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Procedures

Exam focus

Audit procedures must be designed to respond to the specific risks of
material misstatement identified for each individual client. In the exam,
you should make your answers specific to the scenario.

1.1 How to write audit procedures

An audit procedure should be a clear instruction of how the audit evidence is to be
gathered.

It should contain an ACTION applied to a SOURCE to achieve an OBJECTIVE.

In other words, it should describe what needs to be done, how it should be done and
why it should be done.

Tip: Read the procedure back and consider whether a person with no audit
experience will understand it.

1.2 Examples

Example (i): Audit objective: Test the existence of non-current assets

Good procedure Badly worded procedure

Select a sample of assets from the Check a sample of assets.
non-current asset register and physically
inspect them to verify existence.

Explanation

The good procedure above clearly states: The badly worded procedure is not
sufficiently described:
 from where the sample should be
chosen - non-current asset register  From which population should the
sample be selected?
 how they should be checked -
physically inspect  How should the auditor ‘check’
existence?
 the objective of the test - existence
 What are the assets being checked
for?

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