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CS Professional · Internal and Forensic Audit · Practices related to Internal Auditing

An internal auditor at Bharat Steels Ltd wants evidence that approved purchase orders actually match goods received notes. She selects a sample of transactions and traces each from the purchase order through to the receiving record and invoice. Which fieldwork technique is this?

The technique is documentary testing through vouching and tracing. The auditor follows sampled transactions across the purchase order, goods received note and invoice to confirm they agree. This tests individual transactions, unlike ratio analysis, cash counts or bank confirmations, which serve different purposes.

  1. AVouching and tracing through documentary testingCorrect
  2. BAnalytical review of ratios only
  3. CPhysical verification of cash
  4. DExternal confirmation from banks

Explanation

Following transactions across related documents such as purchase order, goods received note and invoice is documentary testing, using vouching and tracing. Ratio analysis does not test individual transactions, cash counts address cash, and bank confirmations are external evidence of balances.

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