Question

A walkthrough is one procedure used by an auditor as part of the internal control audit. A walkthrough requires an auditor to

A. Tour the organization's facilities and locations before beginning any audit work.
B. Trace a transaction from every class of transactions from origination through the entity's information system.
C. Trace a transaction from each major class of transactions from origination through the entity's information system.
D. Trace a transaction from each major class of transactions from origination through the entity's information system until it is reflected in the entity's financial report.

Answer 1

A walkthrough is a procedure used by an auditor to trace transactions through an entity's information system. Hence, option B is correct.

Step-by-step explanation:

A walkthrough is a procedure used by an auditor as part of the internal control audit. It involves tracing a transaction from each major class of transactions from origination through the entity's information system until it is reflected in the entity's financial report.

For example, let's say an auditor is performing a walkthrough of the sales process. They would start by examining the sales documents and records, then follow the transaction through the system to ensure that all necessary controls and procedures are in place and operating effectively.

This helps the auditor gain a comprehensive understanding of the organization's internal controls and processes, identify any potential weaknesses or gaps, and assess the reliability of the financial reports.