Audit procedures are the specific actions an auditor takes to collect evidence. There are six hands-on types, namely inspection, observation, inquiry, external confirmation, recalculation and reperformance, plus analytical procedures. Good audits mix them, because inquiry alone is never enough and some procedures suit some assertions better than others.
Last reviewed: 17 October 2026. Facts checked. We ran a web search on SA 500 and these procedures. Results included ICAI regional council slide decks and study guides, but we did not open the SA 500 text itself, and the two ICAI deck links we tried did not load (one host had a certificate error, one did not resolve). The definitions below follow search summaries of those materials and the general wording of the standard. Check SA 500 before quoting definitions in a working paper.
The idea first
An audit procedure is a way of getting evidence. Evidence is what supports the opinion. The auditor picks procedures by asking: for this risk and this assertion, what action will give reliable evidence? Our guide to audit evidence types and reliability explains how reliable each source is, and audit assertions explain what you are trying to prove.
The procedures at a glance
| Procedure | What you do | Typical example |
|---|---|---|
| Inspection | Examine records, documents or physical assets | Read a sale invoice and delivery challan; look at fixed assets |
| Observation | Watch a process being done by others | Attend a physical stock count |
| Inquiry | Ask knowledgeable people, inside or outside the entity | Ask the credit controller why a debt is overdue |
| External confirmation | Obtain a direct written reply from a third party | Bank balance confirmation; debtor confirmation |
| Recalculation | Check the arithmetic of records or documents | Re-add a ledger; recompute depreciation |
| Reperformance | Independently carry out a control or procedure the entity did | Re-run the bank reconciliation |
| Analytical procedures | Compare numbers with expectations | Compare gross margin by month |
Inspection
Inspection means examining records, documents or physical items. The study guide we saw notes that physically examining an asset can be more reliable than reading a record about it. Documents from outside the entity are more reliable than internal ones. Inspecting a signed contract tells you about rights; inspecting a stock item tells you it exists, but not who owns it or what it is worth.
Observation
Observation is watching a procedure as others carry it out, such as a stock count or how goods are received. Its limit is that it covers only the moment you watch, and people may behave differently when watched. Use it with another procedure, such as testing the records before and after.
Inquiry
Inquiry is asking questions of finance and non-finance staff, management or outsiders. It is useful for understanding and for leads, but answers are not enough on their own. Corroborate with documents or data. Always write down who you asked, when and what they said.
External confirmation
A confirmation is a direct written response from a third party to the auditor, such as a bank, a debtor or a lender. Because the evidence comes from outside, it is usually reliable, especially for existence. The key is control: you send the request and the reply comes straight back to you, not through the client. See balance confirmation letters under SA 505 for a format.
Recalculation
Recalculation checks mathematical accuracy, manually or with software. Typical uses: depreciation, interest accruals, foreign exchange, tax computations and ageing schedules. It tests accuracy and valuation arithmetic, but not whether the inputs are right, so check the inputs as well.
Reperformance
Reperformance is the auditor's own independent execution of a procedure or control that the entity performed. If a clerk matches invoices to purchase orders before approval, you do the same match on a sample and see whether you get the same answer. It is a common way to test whether a control works. See tests of controls under SA 330.
Analytical procedures
These compare numbers with expectations to spot unusual movements. They are used at planning, as substantive tests and in a final review, as our guide on analytical procedures under SA 520 explains.
Choosing procedures: a worked example
Risk: Trade receivables may not exist at year end.
| Step | Procedure | What it tells you |
|---|---|---|
| 1 | Inspect sales invoices, dispatch records and customer orders for a sample | The sale was real and goods left |
| 2 | Send external confirmations to selected customers | The customer acknowledges owing the balance |
| 3 | Inspect cash received after year end | The debt was collected, which supports existence and recoverability |
| 4 | Recalculate the ageing schedule | The ageing is arithmetically right |
| 5 | Inquire about long overdue balances and corroborate with correspondence | Management's view on recovery, tested not trusted |
| 6 | Compare debtor days with prior years (analytical) | Whether the balance looks reasonable |
No single step proves existence. Together they build strong evidence.
Tests of controls and substantive procedures
The same procedures serve two purposes. Used on controls (for example reperformance of an approval check) they are tests of controls. Used on balances and transactions (for example confirming a debtor) they are substantive procedures. How much of each depends on the assessed risk, covered in the audit risk model post.
For a wider framework, see audit procedures and testing framework under Indian standards. When choosing sample sizes, try the audit sampling calculator.
Common mistakes
- Relying on inquiry alone. It needs corroboration.
- Letting the client handle confirmations. The reply must come to the auditor.
- Recalculating without checking inputs.
- Writing "checked" in the working paper without saying what you did and what you found.
Frequently Asked Questions
What are the types of audit procedures?
Inspection, observation, inquiry, external confirmation, recalculation, reperformance and analytical procedures.
What is the difference between recalculation and reperformance?
Recalculation checks arithmetic. Reperformance means independently carrying out a whole control or procedure that the entity did, such as a reconciliation.
Is inquiry enough as audit evidence?
No. It is useful for understanding and leads, but you should corroborate it with documents, data or other procedures.
Which procedure is most reliable?
It depends on the assertion. Evidence from outside the entity, such as a confirmation, and direct physical examination are generally more reliable than internal records or verbal answers.
Are audit procedures the same as audit tests?
Procedures are the actions. Tests of controls and substantive tests describe the purpose for which a procedure is used.
Related Articles
Statutory facts on this page are checked against their sources, and the page says where it relied on secondary reporting. How we verify · Report an error