What are the technical methods of auditing?

There are general and technical approaches to auditing. Audit of the general approach is the audit of the sequence of work and the scope of the audit work or the level of detail and a certain method of division. Audit of the technical approach refers to the collection of audit evidence, the application of technical means.

Audit of the general method:

A. Shun check method and reverse check method

Audit of the general method, in accordance with the order of the audit work and the relationship between the accounting business processing procedures, there are down the check method and reverse check method.

(a) Shun Cha method. Also known as the positive method, it is in accordance with the accounting business processing procedures for the classification of a method of review, that is, in accordance with the chronological order of the occurrence of all the original documents to check, one by one. First check the original documents, check and check the vouchers, and then according to the voucher check, the journal, general ledger, ledger check, and finally to the general ledger and ledger checking accounting statements and statement analysis, along the "certificate - over the accounts - closing - trial balance" of the accounts. It is a general check from the beginning to the end along the account processing procedure of "preparation - posting - closing - trial balance".

This method is due to the review of the results of the work is meticulous, comprehensive, complete, step by step to review the check, it is not easy to negligence, omissions and other shortcomings. Therefore, for the internal control system is not sound enough, the accounts are more chaotic, there are more problems in the audited unit, the use of smooth checking method is more appropriate. The disadvantage is that the workload is large, time-consuming and laborious, is not conducive to improving the efficiency of the audit work, reduce audit costs.

(ii) reverse checking method. Also known as the inverse checking method, it is in accordance with the opposite procedure of accounting business processing both in the checking process against the bookkeeping procedures for checking the method. Usually first from the end of the bookkeeping procedures to check, from the accounting statements or books of accounts to find clues, looking for doubt, and then reverse the bookkeeping procedures to trace the source of the check. Such as checking from the accounting statements to the accounting books, and then check to the vouchers, and finally to the original documents, that is, from the review and analysis of the accounting statements to start, according to the discovery of always and doubt, to determine the focus of the audit, and then come to the review and check the relevant books and vouchers, and do not have to all the items in the statement, one by one, an audit method for review.

Generally speaking, at the beginning of the check, it is appropriate to first use the reverse checking method, reflecting a comprehensive, integrated situation through the check of the accounting statements to seize the key aspects of the existence of accounting errors, and then, according to determine the key aspects of determining the need to check the accounting books and their detailed check. When checking the accounting documents and books, if you want to confirm whether there is any accounting error or clue of error in a certain record, you can start by applying the down check method, and then combine it with the reverse check method. In short, the smooth check and reverse check can be changed to use, smooth check in the reverse check, reverse check in the smooth check, smooth check and reverse check combined with each other, mutual penetration.

Two, detailed investigation and sampling method

Audit methods in accordance with the size of the review of economic information and the collection of audit evidence of the scope of the size of the different, and there are detailed investigation and sampling method.

(a) detailed investigation method. Also known as detailed audit, is the audited unit of a certain period of time all the accounting information (including vouchers, books and statements) to carry out a detailed review and inspection, in order to judge the evaluation of the audited unit of the legality of economic activities, authenticity and effectiveness of an audit method. The advantage of this method is that it is easy to find out the problem, the audit risk is small, and the audit result is more correct. The disadvantage is that the workload is larger and the audit cost is higher. Therefore, in practice, only serious problems, non-thoroughly check the non-dull ad hoc audits, as well as economic activities of very few small enterprises and institutions outside the use of this method, is generally not often used.

(ii) sampling method. Also known as sampling audit, refers to a certain period of time from the audited unit of accounting information (including vouchers, books and statements) in accordance with a certain method of sampling a part of the review, in order to deduce the overall error and fraud, and then to judge the evaluation of the audited unit of the legitimacy of the economic activities, the authenticity of the effectiveness of an audit method. Using sample auditing, if no obvious errors or frauds are found in the sample examined, the unsampled accounting information can no longer be examined. Instead, the scope of the sample should be expanded, or the detailed examination method should be used instead. The advantage of this method is that it can reduce the workload of the audit and lower audit costs. The disadvantage is that it has greater limitations, and if the samples are not properly selected, it will lead the auditors to make wrong conclusions and higher audit risks. In order to avoid this situation, when using this method the auditor usually has to evaluate the internal control system of the audited unit so that the audit conclusions have greater reliability.

Technical methods of auditing:

I. Inspection

Inspection is the auditor's review and verification of the reliability of audit records and other written documents.

