ACCA Audit and Assurance (F8) Practice Exam

Which audit procedure involves verifying the accuracy of financial records?

1. Observation of processes

2. External verification

3. Recalculation of amounts

4. Interviews with staff

The correct answer is: Recalculation of amounts

Recalculation of amounts is the audit procedure that focuses on verifying the accuracy of financial records. This procedure involves the auditor independently calculating figures based on the data provided in the financial statements and confirming that these figures align with what is recorded in the company's accounts. It ensures that the numbers are accurate and that there have been no computational errors that could affect the financial statements' integrity. Through recalculation, the auditor can assess the reliability of the quantitative data presented in financial records. This process might include checking mathematical accuracy in areas such as account balances, revenue calculations, and expenses or confirming the validity of transaction amounts. It is a fundamental testing technique that provides a basis for the auditor's opinion on the financial statements. Other options such as observation of processes and interviews with staff may provide insights into operational controls but do not directly verify the accuracy of financial records. External verification typically involves confirming information with third parties, but still does not assess the underlying accuracy of the financial records themselves. Therefore, recalculation stands out as the most relevant procedure for ensuring the figures are correct in the financial documentation.