Walkthrough Procedures and How They Benefit Nonprofits

Posted by Larry A. Gentile

Walkthrough Procedures - NonprofitsWhy do auditors perform walkthrough procedures?

Have you ever wondered why auditors always ask to perform walkthrough procedures? You know it is part of the audit, but WHY? One of the most important aspects of an audit, especially in the planning phase, is for the auditor to gain an understanding of the organization and how it operates. This includes knowing the key processes and controls that are set in place, and the employees responsible for them, in order for the organization to operate efficiently and effectively.

During a walkthrough, auditors trace a transaction from its origin, through the organization’s information systems, to the point where it appears in the financial reports. From an auditor’s perspective, part of the job is to ensure that the policies and procedures are being followed, and that the organization is operating as intended. This is where walkthrough procedures are most helpful.

How do walkthroughs affect the audit?

Walkthrough procedures affect the audit in multiple ways. They allow auditors an opportunity to identify points of the organization’s processes where a misstatement is more likely to occur. From this, auditors can better serve the organization by focusing on troubled areas while performing their examination. Any processes with significant deficiencies or material weaknesses noted in internal control will be communicated with management at the conclusion of the audit. This allows the organization to concentrate on developing a solution to processes that may be more susceptible to error or fraud.

Therefore, not only do walkthrough procedures help auditors perform their tasks, but they can also help fine-tune the organizational controls and processes.

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