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The system’s walk-through procedure is often the most cost-efficient, annual risk assessment procedure auditors can use, and it is discussed for the first time in SAS No.. It is performed by tracing documents and data through the accounting system from the inception of transaction cycles to their termination. Its primary purpose is to provide a good understanding of the accounting system and any control procedures or activities for risk assessment purposes.
The walk-through procedure, documentation of the internal controls in flowcharts or internal control questionnaires, reading the general ledger and consideration of the prior year's control risk assessment may permit an assessment of control risk in the current period that is less than high. Hear me please. Made clear in the risk assessment standards, performing these risk assessment procedures may provide some of the benefits we may have thought only possible by performing tests of controls procedures.
on other words, when performing tests of balances we may be able to use lesser reliable procedures (nature) for testing small details of an account balance, lesser audit coverage of an account balance (extent) and/or perform some procedures before yearend (timing). The answer to the question posed in the title is that a systems walk-through procedure, considered along with other risk assessment procedures described in the preceding paragraph, can provide substantive evidence that may enable an auditor to reduce tests of balances, even for some smaller audits!
It is very important because it tells you the extent to which you can trust client's records and controls.
The important of walk through test in auditing is highly creteria for auditor to reach a soon judment before they reach any conculusions. This means walk through test mean based on my understanding a process that a ouditor should start his/her tracing, flow up or check ups what every you call from begining of the story of the stransection from the point of veiw he/she can tras ever single point that that trasection eg. I the first place what kind of need assessment was done, second is proper qouts were made then how selection process was made and what preferance was made and why then how they award the supplier who win in then how the supplier conduct his task are they accourding to the agreement and terms of refereance and son on and on. In general walk through test on mean just on poin start the procees same were in the middle.
An audit walk-through involves several steps. The auditor watches how you or your staff operate when writing down a transaction in your accounts. He asks questions of everyone who handles it from the start of the transaction through recording it in your financial statements. Whenever someone documents what's happening, the auditor reviews the documents. If your company has controls to reduce errors and fraud, the auditor may test the controls to see if they work.
