When are follow-up procedures typically performed in an auditing context?

Follow-up procedures are typically performed in an auditing context when there are discrepancies or disagreements, particularly in terms of customer balances. When customers contest or disagree with the balance, it indicates a potential issue that needs to be investigated further to ensure the accuracy of the financial records. This is particularly critical because any unresolved disagreements could affect the reliability of the financial statements and overall audit conclusions.

The follow-up procedures aim to clarify and resolve these discrepancies by obtaining further evidence or documentation, potentially involving discussions with the customer or additional confirmations. By addressing these disagreements, auditors maintain a high level of assurance regarding the completeness and accuracy of those balances.

In contrast, scenarios such as when collections exceed expectations or confirmations are overwhelmingly positive might not require the same level of follow-up, as they generally indicate compliance and agreement with the assumed figures. Additionally, when the accountant is new to the client, it would not inherently trigger follow-up procedures unless issues, discrepancies, or unexpected observations arise during the audit. Thus, the context of customer disagreements necessitates follow-up procedures most appropriately.