Difference between Audit Procedure & Audit Technique


Audit Procedure is something an auditor does or should do in order to do audit.

Audit Technique means how the Audit procedure is conducted.

Audit procedure for audit of Receivables may be as follows
1.      Vouch the Credit Sales Transaction;
2.      Vouch for payment received;
3.      Recompute the discount or any kind of concession if any;
4.      Pay Special attention towards Bad Debts;
5.      Analyse whether any (or any additional)Provision for Doubtfull Debts is required.

Now in order to perform audit procedure like Vouch the Credit Sales Transaction, Sampling & External Confirmations etc are audit technique.

In short,
Audit Procedure means “What you have to do.”
&
Audit Technique means “How you will do it.”

Following are the audit techniques as per Chapter 5 of CA Final Study Material
1.      Confirmations;
2.      Enquiry;
3.      Observation;
4.      Analytical review procedures.

Most of the time in CA Final Examination, the ICAI asks the question like Audit Procedure for conducting audit of Receivables, Fixed Assets, Payables etc.

Few things students should keep in mind while answering the same.

1.      The students approach to answer should be step by step.
Thus do not directly jump on the conclusion that if the auditor is unable to obtain SAAE (Sufficient and Appropriate Audit Evidence) he should modify his report in accordance with SA 705.

2.      Consider the following example while answering for Audit Procedure.
Example –Assume it’s the exam day today.
The exam is scheduled on 2 PM & its 1:45 PM now.
You are 5 kms away from the exam centre & your vehicle is not working.
Now think what all ways you have to reach to the exam centre.
A)     Catch an autorikshaw. But if suppose its rikshaw strike today.
B)     Catch a cab or a taxi. What if its  cab striks too.
C)     Take a lift. But no one is on that road then.
D)     Call parents. What if your parents are in the meeting.
E)      Finally RUN.
So that’s the step by step approach to write Audit Procedure answers.
Lastly if you consider you can’t reach the exam center by running, then give up.
Here give up means conclusion by the auditor in accordance with SA 705.

3.      Following are some points that may be written in common to all Audit Procedures answers.
A)     Enquiry of the management;
B)     Obtain the Written Representation in accordance with SA 580 from the appropriate level of the management; &

C)     The auditor may modify his opinion in accordance with SA 705 (The last point in answer).

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