Topics: Auditing, Internal control, Audit Pages: 9 (1924 words) Published: January 29, 2014
Auditing Techniques are the basic tools utilized by auditors to obtain audit evidences. Auditing Technique is defined as any technique as any technique used to determine deviations from actual accounting and controls established by a business or organization as well as uncovering problems in established processes and controls. Auditing Techniques can be used to aid organizations by uncovering errors in business practices and providing means of protection. The applied techniques can be determine if any income is hidden or improperly categorized or reported; transactions are being completed between the organizations and regulated or prohibited persons, groups or countries; uncovering of environmental waste discrepancies; finding of data inconsistencies; or any other business practice that can be considered as process error, oversight, or violation of ethics, regulations and laws.

Audit techniques are the basic tools or means employed to obtain audit evidences. The application of these techniques constitutes the audit procedures. A. Audit of Non-Financial Records
Non-financial records consist of:
1. The articles of incorporation
2. The by-laws
3. The minute books of the Board of Directors
4. The minute books of the stockholders
5. The articles of co-partnership (in a Partnership)
6. Contracts, leases, pension and retirement plans, labor agreement, etc. Review of non-financial records involves a reading of these records and the extractions of pertinent information for the following purposes: 1. To obtain a concise picture of the plans and policies of management 2. To ascertain that authorized transactions are properly recorded 3. To ascertain that recorded transactions properly authorized To review of non-financial records should be performed early in the audit because information obtained from these records will be found useful in carrying out other audit procedure.

B. Examination of Original Documents
This technique sometimes referred to as vouching which involves an examination of documents supporting business transactions and their comparison with entries in books of accounts to determine: a. That the document is authentic; insofar as this may be reasonably determined b. That the transaction is related to the client

c. That the transaction is a legitimate one, ex. Of a type appropriate to operation of the business d. That the document is properly executed with respect to date, names of parties, amount, etc. e. That the document is properly approved

f. That the transaction evidenced by the document has been properly analyzed for accounting purposes. g. That the transaction is correctly recorded in the books of accounts and that charges and credits are in accordance with generally accepted accounting principles h. That internal controls are adequate, and are being intelligently and consistently observed

These are two approaches to the examination of original documents, both of which are used in a particular audit.
Checking Method Approach – method applicable to the examination of documents, supporting routinely transactions such as cash receipts and disbursement, purchases and sales. Auditor examines a representative sample of all documents of the same kind issued during the period under examination.

Analysis Method Approach – method used when examining the documents supporting irregular or non-routine transactions. Document supporting entries in a particular account are examined in connection with an analysis of the document.

C. Tracing Bookkeeping Procedure
To trace means to allow through a transaction or evidence to a preceding or succeeding stage. Tracing bookkeeping procedures involves repeating or reviewing the procedures performed by the bookkeeper in order to: 1. Determine the adequacy and accuracy of the bookkeeping work and the degree of reliance that may be placed...
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