What Is Walkthrough in Audit and Why It Matters

A walkthrough in audit is a procedural step in an audit where the auditor traces a transaction or process from initiation to completion to gain an understanding of the client’s internal controls and identify potential risks.

Objectives of Walkthrough in Audit

The key audit walkthrough objectives include:

• Understand the client’s business processes and transactions.
• Identify key controls and potential risks.
• Assess the effectiveness of internal controls.
• Determine the extent of testing required.
• Identify areas for improvement.

Key Audit Walkthrough Steps and Procedure

The following audit walkthrough steps are generally followed:

• Plan the walkthrough: Identify transactions or processes to review.
• Prepare documentation: Gather relevant documents and records.
• Conduct the walkthrough: Trace transactions or processes.
• Identify controls and risks: Document key controls and potential risks.
• Evaluate controls: Assess effectiveness of identified controls.
• Document findings: Record results of the audit walkthrough procedure.

Benefits of Walkthrough in Audit

The major benefits of walkthrough in audit are:

• Enhanced understanding of client’s business.
• Identification of key controls and risks.
• Improved audit efficiency.
• Better risk assessment.
• Enhanced audit quality.

Types of Walkthroughs in Auditing

Auditors may conduct different types of walkthroughs, such as:

• Transaction walkthrough: Tracing a specific transaction.
• Process walkthrough: Reviewing a business process.
• System walkthrough: Evaluating IT systems and controls.

Best Practices for Internal Controls Walkthrough

To ensure effective walkthroughs, auditors should:

• Involve client personnel.
• Document walkthrough procedures.
• Test controls during walkthrough.
• Consider multiple scenarios.
• Update audit plan based on walkthrough findings.