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As an auditor, which alternative procedures would you use? Explain and provide an example from both...

As an auditor, which alternative procedures would you use? Explain and provide an example from both service and manufacturing companies. Explain whether you agree or disagree with the implementation of alternative procedures

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Answer #1

During an ongoing audit, the auditor might face certain circumstances where he might not be able to obtain reasonable assurance regarding certain items of the financial statements, therefore, the auditor might resort to seek alternative procedures for verification.

Alternative procedures generally used by auditors are:

  • External Confirmations;
  • Expert Suggestions and Consultancy;
  • Physical Verification;
  • Legal Advisory.

Examples: Physical Verification of Inventory at the warehouse, external confirmations from debtors and creditors, expert consultancy regarding a litigation pending against the company etc.

Generally, Alternative procedures do not provide absolute confirmation regarding the item in doubt but they provide alternate reasonable assurance regarding the item and helps auditor to form his opinion.

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