(a) Review of accounting records and written documents

The auditor will review the auditee's vouchers, books, statements and other written documents. Through the review, to identify problems and doubts, as an audit trail, in order to further determine the focus of the audit and audit procedures. Specifically, the following aspects:

1, the review of accounting documents. Accounting documents, including original documents and vouchers, which review the original documents as the focus.

2, the review of books. Accounts including general ledger, ledger, journal and various auxiliary books. Among them to review the ledger and journal as the focus. In addition to the general ledger with the ledger, the role of the diary, in addition to the role of its own general find no problem. Because the general ledger registration basis, mainly a variety of vouchers summary table, it reflects the summary figures, not easy to find problems.

3, statement review. Review of the statement should review the balance sheet, income statement, cash flow statement as the focus.

4, the review of other records. Although other records are not an important part of the accounting information, but sometimes can be found from some of the problems for the audit trail. For example, product certificates, quality inspection records, as well as contracts, agreements and so on.

(ii) the reconciliation of accounting records

Auditors also need to be on the books, accounts, accounts and accounts between the mutual reconciliation. By checking to confirm whether the two sides of the records are consistent, whether the books are consistent. If discrepancies are found, further follow-up audits should be conducted using other auditing methods. Reconciliation of the contents of the following:

1, the accounts of the table reconciliation. Refers to the statement items and the relevant books and records to check the veracity and correctness of the statement indicators.

2, account reconciliation. Refers to a variety of relevant books and records to check each other. Such as general ledger and ledger, diary between the check. Through the reconciliation of accounts, check whether the two sides of the records are consistent. If inconsistent, it should be further sampling vouchers, voucher verification. Some of the books and records themselves should also be reconciled. Such as checking the total debit balance of the general ledger accounts and the total credit balance is equal. If they do not match, it means that there is an error in the entry, and the books should be further reconciled with the certificates.

3, account verification. It refers to the ledger and journal records with the bookkeeping vouchers. Through the check, prove that all the vouchers have been recorded in the relevant books, about the re-recorded or omitted, as well as the contents of the books of records, the amount of their records as the basis for the bookkeeping vouchers are consistent. Generally speaking, the results of the reconciliation of accounts, such as normal, can no longer carry out the reconciliation of accounts.

4, the actual reconciliation. Refers to the ledger records and physical verification, to identify the number of accounts with the actual number of deposits are consistent. If not, the actual number should prevail, to adjust the book records. Reconciliation can be carried out by two people, that is, one person reads the accounts and the other reconciles the accounts. In this way, re-registration, omission and errors can be detected. For accounts that have been reconciled correctly, the auditor should make a certain mark on the right side of the original record to avoid repeating the reconciliation in the future. For the reconciliation of the accounts should also be marked, so that in the future the original auditor or other successor to further review.

Two, supervise the disk

Supervise the disk is the auditor on-site supervision of the audited unit of all kinds of physical assets and cash, securities and other inventory, and conduct appropriate spot checks. Inventory of assets is an important method to verify whether the accounts are consistent.

Inventory of the way there are surprise inventory and notice inventory. The former generally applies to cash, securities and valuables inventory. The latter applies to fixed assets, products, finished goods and other property inventory. If the inventory objects are scattered in several places, the inventory should be carried out at the same time, in order to prevent the audited unit has enough time to move east to make up for the west. Objects that have been counted should be labeled to avoid duplication of inventory.

Three, observation

Observation is the auditor spell of the audited unit's premises, physical assets and related business activities and the implementation of its internal controls, such as field visits.

Four, inquiry and correspondence

Inquiry is the auditor's written or oral questioning of the relevant personnel.

Correspondence is the auditor in order to confirm the audited entity's accounting records contained in the matter to a third party to send a letter of inquiry. If there is no response to the letter or if the auditor is not satisfied with the results of the response, the auditor shall perform alternative audit procedures to obtain the necessary audit evidence.

V. Calculation

Calculation is the auditor of the audited unit of the original documents and accounting records of the data carried out by the checking or separate calculations. Auditors often need to audit the process of vouchers, books and statements of the figures recalculated to verify their accuracy. Calculation work is more mechanical, cumbersome, but significant, not to be taken lightly, because the figures calculated incorrectly, or deliberately distort the calculation results, will have a significant impact on the correctness of accounting information.

Sixth, analytical procedures

Analytical procedures are the auditor's analysis of the audited unit's significant ratios or trends, including the investigation of unusual variations, and these significant ratios or trends with the expected amount of discrepancies and related information. Generally, the auditor will utilize analytical review methods throughout the audit. For unusual moving items, the auditor should reconsider the appropriateness of the audit procedures he or she has applied and, if necessary, should perform additional audit procedures to obtain the necessary audit evidence.