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Selection of items for the purpose of checking can be done in two ways: (i) Judgment (ii) Statistical Sampling. When the judgment method is applied, the method of checking is called test checking. When sampling techniques are applied it is called statistical sampling.

Precautions To Be Taken – While adopting the test check, the auditor must take the following precautions:

1. Entries selected for test checking must be representative of all transactions.

2. The selection of the items should be at random.

3. It cannot be adopted in case of vouching the cash book.

4. Client’s staff should not come to know of the entries selected for test checking.

5. Period selected for test checking should differ from book to book and year to year.

6. He should not adopt test checking where the law requires thorough audit.

7. A number of entries of the first and last month of the year must be checked thoroughly.

8. Test should be so devised that a sizeable portion of the work done by each employee is checked.

9. Control accounts or impersonal ledger should not be subject to test checking.

10. Auditor should select the test independently without regard to the suggestions of the member of the client’s staff.

11. Bank statement and entries for cash withdrawal and cash deposits should be checked in full.

The extent of the test checking will depend upon the judgment and wishes of the auditor but it must be remembered that time unnecessarily spent in routine checking is a waste of resources. Caution must also be taken to see that the test checking may not become insignificant in extent or automatic and unrepresentative. Test checking will be of no use unless the representative items selected for checking are chosen with great intelligence and imagination.

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