What is a Walk-Through Test?

A walk-through test is used by an auditor to follow each step in a transaction. The examination starts with the triggering business transaction, and compares each subsequent step to the procedure for how the transaction is supposed to be processed. The intent behind this test is to determine the reliability of a system, and whether there are any issues that should be brought to the attention of management. A walk-through test will only work if the documented procedure in which it is based is up-to-date.

The following activities are normally included in a walk-through test:

Select a transaction for testing. Pick a transaction using your sampling methodology for the area targeted for testing. For example, you might pick a transaction in the areas of billing, payables, or payroll.
Follow the processing steps. Follow the processing steps for the transaction from beginning to end, noting such matters as the confirmation of receipt, data entry, review, and output to the next processing step.
Verify documentation. Verify that the documentation associated with the test has been properly completed, authorized, and recorded in the accounting system. For example, you might review a customer’s purchase order and the related internal sales order when reviewing the process of creating a customer invoice.
Discuss with employees. Talk to the people involved in the targeted process, to understand their assigned tasks and what they are responsible for completing. This step is needed to gain a better understanding of whether employees have a complete understanding of what they are doing, whether they can spot anomalies, and what they would do if they were to find such anomalies.
Review controls. Review the controls embedded within the targeted process, to see if they are functioning properly and are working as intended. This can involve checking to see if automated controls are functioning properly, or if employees have a clear understanding of how to conduct manual controls.
Evaluate the walk-through. Based on your walk-through, decide whether the underlying system is reliable, and whether there are any issues that should be brought to the attention of management. Your review will determine the extent to which further audit procedures can rely on this process.