Audit and Assurance · Audit procedures

Audit Procedures and Methods of Obtaining Audit Evidence

Updated 11 October 2026 · Fact-checked

Audit procedures are the methods an auditor uses to gather audit evidence: inspection, observation, inquiry, external confirmation, recalculation, reperformance and analytical procedures. To answer an exam question, identify the assertion being tested, choose the procedure that gives the most reliable evidence for it, and state exactly what you would do and what you would look for.

Understand Audit Procedures and Methods of Obtaining Evidence

Audit evidence is the information the auditor uses to reach conclusions for the opinion. Audit procedures are the actions you take to get that evidence. Nothing is evidence until you perform a procedure that produces it.

There are seven procedures you must know. Inspection is examining records, documents or physical assets. Observation is watching a process or procedure being done by others, such as an inventory count. Inquiry is asking questions of management, staff or outside parties. External confirmation is getting a direct written reply from a third party, such as a bank or a customer. Recalculation is checking the arithmetic accuracy of documents or records. Reperformance is independently carrying out a procedure or control that the entity already performed. Analytical procedures are evaluating financial information by studying plausible relationships and investigating unusual movements.

Not all evidence is equally reliable. Evidence from an external, independent source is stronger than evidence from inside the entity. Evidence you obtain yourself, by observing or recalculating, is stronger than evidence you only hear about. Original documents are stronger than copies. Written evidence is stronger than oral statements. Inquiry alone is rarely enough, because the answers may be biased or wrong.

The procedure you pick depends on the assertion. For existence of an asset, you inspect it or observe a count. For completeness of liabilities, you look at post year-end payments or get supplier statements. For rights and obligations, you inspect title documents for assets, such as property deeds or vehicle registration documents, and agreements for liabilities, such as loan agreements. For accuracy, you recalculate or reperform. Matching procedure to assertion is the skill the exam rewards.

Procedures are used in different ways. Some are risk assessment procedures, some are tests of controls, and some are substantive procedures. Inspection, inquiry and the rest can appear in any of these. The purpose changes, not the technique.

Key rules to remember

Inspection: Examine records, documents or physical assets; Inspection of documents can support occurrence, rights and obligations, or other assertions, depending on the document and its reliability. Physical inspection gives evidence of existence, but not of ownership or valuation.
Observation: Watch a process being performed by others; Limited to the moment of observation. People may behave differently when watched.
Inquiry: Ask informed people inside or outside the entity; Must be corroborated by other evidence. Never enough alone for a significant item.
External confirmation: Direct written reply from a third party to the auditor; The auditor must control the request and the reply. Examples are bank, receivables and legal confirmations.
Recalculation: Auditor rechecks the arithmetic of a record or document; Tests mathematical accuracy, such as depreciation, invoice extensions or payroll totals.
Reperformance: Auditor independently executes a procedure or control; Tests that a control or procedure was done properly, such as redoing a bank reconciliation.
Analytical procedures: Compare, find relationships, investigate unexpected differences; Used in planning, as substantive tests and in the final review.
Reliability of evidence: External > internal; auditor-obtained > entity-provided; original > copy; written > oral; Rules of thumb for reliability, not absolute laws. Controls in the entity also affect reliability.

How to solve Audit Procedures and Methods of Obtaining Evidence questions

Use this method for any question that asks which procedures to perform, or how to test a balance or assertion.

1Read the requirement and note the item (for example receivables) and the assertion (for example existence).
2Ask what could go wrong for that assertion. This tells you what evidence you need.
3Pick the procedure that best answers it. Prefer external and auditor-obtained evidence.
4Write the procedure as an action: 'Inspect', 'Confirm', 'Recalculate'. Name the document or party.
5State what you are looking for, such as agreement to the ledger or a date after the year end.
6Add a second, different procedure if the risk is high, so evidence is corroborated.
7Check you have matched the number of procedures to the marks available.

Quickest way: Verb, object, purpose

When to use it: Use in Section C or OT questions with limited time, when you need a clear procedure fast.

Write a verb from the seven procedures.
Add the exact object, such as 'the supplier statement at the year end'.
Add the purpose in a few words, such as 'to confirm completeness of payables'.
For OT questions, match the assertion to the procedure and eliminate options that only use inquiry.
Move on once you have one procedure per mark.

