangible assets.

Inspection of tangible assets allows you to verify their existence, but not necessarily with respect to ownership or valuation of them


A look at the process or procedure performed by other persons (the personnel of the economic entity)


Finding information from knowledgeable persons within and outside the location of the entity being audited and evaluating the answers.

Depending on the form, the following types of requests are distinguished:

• official written, addressed to third parties;

• informal oral questions addressed to employees of the audited entity


Reply in writing on paper or electronic media directly from a third party to a request to confirm the information contained in the accounting records (for example, confirmation of receivables directly by debtors)


Check the accuracy of arithmetic calculations in primary documents and accounting records, or perform independent calculations by the auditor. Recalculation can be performed using information technology (for example, obtaining an electronic file from the subject and using the CPA to check the accuracy of the file summarizing)


Independent auditor performance of procedures that were originally performed as part of internal control



Analyzing and evaluating the information received by the auditor, examining the most important financial and economic indicators of the entity being audited in order to identify unusual and (or) incorrectly reflected business transactions in accounting, identifying the causes of such errors and distortions

When selecting and implementing audit procedures, the auditor should take into account the limitations of certain procedures. So, for example, the fact of the availability of securities (shares, bonds) is not a proof of the rights to them and their valuation. The observation procedure is limited in time only at the moment when it is conducted. The request procedure does not in itself provide sufficient appropriate audit evidence for the absence of significant distortion. The same set of audit procedures can provide audit evidence that is relevant to certain management statements, but not relevant to others. Therefore, in order to obtain relevant audit evidence, it is necessary that the audit procedure has a targeted orientation, i. it was determined which statement of the leadership (existence, completeness, evaluation, etc.) will be checked. For example, if the purpose of the auditor is to detect an overstatement of accounts payable in terms of existence or evaluation statements, the appropriate audit procedure is to test the balance of the accounts payable, and if the auditor's goal is to identify its understatement, then it is more appropriate to test subsequent payments, unpaid vendor documents./p>

It is to the audit procedures that such an important term for auditors' understanding is the "volume of audit".

Audit scope - audit procedures that, in the auditor's opinion, are necessary in certain circumstances to achieve the objective. The choice of the auditor of procedures is the subject of professional judgment, should be carried out taking into account the federal standards of auditing activity, internal audit standards applied in the SRO, of which the auditor is a member, as well as intra-firm standards. In addition to the standards, the auditor, in determining the scope of the audit, must take into account federal laws, other regulatory legal acts and, if necessary, the terms of the audit assignment and the requirements for preparing the audit conclusion (clause 5 of FPSAD No. 1 "The purpose and main principles of auditing the financial (accounting) reporting & quot;) ..

The requirements for the use of analytical procedures are established by FPSAD No. 20, "Analytical Procedures & quot; (introduced by the Decree of the Government of the USA from 16.04.2005 № 228). In international practice, the application of analytical procedures is guided by MCA 520 with the same name.

Analytical procedures include (paragraph 4 of FPSAD No. 20):

1) consideration of financial and other information about the audited person in comparison with:

• comparable information for previous periods;

• Expected results of the entity's activities (for example, estimates or forecasts), as well as the auditor's assumptions;

• information on organizations conducting similar activities (for example, comparing the ratio of revenue from sales of the entity to the amount of accounts receivable with average industry indicators or with indicators of other organizations of comparable size in the same branch of the economy);

2) consideration of the relationships:

• between elements of information that are supposed to match the predicted pattern, based on the experience of the entity being audited;

• between financial and other information (for example, between labor costs and the number of employees).

Analytical procedures can be implemented in many ways: simple comparisons, complex analysis, application of complex statistical methods, etc.

The auditor should apply analytical procedures at all stages of the audit. With their help, at the planning stage, the auditor will reach an understanding of the entity's activities, identify areas relevant to the audit and areas of possible risk. The complexity, scope and timing of the analytical procedures are determined by the auditor and depend on the volume and complexity of the financial statements of the audited entity.

If the auditor intends to perform analytical procedures as audit procedures on the merits, it must be taken into account (paragraph 11 of FPSAD No. 20):

• the objectives of the implementation of analytical procedures and the degree of reliability of their results;

• the characteristics of the entity being audited and the degree of possible disaggregation of information (for example, analytical procedures can give better results if applied to financial information but to certain types of activity or to individual units, shops, retail premises of the audited entity than to its financial (accounting) reporting in general);

• availability of financial information (estimates, forecasts) and non-financial (quantity of produced or sold items) character;

• the reliability of the information available (for example, the auditor is advised to check whether the estimated and forecasted data have been prepared with sufficient care by the employees of the audited entity);

• the relevance of the information available (for example, it is useful for the auditor to understand whether the estimates were compiled on the basis of expected results or when training the employees of the audited entity proceeded from the objectives set by the management of the audited entity);

• The source of the information available (for example, sources independent of the audited entity are usually more reliable and provide more objective information than internal sources);

• comparability of available information (for example, it may be necessary to supplement and detail the data for the industry as a whole, so that they can be compared with the data of the audited entity that produces or sells specialized products);

• the knowledge gained by the auditor during previous audits, as well as an understanding of the typical problems of the entity being audited, which served as a reason for commenting and making adjustments to financial (accounting) statements.

FPSAD No. 20 recommends the auditor to apply analytical procedures and at the final stage of the audit in formulating a general conclusion: whether the financial (accounting) statements in general have an opinion on the audited entity's activities that have developed in the auditor.

Based on the results of applying analytical procedures at the final stage of the audit, issues requiring additional audit procedures may be identified.

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