A Handy note On Audit Test Checking of Samples
The extent of test checking during an auditing process depends on certain factors such as
- The dimension of the institution under audit
- The strength and effectiveness of their internal control
- The scope of dependability of their books and records
- The fair error percentage
- Degree of certainty
Cases for adopting the test checking process
Test checking is specifically employed for the following cases like
- Mass of transactions. If the case involves huge transaction processes, then testing is the only reasonable option for auditing.
- Time constraints. When the auditor is provided with relatively low time to examine the transactions of either a medium or almost large sized concern.
Pros of exercising the test checking process
With the auditing perspective, there are several advantages of using test checking like
- Arriving easily at the real audit objective. An Auditor always needs to present his status on the firm’s financial statements. There are cases when even after complete account checking, the auditor is not fully satisfied with his arrived conclusions. In such cases, utilizing the test checking services is really great for instantly attaining the reasonable audit assurance.
- Effective use of expertise. The program of test checking requires the mind concentration along with intelligent verdict. Thus, this process helps the auditor to use his expertise naturally as well as effectively.
- Controlled application of the exemption principle. If the whole process of internal control goes clean and render complete satisfaction, there is absolutely no need to verify the wholesome transaction. But if the case creates a suspicion, definitely you need to see this that it goes through the normal procedures.
- Risk accessing factor. An auditor has the potential capability to identify the risk factor involved in the misstatements of the financial records. He can easily recognize it out in a scientific manner by considering suitable samples and analyzing the same in detail.
- Time-saving process. As only a small section of transactions is considered for verification and renders the valid result, this process is really considered as an economic one.
- Substantial reduction in the work process. As the test checking involves a sample portion of the whole transactions, there is a significant decrease in the workload.
The test checking pattern of auditing is fully decided by the auditing staff and may not stick to fixed samples of adequate size. Further, the activity peak seasons need to be also taken into account while considering for conducting out the sample checking process.