Common mistakes in Audit Procedures and Methods of Obtaining Evidence

Writing 'check' or 'review' instead of a named procedure.
These words feel natural, so students use them without thinking.
Fix: Start each point with a precise verb such as inspect, observe, recalculate, reperform or confirm, then name the document.
Confusing recalculation with reperformance.
Both involve the auditor doing work again.
Fix: Recalculation rechecks arithmetic. Reperformance redoes a procedure or control, such as a reconciliation or an authorisation check.
Relying on inquiry alone.
It is quick and easy to write down.
Fix: Treat inquiry as a starting point. Add inspection, confirmation or another procedure to corroborate the answer.
Using physical inspection to prove ownership or valuation.
Seeing an asset feels like complete proof.
Fix: Physical inspection supports existence only. Use title documents for rights and obligations, and valuation tests for value.
Choosing a procedure that does not match the assertion.
Students list general procedures without linking them to what could be misstated.
Fix: Name the assertion first. For completeness, select items from an independent source (for example physical items or source documents) and trace them to the ledger. For existence, select items recorded in the ledger and vouch them to the asset or supporting evidence.
Describing a confirmation that the client controls.
Students forget independence is the point.
Fix: State that the auditor sends the request and receives the reply directly, not through the client.

Worked examples

Example 1

You are auditing receivables of a manufacturer. Describe three audit procedures to obtain evidence that receivables exist at the year end.

Show the solution

The assertion is existence, so the risk is that balances are fictitious or already paid.
Procedure 1: send external confirmation requests to a sample of customers, controlled by the auditor, asking them to confirm the balance owed. This is strong because it is external.
Procedure 2: inspect cash receipts after the year end, using the entries on the bank statements and the remittance advices in the entity's records, and trace them to the customer accounts. Receipts support existence, and they also give evidence on recoverability (valuation).
Procedure 3: for non-replies, inspect dispatch notes and invoices to show that goods were delivered before the year end.
Each procedure names the evidence source and purpose.

Answer: Confirm balances directly with customers, inspect post year-end cash receipts on the bank statements and remittance advices (evidence of existence and also of recoverability), and inspect delivery and invoice documents for non-replies.

Example 2

An entity's payroll clerk prepares a monthly payroll summary. A supervisor says she checks the totals and the bank transfer file each month. Explain how the auditor could use recalculation and reperformance here.

Show the solution

Recalculation: select several months and add the payroll summary again to check that gross pay, deductions and net pay totals are arithmetically correct.
Reperformance: redo the supervisor's check by independently agreeing the payroll totals to the bank transfer file for the months selected. This shows whether the check was performed correctly on those items. Operating effectiveness of the control needs wider testing, over more items and periods.
The difference is that recalculation tests the numbers, while reperformance tests whether the control procedure was carried out properly.
Inquiry alone, such as asking the supervisor whether she checks, would not be enough. It needs the procedures above, plus inspection of any sign-off evidence.

Answer: Recalculate the payroll totals to test arithmetic accuracy. Reperform the supervisor's agreement of payroll totals to the bank file to see whether the check was done correctly on the items tested. A conclusion on operating effectiveness needs wider testing.

Exam tips

Always link each procedure to an assertion. A procedure listed without a purpose earns fewer marks.
In OT questions, a procedure using only inquiry is rarely the best answer for a significant balance.
In Section C, write one procedure per point, with the action, the document and the purpose.
Learn the recalculation versus reperformance distinction. It is a favourite OT item.
Always say that confirmations are sent and received by the auditor, not the client.

Audit Procedures and Methods of Obtaining Evidence in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Audit Procedures and Methods of Obtaining Evidence: frequently asked questions

What is the difference between recalculation and reperformance?

Recalculation is rechecking the arithmetic of a record, such as depreciation or an invoice total. Reperformance is independently carrying out a procedure or control the entity has already done, such as a bank reconciliation. One tests numbers, the other tests a process.

Why is inquiry not enough on its own?

Answers from management or staff may be biased, mistaken or incomplete. The auditor must corroborate them with other evidence such as documents, confirmations or recalculation.

How do I choose an audit procedure for an assertion?

First name the assertion and what could go wrong. Then choose the procedure that gives the most reliable evidence for it. For example, inspect assets for existence and recalculate for accuracy.

Are analytical procedures one of the seven procedures?

Yes. Analytical procedures evaluate financial information by studying relationships and investigating unusual differences. They are used at planning, as substantive tests and in the final review.