Auditing and Ethics · Audit Strategy, Audit Planning and Audit Programme

Audit Techniques and Procedures for Obtaining Audit Evidence

Updated 4 October 2026 · Fact-checked

Audit procedures are the methods an auditor uses to collect audit evidence: inspection, observation, external confirmation, recalculation, reperformance, analytical procedures and inquiry. They are used as risk assessment procedures, tests of controls or substantive procedures, and together they form the audit programme. Match each procedure to the assertion it tests.

Understand Audit Techniques and Procedures for Evidence

An auditor cannot give an opinion on feelings. The opinion needs audit evidence, which is the information used to reach conclusions. Audit procedures are the actions that gather this evidence. SA 500 deals with this area.

There are seven main procedures. Inspection means examining records, documents or tangible assets. Observation means watching a process being done, such as a stock count. External confirmation means getting a direct written reply from a third party, such as a bank or debtor. Recalculation means checking the arithmetic accuracy of documents or records. Reperformance means the auditor independently carries out a procedure or control that the entity performed. Analytical procedures mean evaluating financial information through plausible relationships and investigating unusual variances. Inquiry means seeking information from knowledgeable people, inside or outside the entity.

These procedures serve three purposes. Risk assessment procedures help you understand the entity and identify risks of material misstatement. Tests of controls check whether controls operated effectively. Substantive procedures detect material misstatements at assertion level. They are of two types: tests of details and substantive analytical procedures.

The audit programme lists the procedures planned for each area, with their nature, timing and extent. So technique choice is not random. You pick the procedure that gives the most reliable evidence for the assertion and risk involved.

Reliability differs. Evidence from external sources is generally more reliable than internal evidence. Evidence the auditor obtains directly is more reliable than evidence got by inquiry. Original documents are more reliable than photocopies. Inquiry alone is usually not enough to support a conclusion, so pair it with other procedures.

Key rules to remember

Purposes of audit procedures: Risk assessment procedures + Tests of controls + Substantive procedures; Inquiry alone does not suffice for any of them. Substantive procedures are tests of details and substantive analytical procedures.
Procedure list: Inspection, Observation, External confirmation, Recalculation, Reperformance, Analytical procedures, Inquiry; Learn this list as the seven procedures in SA 500. Know one example of each.
Reliability of evidence: External > Internal; Direct > Indirect; Documentary > Oral; Original > Copy; These are general rules, not absolute. Internal evidence from strong controls can be more reliable than external evidence from a doubtful source.
Sufficiency and appropriateness: Audit evidence = Sufficiency (quantity) + Appropriateness (relevance and reliability); Higher assessed risk needs more evidence. Better quality evidence reduces the quantity needed, but poor quality cannot be fixed by more quantity.

How to solve Audit Techniques and Procedures for Evidence questions

Use this method for any question on audit techniques, from a one-line definition to a case where you must choose procedures.

1Identify what the question asks: define a procedure, give an example, distinguish two terms, or choose procedures for a given area.
2Name the account and the assertion at risk, such as existence of inventory or completeness of liabilities.
3Pick the procedure that best addresses that assertion. Use observation and inspection for existence, confirmation for receivables and bank balances, recalculation for accuracy, reperformance for controls.
4State whether it is a test of control, a substantive test of details, or an analytical procedure.
5Explain why the evidence is reliable or what its limit is. For example, inquiry alone is weak.
6Link it to the audit programme by noting nature, timing and extent.
7Conclude with the evidence gained and its sufficiency and appropriateness.

Quickest way: Assertion-to-procedure matching

When to use it: Use for MCQs and for short written answers where you must name a procedure fast.

For MCQs, look for keywords. Watching an activity means observation. Third-party reply means confirmation. Checking arithmetic means recalculation. Doing the control again independently means reperformance. Examining documents or assets means inspection.
Eliminate options that rely only on inquiry when the question asks for strong evidence.
For written answers, use the format: procedure, example, assertion, reliability comment. Give one line each.
Show the differences with a single sentence: tests of controls check operation of controls; substantive procedures check amounts and disclosures.
Attempt MCQs first. There is no negative marking, so never leave one blank.

