Audit Walkthrough Example (2026): Follow One Purchase From Requisition to Check
Kyle Ashcraft, CPA · 2019 CPA Exam Scores · 95 FAR · 98 BEC · 91 REG · 90 AUD
Every audit textbook says the auditor obtains an understanding of internal control. Very few show you what that looks like. It looks like this: you pick one purchase and follow it from start to finish, the same way it moves through the company. That is a walkthrough, and it is the step students most often mix up with testing the controls.
I am going to follow one purchase at Coffee Co., the example client from my Auditing 101 videos, through seven steps. Then I will show you the work paper, what a walkthrough cannot tell you, and the exam question that tests it.
Quick answer: a walkthrough follows one transaction from start to finish. At every step you ask who does it, watch them do it, inspect the documents and, where you can, redo the control yourself. It tells you whether a control is designed effectively and has been implemented. It cannot tell you the control worked all year. That takes a test of controls on a sample.
This is the walkthrough chapter of my Auditing 101 video on what auditors actually do in the field. The page below covers the same purchase in writing.
On this page
Last updated October 2026. Coffee Co. and every figure in it are the example from my Auditing 101 video, not a real client. Standards referenced: PCAOB AS 2201 and AICPA AU-C 330.
What is an audit walkthrough?
A walkthrough is following one transaction through the company's process, from the moment it starts until it shows up in the financial records. At every step I do three things. I ask who does it. I watch them do it. And I inspect the documents. Where I can, I also redo the control myself.
Asking alone is never enough. People tell you how things are supposed to work. Watching and inspecting show you how they actually work.
| Technique | What you do | At Coffee Co. |
|---|---|---|
| Inquiry | Ask who does the step | Who starts a purchase? The roastery supervisor. |
| Observation | Watch it happen | Watch the receiving clerk count a delivery. |
| Inspection | Look at the document | Requisition 418, the signature on purchase order 2357. |
| Reperformance | Redo the control yourself | Redo the three-way match. |
The PCAOB's AS 2201 describes a walkthrough the same way: following a transaction through the process using a mix of inquiry, observation, inspection of relevant documents and reperformance of controls. Inquiry on its own is the weakest of the four, which is why you never stop there.
What does a walkthrough look like? One purchase, seven steps
Our purchase is Coffee Co.'s order of 14 bags of Colombian beans from Bean Supply Co. for $4,200. Here is the path it takes.
- The requisition. When the beans run low, the roastery fills out a requisition, and Joe Park, the roastery supervisor, approves it. I ask who starts a purchase, I watch Joe approve one, and then I inspect ours: requisition 418, 14 bags, approved by Joe.
- The purchase order. Purchasing turns the requisition into purchase order 2357, and the purchasing manager, M. Ortiz, signs it before it goes out. I inspect the signature. That is the control: nothing gets ordered without approval.
- Receiving. On October 20, Bean Supply's truck pulls up to the dock. The receiving clerk gets a copy of the purchase order with the quantities blacked out, so the clerk has to actually count the bags. That is a blind count. I watch the clerk count a delivery, and then I inspect ours: receiving report R-171, 14 bags received, signed by the clerk.
- The invoice. Bean Supply bills $4,200, and the invoice goes straight to accounts payable, not to the person who ordered the beans. That separation is the point. The person who orders should not be the person who pays. (I cover that idea in segregation of duties.)
- The three-way match. Accounts payable lines up the purchase order, the receiving report and the invoice. 14 bags ordered, 14 bags received, 14 bags billed at $300 each. All three match. Here I do not just watch. I redo the match myself. That is reperformance, and it holds at $4,200.
- The entry. Only a matched package gets recorded. Debit inventory $4,200, credit accounts payable $4,200.
- The check. On November 19, the treasurer signs check 438 for $4,200, but only with the matched package attached. Then the package is marked paid, so the same invoice can never be paid twice.
The conclusion. Seven steps, one purchase. At every step the control was there and someone actually performed it. So I conclude two things: the controls are designed effectively, and they have been implemented. In other words, they exist, and they were put in place.
What does the walkthrough work paper look like?
