E.10 Preliminary Survey Techniques

  1. The techniques discussed in this procedure should not be considered all-inclusive. Practice Review and Internal Audit (PRIA) should use only those techniques necessary for the specific program or activity to be surveyed. PRIA auditors should constantly strive to develop new and more effective techniques. In selecting the best method for surveying a particular activity, the internal auditor should use the techniques that will produce the desired result and at the least cost. The most effective method may actually be a combination of several methods depending on the circumstance.

  2. Interviewing—The preliminary survey includes the use of interviews in each major functional area. Interviews must be planned in advance, keeping in mind that the purpose of the survey is to disclose areas with potential for improvement of risk management, control, governance, and operations.

  3. Narratives—This can often be the simplest and most effective way to describe a situation or process.

  4. Visual Observations—A tour of the facilities of the area to be audited may disclose material weaknesses in the operations in various areas, including supervision, housekeeping, safety, security, operational efficiency, and employee morale. Visual observations also include scanning records and reports for unusual items.

  5. Comparative Analysis—This technique involves comparing data, sometimes from various sources, to identify unusual situations, deviations, or trends. Data can be compared to budget, prior periods, other Office of the Auditor General of Canada (Office) departments, similar operations elsewhere in the Office, outside industry data, financial to statistical, and vice versa. Creativity and business knowledge will enhance the variety of options to consider. This is similar to analytical review below.

  6. Flowcharting—This technique involves using a diagrammatic network to chart steps that must be completed before a program or activity can be concluded successfully. This technique can be particularly useful to the auditor in documenting controls and in identifying bottlenecks and duplications in operations.

  7. Analytical Review—This technique involves comparing results such as income, expenses, etc., for the same entity from period to period. It also can be used when evaluating changes in results that are dependent on or affected by other factors. For example, if the number of employees increased from the last period, the payroll costs should also go up in addition to the normal increase due to raises, inflation, etc. Both Analytical Review and Comparative Analysis above can be effective applications of computer-assisted audit techniques (CAATs).

  8. Risk and Control Matrices—This tool is often an efficient way to document preliminary survey data in a visual way. It can match risks to controls, or lack thereof, and can further be customized or expanded to cross-reference to or show program steps or results of evaluation of the controls.

  9. Exploratory Sampling—Consultation with the Office Internal Specialist—Quantitative Methods is advised. The exploratory sampling method uses random sampling as a tool in conjunction with selected audit tests—normally employed for financial, compliance, and management audits.

    Generally speaking:

    1. The number of items in the population to be tested (cases, contracts, practices, etc.) can be determined.

    2. A random number system can be applied to select the items for audit tests.

    3. A minimum acceptable error rate can be established. For example, if the actual error rate found after testing is at, or less than, the value established as the standard, the auditor may conclude that further testing is not necessary. Generally, if the minimum acceptable error rate is exceeded, the testing will be extended upon conclusion of the survey phase. While this method can be applied to small populations of items, applying this method to larger populations will produce better cost‑effectiveness.

Last modified:
2018-02-20