Though the concept of walkthroughs as an auditing technique is not new, Auditing Standard 2 of the PCAOB requires the auditor to perform a walkthrough of each major class of transaction. Conducting a walkthrough helps the auditor in obtaining a complete understanding of the process flow of transactions. The best and most preferred way of conducting a walkthorugh is by following a transaction from its origination to its ultimate end in the financial statements of the company. As I see it, walkthroughs serve the four key purposes -

1. Within a process, walkthorughs help the auditor in understanding the design of controls.

2. Walkthroughs help the auditor in evaluating the effectiveness of design of controls.

3. Help in verifying whether controls have been placed in operation.

4. Conducting a walkthrough helps the auditor in understanding the key areas in the process where a material mis-statement could occur.

We stress a lot on walkthroughs especially to our onsite consultants, since for them it is essential to have a through understanding of the business process, related risks of material mis-statements and controls.

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