Due to the paucity of time and the numerous and complex audit work, the auditor may feel that he will not be able to finish the whole work in time. He shall also not be able to do full justice with the audit work. Thereby the whole of his labour shall go waste. Under the circumstances, he chooses to check and verify only a few transactions from each category, instead of going for extensive checking of the whole audit work, provided he feels and is satisfied with the internal check system in vogue in the enterprise. Such checking of sampling basis is known as Test Checking or Sample Checking.

By this method of checking he applies the result of the checking upon the whole audit work, i.e., if the result of test checking is favourable, he feels that everything is o.k. If on the other hand, the result of the test checking is unfavourable, he feels that the account books are not correctly and truly maintained.

Thus, Test Checking in audit involves the selection and checking of a certain number of transactions, e.g., 25% of the postings from Cash Book to General Ledger or all the postings from Cash Book to General Ledger for any two or three months. The object of such checking is to arrive at an approximation of certain characteristics present in the recording of mass transactions.



While Test Checking the following precautions should be taken by the auditor:

(1) Knowledge of Internal Checking System- 

At the outset, the Auditor should verify the internal check system of the enterprise thoroughly and satisfy with the strength and weaknesses of the system. When the internal beck system is sound and the auditor is satisfied fully, then only he should go for the test checking or sample checking of the transactions.

(2) Selection of Representative Transactions-

Selected transactions should be a true representative of the whole lot, e.g., in a sugar mill purchases relating to sugarcane shall be representative. If the purchase of greece and oil for the use of machines are selected as samples for test-checking purposes, they shall not prove to be a true representative of a whole lot of purchases of sugarcane.

(3) Selection from Different Periodical Transactions-

Transactions from various periods of different records should be included in the sample. Samples should not relate only to a particular period say months of January and February, but rather from all months of the year, or some special months of the year depending upon their suitability as samples. Such selection shall fulfil the objective of checking and verification of the accounting records.

(4) Checking of Work Done by all Employees-

While selecting samples, care should be taken that they are taken from the work of each employee and not from the work of a few employees only. If the sample is selected from the work of a few employees only, it may happen that the dishonest employee may escape from the eyes of the auditor and thereby the records maintained by such an employee may not be audited at all and the errors/frauds if any may remain undetected.

(5) Checking of Transactions relating to Commencement and at the End of the Year-

Transactions from the beginning and the end of the year must be selected as samples out of the entire work under audit since it is found that defalcations are usually done in the end of the year and their adjustments reflect upon the transactions of the beginning of the year. Checking transactions relating to the beginning and at the end of the year are thought to be an important transaction for the detection of errors and frauds.

(6) Selection be based on Random Sampling Method-

Selection of transactions from the records and the entries recorded in the various books be made on random sampling. Such selection has got its advantages mainly because it is free from bias and proves to be fully representative.

(7) Cash Book should not be checked through Test Checking Basis-

The Cash Book and Pass Book of an enterprise are given more importance, and therefore, should not be checked and verified on the basis of test-checking. A routine checking system is adopted for the checking of these books. These books require extensive checking since most of the errors and frauds are committed through these books.

(8) No Enquiries be made from the Employees of the Client-

While selecting transactions as samples, enquiries 'should not be made from the employees of the client, because they may not give the correct information to the auditor. He should do the selection of transactions on his own and do this work secretly.

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