Audit procedures are the process and techniques that an auditor performs to obtain sufficient and appropriate audit evidence. There are different types of audit procedures like Inquiry, observation, Analytical review, and so on. Surprise checks should be a part of the audit procedures to improve the effectiveness of the audit.
The element of surprise can be with regard to three things
1. Time of the Audit,
2. Selection of the date at which auditor visits the client place,
3. Selection of the Items.
The main focus of the surprise checks is on internal control; they check whether the system of internal control is operating effectively or not. If surprise checks reveal a weakness in the internal control system, the auditor can inform the same to management so that the management can take the action accordingly.
The results of surprise checks will help the auditor in deciding the scope of the audit and submit the report.
Surprise checks are conducted to check that the accounting and other records are prepared and kept up to date. As a result of the surprise checks, if the auditor finds any fraud or error or the fact that any books or register are not maintained properly can be brought to the attention of the management immediately.
The auditor can do surprise checks in the area where he feels like the internal control system is not effective or the company is very large having numerous branches and engaged in different activities.
The surprise checks are relevant in certain items that are Cash, Investments, stocks, stores, Statutory registers.
The frequency of the surprise checks is to be decided by the auditor based on his understanding of the internal control system, a surprise check should be conducted at least once during the course of the audit.
It also acts as a moral check on the client’s employees.
The auditor should satisfy himself that the appropriate actions are taken by the management for the matters communicated by him.
It is not necessary that whatever he has communicated with the management after doing surprise checks be a part of the audit report. However, the auditor should include if they are material and affects a true and fair view of the financial statements of the company.