You are required to distinguish between procedural and a balance sheet audit
I) Procedural audits entail a review of the company‘s procedures and records so as to ascertain whether they are accurate and reliable for decision making. These audits are ideal for organizations operating in dynamic business environments and companies whose operations are so technical and need to be updated over time. The audit concentrates on the review of operating procedures rather than on financial balances.
II) Balance sheet audits
These are audits in which the auditor starts his audit work from the balance sheet and tries to trace original entries to their final recording in a bid to prove their authencity. The auditor concentrates on proving the management assertions that are relevant to each of the balance sheet items.
This audit approach is adopted when carrying out a special assignment where the auditor is required to concentrate on the verification of the assets and the liabilities.
Very little time is spent in testing controls that management has put in place.
