Financial Report Testing Methods 1681



  • What are the standard methods of testing Financial Reports (e.g. Inventory Adjustment Report , Order Price Override Report, Order Activity Report)?
    Some ideas are :

    1. Do Top Line Reconciliation of Report V/S Query of Database File
      Sample the First report Line and verify that this is as per the database
    2. Check Footing , Cross Footing Totals are correct
      Column Totals are correct ; Row Totals are correct and both match
    3. Tally across two reports for same financial Information.
      For above reconciliation ,one approach is to extract the system generated report in a spreadsheet
      Are there any other ways (apart from manual Calculations) for verification?


  • Also check out CAAT software such as ACL which can halp you recalculate reports from source data.



  • Last year, we received instrunctions from our global firm to make a reperformance of the reports that support key controls. We had a framework where we colud rely in Internal audit work and canned reports. However a lot of work was done to reperformance by using CAATs for some reports.
    The best approach get an agreement with your auditor regarding how to test them, and start testing them, because it may take some time.



  • This is more of a conceptual thought and it may or may not tie in to SOX financial testing … As an IT person I’ve been a victim of – I mean I’ve participated in about 30 years worth of audits 😉 🙂
    One key control in any financial reconciliation process, is ‘going to the original source’ whenever possible. Here you’d sample original input records from an external source or an original document (e.g., bill or invoice) and trace that through from an accountability standpoint all the way to the final destination. You’d look at any transformations (e.g., monetary changes), error corrections, etc.
    Thus, if original invoice #123456 was for USD43.23 in the beginning, it should also be the same in the financial reports being tested, or documented as a difference.



  • The best approach get an agreement with your auditor regarding how to test them, and start testing them, because it may take some time.
    Excellent Advice 🙂



  • True ; But right now I am responsible for designing the test steps which the external auditor will review


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