How Does The Auditor Perform The Test Checking?
Test checking is actually a process which involves selecting a particular proportion of the company’s transaction and testing the same for determining the reality factor of their whole accounting section.
The prominent features of test checking include
- Scientific basis: This aspect can be explained by the general fact that a scientifically chosen sample would represent the characteristic features of the whole population. Even the sampling theory is dependent on the scientific law. Thus, this can greatly rely upon when considered to other techniques which lack the basic acceptability part.
- The process of estimation: The schemes like test checking and sampling alone cannot satisfy the high accuracy percentage or 100% reliability. See this simple example, when a tolerable error is accounted for a particular subject under examination, the judgment is truly based on the individual considering it.
- Analysing the material property: If the records involving huge capital or material balance are methodically checked, then usually, the entries recorded for a few random moths are checked intensively and others go unverified.
- Full verification scheme conducted for over a period: The auditing strategy is like it goes for a whole three to five years gap and each random month like January, May and November are taken as a term and is used to cover almost all types of transactions taking place in a company for the first year. Such a selection process goes for each year and finally, the auditing will be finished by the end of the fifth year.
- The surprise element: Usually, the auditee company members seldom antedate the test checking pattern and time and this remains a surprising criterion for the company officials. But there are also minority cases where the areas and the period of checking are pre-informed before actually conducting the auditing process.
- The flexible system: If the auditing process maintains a unique mode of test checking, then the process itself may have chances to lose its face value. As a part of this measure, the auditor should always be ready to try out different auditing patterns to bring out the most out of the flexible auditing.
- Authority of judging things: The concerned auditor’s word is the final for every test checking situation and the auditors’ judgment is primarily based on his previous experience of dealing with similar past and present situations, new developments and the efficiency of the internal control system