Now I write it up. The work paper has one row for each step: who does it, the control, and how I know. Some firms write the same thing as a memo or draw it as a flowchart. Either way, it documents how the system is designed. It does not test anything.
| Step | Who | The control | Evidence in the file |
|---|---|---|---|
| Requisition | Roastery supervisor | Supervisor approves the request | Requisition 418 |
| Purchase order | Purchasing manager | Manager signs before it goes out | Signature on PO 2357 |
| Receiving | Receiving clerk | Blind count against a PO with quantities hidden | Receiving report R-171 |
| Invoice | Accounts payable | Invoice goes to AP, not the requester | Bean Supply invoice, $4,200 |
| Three-way match | Accounts payable | PO, receiving report and invoice must agree | Match redone: 14 × $300 = $4,200 |
| Entry | Accounts payable | Only a matched package is recorded | Dr Inventory, Cr AP $4,200 |
| Check | Treasurer | Signs only with the matched package; package marked paid | Check 438, November 19 |
| Designed effectively? Implemented? | Yes. Yes. | One purchase: PO 2357, $4,200 | |
What does a walkthrough not tell you?
Look at what I did not conclude. I did not say the controls operated effectively. A walkthrough is one transaction. It tells me the control exists. It cannot tell me the control worked all year. That is operating effectiveness, and it takes a sample across the whole period.
Here is how it plays out at Coffee Co. I pulled 25 of its 260 purchase orders from January to December, and 2 of them had no signature. That is an 8% deviation rate, so the control did not operate effectively. My walkthrough saw a signed purchase order, which was correct. It just never looked at the other 259. I run that test in the same 25 purchase orders, tested twice.
| What you want to know | Where the evidence comes from |
|---|---|
| Is the control designed effectively? | The walkthrough |
| Has it been implemented? | The walkthrough |
| Did it operate effectively all year? | A test of controls on a sample over the period |
And I only test operating effectiveness when I plan to rely on the controls, or when substantive procedures alone are not enough. One more limit: management can walk right around a control that is in place, so a walkthrough is never one of the procedures for management override.
How does the AUD exam test walkthroughs?
The question asks which of the answer choices is the correct list of walkthrough procedures usually performed in an issuer's integrated audit. It is exactly what we did at every step: inquiry, observation, inspection of the documents, and reperformance of the match. That is answer C.
- Answer A is the trap. It includes analytical procedures and testing of controls. Analytical procedures compare totals across lots of transactions, and we never looked at a total. We followed one purchase. Testing of controls is not a step inside a walkthrough. It comes after, with the 25 purchase orders.
- Answers B and D both include sampling. A walkthrough is one transaction, so there is nothing to sample.
Remember: walkthrough = one transaction = inquiry, observation, inspection, reperformance = design and implementation. Sample = test of controls = operating effectiveness.
If you want to practice this with official AICPA questions, they are in my free AUD 101 course below. For the surrounding concepts, see test of controls, control risk and the expenditure process.
Sources: PCAOB AS 2201, An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements (walkthroughs); AICPA AU-C 330, Performing Audit Procedures in Response to Assessed Risks. Standards checked October 2026. Coffee Co. figures are illustrative.
Frequently asked questions
What is a walkthrough in an audit?
A walkthrough follows one transaction from the moment it starts until it is recorded, asking who performs each step, watching it done, inspecting the documents and, where possible, redoing the control. Its purpose is to confirm that controls are designed effectively and have been implemented.
What procedures are performed in a walkthrough?
Inquiry, observation, inspection of documents and reperformance. Analytical procedures and sampling are not part of a walkthrough, because a walkthrough is one transaction rather than a population.
Does a walkthrough test operating effectiveness?
No. One transaction shows that a control exists and was put in place. It cannot show the control worked all year. Operating effectiveness takes a test of controls on a sample across the period.
What does it mean for a control to be designed effectively and implemented?
Designed effectively means the control exists and would work if it is performed. Implemented means it was actually put in place and used. A walkthrough of one transaction speaks to both.
When does an auditor test operating effectiveness of controls?
Only when the auditor plans to rely on the controls, or when substantive procedures alone cannot provide enough evidence. Otherwise the audit goes straight to substantive testing.
Start the free AUD 101 course
A full free outline and official AICPA questions you can practice, so you can see whether the explanations work for you. No credit card required.
Kyle Ashcraft, CPA scored 90 or above on every section of the CPA exam in 2019, including a 90 on AUD. He is the founder and sole instructor of Maxwell CPA Review, where he creates every lecture, textbook and study outline himself.
Reach him at MaxwellCPAreview@gmail.com.
Double-click to edit...