What is a walk-through test?

A walk-through test is a technique used to evaluate the dependability of an entity’s accounting system during an audit. A walkthrough test follows a transaction step-by-step from the beginning to the end of the accounting system. Walkthroughs help resolve issues and shortcomings, although they are unnecessary for accountants.

Comprehending Walkthrough Examinations

The walk-through exam is one of the several tests auditors do to assess an organization’s risk management and accounting controls. The test can potentially identify material vulnerabilities and system flaws that the company must address.

During a walkthrough test, an auditor will examine how a transaction starts and progresses through an organization’s or company’s accounting system. This entails figuring out how a transaction is approved, entered into the books manually, automatically, or both, and then posted in the general ledger. The auditor will want to know how follow-up actions are taken to strengthen controls and how accuracy controls are implemented at each process stage.

A thorough walkthrough exam will also document the individuals entering transactions into the accounting system. Flowcharts and checklists are helpful tools for doing comprehensive walkthrough testing. The American Institute of Certified Public Accountants (AICPA) annually advises taking walkthrough exams.

As many small firms would do a walkthrough test without maintaining thorough records or evaluating a company’s financial records, walkthrough tests don’t necessarily need to be official processes. In other words, the auditor will watch and ask questions without seeking specific evidence or going through the transaction’s records or paper trail.

Particular Points to Remember

Asking staff members simple questions may be used to conduct a walkthrough exam, although it is not advised. This is because an employee’s description does not always match what occurs. For example, seeing staff in action and their transaction processing is a better approach than going through a walkthrough. Analyzing the company’s accounting process goes one step further when one examines papers and records.

A Walk-through Test Example

Depending on the business and auditor, a walkthrough will take many forms, but in general, the procedure should include a visual evaluation of the staff’s workflow while documenting a transaction. The auditor will next speak with anyone involved in the transaction and review the relevant paperwork. If accounting controls are in place, an auditor may also test them.

The auditor will list the shortcomings in how the transaction was handled after the walkthrough. The theory is that fixing these flaws may strengthen an organization’s accounting system.

Conclusion

• Walkthrough tests are dependability audits conducted on accounting systems.
• These assessments identify flaws and significant vulnerabilities in an organization’s bookkeeping procedures.
• To find weak spots, auditors doing the walkthrough will observe the company’s employees and review documentation produced throughout the process.
• The American Institute of Certified Public Accountants (AICPA) annually advises taking walkthrough exams.