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Performing Walkthrough

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Submitted By brianlo
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PERFORMING AND DOCUMENTING WALKTHROUGHS

PURPOSE

This form has been designed to help the auditor:

* Understand the nature of a walkthrough; * Provide example inquiries to help perform the walkthrough; and * Document the procedures performed and the information gathered during the walkthrough.

INSTRUCTIONS

Statement on Auditing Standards No. 109 (SAS-109), Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, requires that the auditor:

…obtain a sufficient understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures.

To obtain an understanding, the auditor should evaluate the design of controls and determine whether they have been implemented. Several types of audit procedures may be performed, such as:

* Observation of entity activities and operations. * Inspection of documents (e.g., business plans and strategies), records, and internal control manuals. * Reading reports prepared by management (e.g., quarterly management reports and interim financial statements), by those charged with governance (e.g., minutes of board of directors’ meetings), and by internal audit. * Visits to the entity’s premises and plant facilities. * Tracing transactions through the information system relevant to financial reporting, which may be performed as part of a walkthrough.

The auditor may either use this form to document walkthrough procedures or document procedures at AID-402 in a separate narrative, flowchart, or other workpaper. Wherever the procedures are documented, the auditor should capture the information suggested herein.

If the entity has documented its policies for processing a

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