Technical Audit

Technical Audit

Technical audits are audits performed by a subject-matter expert, engineer or auditor that evaluates the deficiencies or areas of improvement in a system, process or proposal. Technical audit covers the technical aspect of the project implemented in the organisation. A technical auditor should have deep knowledge of development, security standards, and design. As well as knowledge of algorithms updates.

What are the objectives of a technical audit?

The objectives of a technical audit are:

  • The technical operations are performed as required.
  • Sound control framework is in place to avoid and prevent potential risks.
  • The procured technical equipment is suitable for their purpose.
  • Responsibility and authority for operations are properly assigned.
  • The information system is enough to provide assurance of operating activities being done properly.

What are the concentrations of Technical Audit?

  • Planning and design. Needs analysis and demand analysis. Preparation of technical specification and authorisation. Quality assurance and the experience of the supplier required by the project.
  • Procurement or purchase. Compliance with the financial manual and independent evaluation of the received proposal.
  • Timely completion of the project, provision of liquidity damage in case of delayed project completion and acceptance of test report.
  • Impact of the project. Reduction of operation costs or improvement of operation, increase in market share, improvement of Key Performance Indicators or KPIs, increase customer loyalty or decrease customer chum, and increase in the company revenue.

The benefits of technical auditing.

Technical audit improves internal control systems to mitigate potential risks. It also improves the quality of service, assures revenue and transparent and cost-effective procurement of services and goods. It makes sure that projects are completed on time and that the project cost and annual operating cost is reduced. Technical auditing services also help in re-scheduling of project activities and improvement of the performance of a system.

Technical Audit Procedures

It is common that auditors do not look into each transaction in a financial statement of a company. This is why technical audit steps are made to make sure that auditors are able to express reasonable assurance that an account balance is not misstated and complete the audit in a reasonable amount of time. Knowing some common technical audit procedures can clarify how an auditor reaches a decision.

Sampling tests of details.

Testing for misstatement in a financial statement requires an auditor to choose to sample items from the balance and make a judgment based on the sample. An example is when an auditor tests the accounts receivable balance. He or she may examine the subledger to have a view of the listing of the customers who make up the balance. The auditor gets a random sample of customers from the subledger and a random sample of invoices from each subledger. The auditor has assurance about the large account balance without the need to look through each invoice. He or she can estimate total misstatement in the account balance based on the results of the sampling as long as the sample is randomly selected.

Reciprocal Testing

For understatement testing, a test of details can be applied. Auditors may use a common balance when testing for understatement.  These are population accounting entries related to the account being investigated. As an example, auditors must test to make sure that liabilities are not understated. Auditors should examine asset receipts, cash receipts, and equipment purchase assuming that the company has a valid purpose to record the liability if something was indeed received.


For certain kinds of audits, auditors need to examine items physically. This is especially true when testing fixed assets and inventory for overstatement. Auditors choose material items and observe their existence. If factory machinery makes up a substantial portion of the company’s fixed asset, the auditor should examine it to make sure it is there and examine supporting documents related to the cost of the machine and calculation of its depreciation. Observations by auditors are considered strong audit evidence.

Substantive Analytic Procedures

These procedures help compare recorded amounts to expectations of the amount made by an auditor. Auditor may rely on these procedures when completing audits but they can also be used in combination with testing of details.

When completing these procedures, auditors should build expectations of the account balance. Inputs to the calculation should be audited in a different fashion. When testing payroll expense, auditors must test details. If the tests show that the payroll’s expense computation is correctly stated, auditors can make use of the number of days of outstanding payroll and average payroll expense for each day to determine an expected amount of payroll liability that is owed to employees at the year’s end.

Kingston Knight Audit are the Auditor Melbourne experts to contact when dealing with your trust account audit, SMSF Audit, financial statement audit,  and internal audit requirements. Contact us today, Kingston & Knight Audit offers a free telephone consultation to establish how we can best help you achieve the assurance and compliance you require.

Call our Melbourne team today on 03 9088 2242, or email us via

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