Walkthrough PDF

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Walkthrough...

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Conducting a ‘Walkthrough’ ‘Walkthrough’ has been identified as the most effective means for an auditor to obtain/confirm his/her understanding of how internal control over financial reporting is designed and operates to evaluate and test its effectiveness. It includes making inquiries of and observing the personnel who actually perform the controls; reviewing documents that are used in, and that result from, the application of the controls; and comparing supporting documentation to the accounting records. From a control standpoint, a walkthrough can be defined as simply the act of tracing a transaction through organizational records and procedures-a commonsense approach to learning how a process works. Using walk through, internal auditorsI. Obtain understanding of the process flow of transactions. II.

Confirm/obtain understanding of the design of controls identified for all five components of internal control over financial reporting, including those related to the prevention or detection of fraud.

III. Determine the scope of their audit. IV.

Evaluate the effectiveness of the design of controls, and confirm whether controls have been placed in operation- in other words can use walkthrough as a mean of testing the identified controls.

In practice, internal auditors conduct and documents walkthroughs as a key part of their preliminary survey. Two very popular ways to conduct walkthroughs are 1. Interview. 2. Observation. Interview: To conduct a successful interview, in order to document the process properly-

Before the interview: 

Obtain an understanding of the nature of the client’s business process.

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Prepare a list of key questions/topic that will be addressed during the interview. And it is most of the time beneficial to send the questions to the interviewee so that he/she has time to prepare and may even gather necessary documents.

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Arrange a time.

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Dress appropriately.

During the interview: 

Arrive on time.

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Kick off the interview with an appropriate introduction and a summary of the interviewer’s objective for the interview.

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Ask effective and mostly open-ended questions.

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Employ active listening skills.

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Take good notes.

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At the end of the take a minute to review the notes to make sure that the interview objective has been met.

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Obtain necessary documents that will help documenting and/or enhance your understanding of the over all process (e.g. responsibility matrix for payroll department, or process flow chart, or organizational chart)

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Summarize key point to make sure understanding is accurate.

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Set time/option for follow up meeting, to-dos, as appropriate.

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And always thank the client for his/her time.

After the interview: The best practice is to document the understanding about the process right after the interview, send the follow up questions regarding any other topic that you have missed during the interview, and when finish documenting the walkthrough, send a copy to the process owner to confirm your understanding of the process or to add any other information that is needed. Observation: Observation requires the same kind of preparation- the only difference is that the auditor documents the process by observing the process owners performing it. And the auditor should ask questions and take good notes during the observation process, and collect documents to achieve a better understanding of the process and the control. And again, the best practice is to document the walkthrough right after observing, send the follow up question or questions regarding any other topic that you have missed, and when finish documenting, send a copy to the process owner to confirm your understanding of the process or to add any other information that is needed....