Definition
The auditor independently redoes a calculation and compares the answer with the recorded figure. AU-C 500 lists it as one of the audit procedures for obtaining evidence. It covers extensions and footings, depreciation schedules, loan interest, amortization, accrued vacation, tax provisions and the allowance rollforward.
Why it matters in an audit or review
Recalculation tests the accuracy of an amount without re-deciding the underlying judgment. It is cheap, precise and often exposes formula errors in client spreadsheets. When a schedule is used as audit evidence, recalculating it is part of testing the information's accuracy and completeness.
Example
A $1.5 million interest-only note (illustrative) bears 6.5 percent interest. The auditor recalculates interest for the year at $97,500 and compares it with a recorded $101,200. The $3,700 difference traces to a client spreadsheet that applied the rate to about $1,557,000, a balance that included accrued interest, so the formula, not the loan terms, is corrected.
Common mistakes
- Recalculating with the client's own spreadsheet instead of building an independent check.
- Confirming the total but not the inputs, such as rate, dates and balances.
FAQ
Is recalculation the same as reperformance?
No. Recalculation checks math. Reperformance repeats a procedure or control that the entity performed, such as a reconciliation or an approval workflow.
Sources
- AICPA, AU-C Section 500, Audit Evidence (recalculation and reperformance)
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error