The External Institutions of Corporate Governance: regulators, markets, auditors and others

The relationship of audit techniques, audit procedures and assertions
Audit technique - are the basic tool or means employed to obtain audit evidences.
Audit procedures - are the application of audit techniques.
Assertions – are representation of management as to the fairness of the financial statements.

Audit
Techniques
Audit Procedures
Assertions

Count

Counting of inventory, cash securities, unmatured, promissory note (to establish existence and where applicable, ownership and condition of assets).

Physical Existence Confirm

Obtaining confirmation directly of details of account balances (to verify validity and accuracy of balances and other information with outside parties).

Existence; rights and obligations Inquire

Obtaining client’s representation letter; explanation to many diverse questions raised during the audit (to obtain knowledge).

Completeness

Examine, Inspect, review, trace, verify and vouch

Examining (or vouching) paid checks, vendor’s invoices, approved client documents (voucher; purchase orders, receiving reports) titles, contracts and other documentary materials (to verify the validity and propriety of accounting treatment of transaction and account balances and compliance with internal control).

Occurrence, measurement

Observe, Test and Verify

Observing the taking of physical inventories by the client’s personnel; of actual operation of internal control (to determine compliance with prescribed procedures).

Existence

Extend Foot

Rechecking clerical determination by client (to verify the accuracy of computation and transfer of information made by client).

Measurement

Compare, Trace

Comparing current period account balances or operating data with similar information for prior periods and investigation of unusual data relationship (to disclose and determine the reason for significant changes).

Completeness

Analytical Review