The 8 general audit procedures, used to gather evidence regarding management assertions, include inspection of records/documents, inspection of tangible assets, observation, external confirmation, inquiry, recalculation, re-performance, and analytical procedures. These methods are applied to evaluate financial statements, transactions, and internal controls.
Audit Procedure Methods
Audit procedures to obtain audit evidence can include inspection, observation, confirmation, recalculation, reperformance and analytical procedures, often in some combination, in addition to inquiry.
The eight primary types of audit evidence include physical examination, confirmations, documentary evidence, analytical procedures, oral evidence, the accounting system, reperformance, and observatory evidence.
The seven types of audit procedures
The principles of independence, objectivity, competence, confidentiality, professionalism, due professional care, and continuous improvement are essential for the internal audit function to fulfill its role as a trusted advisor to the organization.
It is mainly of two types – substantive and analytical procedures. Depending on risk assessment, auditor applies audit procedures. These help an auditor to plan audit and accordingly invest time for obtaining audit evidence.
Types of Audits: Breaking Down 9 Different Audits
Balancing the 3 C's in Auditing Practice
Balancing competence, confidentiality, and communication is essential for the effectiveness of the auditing process.
Audit procedure refers to structured procedures/tests that are conducted by the auditors to obtain adequate, relevant evidence. This evidence can assist them to opine as to whether the financial statements are not materially misstated, be it by error or fraud.
The five stages of the audit process are: planning and scoping, risk assessment and understanding internal controls, audit testing (including tests of controls and substantive tests), evaluation and reporting, and follow-up and remediation.
The 5 Cs of audit (Criteria, Condition, Cause, Consequence, Corrective Action) are a framework for structuring clear, actionable audit findings, explaining what should be (Criteria), what is found (Condition), why it happened (Cause), what the impact is (Consequence/Effect), and how to fix it (Corrective Action/Recommendation) to drive organizational improvement and compliance.
The document outlines the 7 E's—Effectiveness, Efficiency, Economy, Excellence, Ethics, Equity, and Ecology—as essential themes for auditors to enhance organizational success. It emphasizes the importance of incorporating these principles into audit processes to evaluate and improve organizational performance.
The 7 steps in the audit process generally cover Planning, Risk Assessment, Internal Control Testing, Fieldwork/Evidence Collection, Reporting, and Follow-Up, focusing on a systematic review from initial engagement to ensuring corrective actions are taken for operational improvement. This framework ensures comprehensive evaluation, from understanding the client's business to delivering actionable insights and ensuring accountability for identified issues.
SOX compliance is the act of adhering to the financial reporting, information security and auditing requirements of the Sarbanes-Oxley (SOX) Act, a US law that aims to prevent corporate fraud.
There are two main categories of audits: internal and external. Audits are a key component for becoming ISO certified and you must have internal auditors, and pass the 2-stage registrar audit by an external party in order to become ISO 9001 certified.
The Big 4 are the largest accounting and auditing firms in the world: Deloitte LLP (Deloitte), PricewaterhouseCoopers (PwC), Ernst & Young (EY) and Klynveld Peat Marwick Goerdeler (KPMG). They're so big that their joint revenue in 2024 was—you guessed it—$212 billion.
Objectivity is the cornerstone of the internal audit golden rule. Auditors must approach their work without bias, ensuring their evaluations are fair, impartial, and based solely on evidence.
The Audit Bureau of Circulations (ABC) of India is a non-profit circulation-audit organisation. It certifies and audits the circulations of major publications, including newspapers and magazines in India.
Big Five
The four common types of auditors are Internal Auditors (evaluate company operations for management), External Auditors (independent review of financial statements for outside parties), Government Auditors (ensure compliance with laws for public agencies like the IRS), and Forensic Auditors (investigate financial fraud for legal proceedings). These roles focus on different areas, from internal controls and risk management to financial reporting accuracy and fraud detection.
Performance aspects include: economy, efficiency, effectiveness, compliance, accuracy, completeness, and timeliness.
Types of Audit Procedures
Inspection: Examining records, documents, or physical assets. This includes reviewing invoices, contracts, and board minutes, as well as checking inventory or equipment. Inspections verify the existence and condition of assets. Observation: Watching others perform processes or procedures.
There are eight different types of audit evidence. They are physical examinations, confirmations, documentation, analytical procedures, observations, inquiries, reperformance, and recalculation.
Let's take a closer look at each of the different assertion types and how they work.