The digital age that offers speed and ease of access, not only provides practicality but also opens up space for errors, fraud, and irregularities. It is under these conditions that the company needs an audit and it is necessary to apply relevant audit techniques.
Audit techniques are key to auditor. to obtain audit evidence. While audit evidence can provide a way for auditors to see the actual implementation and operational standards.
What Is An Audit Technique?
Audit techniques refer to a set of methods that the auditor applies when conducting an audit. Audit techniques are the ways that auditors use to obtain evidence and compare actual circumstances with supposed circumstances. Good through interviews, review documents, questionnaires, data analysis, and physical observation.
Purpose Of Using Audit Techniques
- Obtain audit evidence, both evidence related to actual and supposed circumstances.
- Compare the actual and supposed circumstances of the evidence obtained.
- Ensure the organization's compliance with accounting standards, rules and applicable laws.
- Detect errors and fraud.
- Improve organizational performance.
18 Audit techniques to know
1. Analysis
Analysis techniques are audit techniques that are carried out by breaking down or parsing data into smaller parts. By breaking it down into smaller elements, auditors can map and find out hidden relationship patterns.
For example, auditors want to assess the fairness, trends, and potential deviations in an organization's financial data. Audit techniques used are comparison and ratio analysis. The comparison focused on inter-period and inter-unit data to identify unnatural fluctuations.
2. Observation or observation
Observation or observation is the technique of observing the audit object in a careful, scientific, and continuous manner. This technique is performed within a certain period of time to prove a problem or circumstance.
An example of the implementation of observation techniques in auditing is when the auditor wants to make sure a procedure is carried out correctly and according to policy. Observation is carried out directly by observing the work process without intervention. Starting from the production process, attendance, to payroll.
3. Request For Information (Inquiry)
Information request technique is an audit technique by extracting information from competent parties orally and in writing. For example, employees, officials, specialists, or professionals of a particular scientific field.
This technique can be used when the auditor wants to obtain an initial understanding or clarification of a condition. These goals can be achieved through interviews or questions and answers. Auditors ask management or staff questions regarding a particular process, policy, or transaction.
4. Evaluation
Evaluation techniques are ways to obtain judgments by looking for patterns of relationships or linking the information obtained. This technique can be applied when the auditor wants to assess the effectiveness and adequacy of the system or control.
The evaluation applied is to assess policies and procedures. The Auditor assesses whether the internal control system has been adequately designed and implemented or not.
5. Investigation
Technique investigative audit it is a way for auditors to identify problems intensively. This method is applied through in-depth elaboration, decomposition, and research. This technique becomes a deepening step when there are verified indications.
For example, in an organization the auditor wants to uncover indications of fraud or misconduct. Auditors conduct in-depth checks and special searches of transactions, related parties, and certain patterns that are considered suspicious.
6. Verification
Verification is a detailed and thorough testing technique regarding the correctness, accuracy of calculations, validity, bookkeeping, to the existence of a document.
For example, when auditors want to ensure the validity and accuracy of an organization's data. Then, matching is made to accounting records and supporting documents. Such as invoices, contracts, and proof of payment.
7. Check
Another technique that can be done in the audit process is a check or examination technique. This technique is done to test the truth or existence of something carefully.
For example, auditors want to ensure the completeness and compliance of documents. So, the examination carried out is an Administrative Examination. The Auditor checks whether all supporting documents are available and have been approved according to the procedure or not.
8. Test or Test
The test technique is an audit technique through in-depth research on important matters. For example, auditors want to test the effectiveness of controls and the correctness of records. The tests carried out are sample tests of transactions to ensure their compliance with standards and policies.
9. Footy
The footing technique is a technique commonly performed on financial documents. This technique tests the accuracy of summing subtotals and totals vertically. The purpose is to determine whether the data and the auditee's report can be believed to be accurate.
For example, when auditors want to ensure the accuracy of calculations. So, this test is done by recalculating vertically. The Auditor re-sums the numbers in a report or Journal column.
10. Cross Footing
Similar to technique footy, engineering cross footing is a test performed horizontally or cross-calculation to ensure the correctness of the summation of subtotals and total reports.
For example, the auditor wants to ensure the consistency of the calculations of a financial report. The calculation performed is a cross calculation by matching the horizontal total with the vertical total in the report.
11. Vouching
Vouching is a technique for tracing information or data from accounting records to source documents or supporting evidence. This technique is limited to checking the existence of evidence without examining its substantive content.
For example, an auditor wants to prove the existence and validity of a transaction. Thus, auditors trace transactions from journals or ledgers to supporting evidence.
12. Trasir (Tracing)
Trasir or search is the opposite of vouching. This technique is performed by tracing the proof of the transaction to the presentation of information in the document.
For example, when the auditor wants to ensure the completeness of recording transactions. To achieve that, auditors perform traceability from source documents to journals and financial statements.
13. Scanning
Scanning it is a quick and thorough examination to find unusual things about information or data. For example, when auditors want to identify patterns or unnatural transactions. Thus, auditors do scanning by scanning the list of transactions. It aims to find extreme numbers or abnormal patterns.
14. Reconciliation
Reconciliation is the matching of two separate data to the same data, but done by two different units. The goal is to obtain the appropriate amount of certain conditions.
For example, the auditor wants to ensure compatibility between records. Thus, the matched data sources are internal records and external data, such as bank statements.
15. Confirmation
Confirmation is a way of obtaining evidence or information from parties outside the auditee. Confirmation can be done through oral (interview) or written (send a confirmation letter). Confirmation techniques are divided into two, namely positive confirmation and negative confirmation.
A positive confirmation is a confirmation that must be answered. While negative confirmation is confirmation that asks for an answer if the confirmed data is different and does not need to be answered if the confirmed data is the same as the data in question.
Confirmation techniques can be implemented when auditors want to verify data to an independent party. Auditors conduct written confirmation by sending letters to third parties, such as customers, vendors, and banks.
16. Comparison
Benchmarking is an audit technique by comparing data between work units or between periods and drawing conclusions afterwards. For example, when the auditor wants to identify performance or cost irregularities in the organization. Then, the auditor compares the budget plan with the realization to detect significant differences.
17. Inventory or outpatient
Inventory is an examination of physical goods. Such as, assessing the condition of goods, comparing balances and administrative books, and looking for causes of differences. The results of this examination will be set forth in the minutes (BA).
For example, auditors want to ensure the physical existence of an organization's assets. Then, the auditor performs an asset calculation and matches it with the records.
18. Inspection
Inspection is an audit technique by checking directly to the scene. Generally, inspections are carried out on the spur of the moment, so that auditors can find out the real state of affairs.
For example, the auditor wants to ascertain the existence and condition of evidence. Thus, the auditor conducts a physical examination of documents, assets, and facilities directly.
Closing
Audit techniques are not just an important step for auditors to collect relevant and tested evidence. But part of the crucial aspect is being able to test the truth, reliability of information, compliance with regulations, detect errors and fraud, and support audit opinions and conclusions.
By conducting periodic audits, the company can improve the reliability of its financial statements, detect fraud, and increase the credibility of the organization.
To obtain reliable and trustworthy audit results, organizations do not need professional auditors, but also tools capable of systematically supporting the planning, execution and reporting of audits.
In this context, Audithink provides best audit app as an innovative solution to simplify the audit management of your company. Software supported by features monitoring, so that the audit process can be monitored real-time. Contact the Audithink team for a consultation or schedule a free demo now to know the toughness of our system.