Common mistakes in Audit Techniques and Procedures for Evidence

Treating recalculation and reperformance as the same thing.
Both involve doing the work again.
Fix: Recalculation is checking arithmetic accuracy. Reperformance is independently executing a procedure or control, such as re-doing a bank reconciliation.
Calling a physical stock count watched by the auditor 'inspection' instead of observation.
Both involve looking at inventory.
Fix: If the auditor watches the entity's staff doing the count, it is observation. Examining the inventory items themselves is inspection.
Relying on inquiry alone as sufficient evidence.
Management replies seem convincing.
Fix: Corroborate inquiry with inspection, confirmation or other procedures. SA 500 says inquiry alone is not sufficient for testing operating effectiveness of controls.
Confusing tests of controls with substantive procedures.
Both involve checking vouchers.
Fix: Ask what is being tested. If it is whether a control operated, it is a test of control. If it is whether an amount or disclosure is misstated, it is substantive.
Listing procedures without linking them to assertions or the audit programme.
Students memorise definitions only.
Fix: Always add the assertion and where it fits in the programme, with nature, timing and extent.

Worked examples

Example 1

Name the audit procedure in each case: (a) The auditor watches the staff counting inventory at the year-end. (b) The auditor sends a request to a customer to confirm the balance. (c) The auditor re-adds the sales register for a month. (d) The auditor independently performs a bank reconciliation that the accountant prepared.

Show the solution

(a) The auditor is watching a process carried out by others, so this is observation.
(b) A direct written reply is sought from a third party, so this is external confirmation.
(c) Checking arithmetic accuracy of a record is recalculation.
(d) Independently executing a control the entity performed is reperformance.

Answer: (a) Observation, (b) External confirmation, (c) Recalculation, (d) Reperformance.

Example 2

Distinguish between tests of control and substantive procedures, and explain how each could be used for purchases.

Show the solution

Tests of controls are designed to evaluate whether controls operated effectively to prevent or detect material misstatements at assertion level.
Substantive procedures are designed to detect material misstatements at assertion level. They comprise tests of details and substantive analytical procedures.
Purchases test of control: inspect purchase orders for approval signatures and reperform the three-way match of order, goods received note and invoice for a sample.
Purchases substantive test: vouch a sample of purchase entries to supplier invoices and goods received notes to check occurrence and accuracy, and compare purchases to the previous year by month to investigate unusual variances.
Link to the programme: if controls are tested effective, the extent of substantive work can be reduced. If controls are weak, the extent is increased.

Answer: Tests of controls check whether controls worked. Substantive procedures check whether amounts and disclosures are misstated. For purchases, checking approvals and the three-way match is a test of controls. Vouching entries to invoices and variance analysis is substantive. The result decides the extent of work in the audit programme.

Exam tips

Learn the seven procedures with one example each. Questions often ask 'name the procedure' in scenario form.
In written answers, always state the assertion the procedure addresses. This earns step marks.
When asked to distinguish tests of controls from substantive procedures, give the purpose, the nature and an example for each.
For 'suggest procedures' questions, give a mix of procedures and avoid relying on inquiry alone.
Attempt every MCQ. Wrong answers carry no penalty.

Practice questions from Audit Strategy, Audit Planning and Audit Programme

Audit Techniques and Procedures for 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 Techniques and Procedures for Evidence: frequently asked questions

What are the audit procedures for obtaining audit evidence?

They are inspection, observation, external confirmation, recalculation, reperformance, analytical procedures and inquiry. Auditors use them as risk assessment procedures, tests of controls or substantive procedures. SA 500 sets out the requirements for audit evidence.

What is the difference between recalculation and reperformance?

Recalculation checks the arithmetic accuracy of documents or records. Reperformance is the auditor independently carrying out a procedure or control that the entity originally performed. A bank reconciliation redone by the auditor is reperformance.

What is the difference between a test of control and a substantive procedure?

A test of control checks whether a control operated effectively. A substantive procedure checks whether amounts, balances or disclosures are materially misstated. Test results on controls influence how much substantive work is needed.

Is inquiry enough as audit evidence?

No. Inquiry is useful but usually does not give sufficient evidence alone. The auditor should corroborate it with other procedures such as inspection, observation or confirmation.