Walk-Through Test in Accounting

A walk-through test is an audit procedure that traces a transaction step-by-step through an organization’s accounting system to verify that controls operate as intended and to identify control weaknesses or material deficiencies.

What it is

A walk-through test follows a single transaction (or a representative sample) from initiation through authorization, recording, and final reporting in the general ledger. The goal is to confirm that controls for accuracy, completeness, and proper authorization are applied at each stage and that the documented process matches actual practice.

How it works

Auditors perform walk-throughs by combining observation, inquiry, and document inspection. Typical activities include:
* Selecting a transaction type or specific transaction to follow.
* Observing staff as they initiate, approve, and process the transaction.
* Interviewing personnel involved in the process to clarify responsibilities and steps.
* Inspecting supporting documents (purchase orders, invoices, approvals, reconciliations).
* Verifying how entries are recorded—manually, by automated systems, or both—and how they post to the general ledger.
* Testing any controls in place (e.g., segregation of duties, authorization thresholds).
* Documenting findings with flowcharts or checklists and noting personnel involved.

The American Institute of Certified Public Accountants (AICPA) recommends performing walk-through tests regularly (often annually) as part of ongoing internal control assessment.

Typical steps for an auditor

1. Define scope and select transaction(s).
2. Observe the process in real time where possible.
3. Interview staff to understand roles and controls.
4. Inspect documentation that supports each step.
5. Re-perform or test controls to confirm effectiveness.
6. Record deficiencies and recommend corrective actions.

Special considerations

• Don’t rely solely on employee descriptions—what people say may differ from what actually occurs. Observation and document review are more reliable.
• Small businesses may perform informal walk-throughs without extensive documentation, but auditors should still seek evidence of control operation.
• Use of flowcharts and checklists improves consistency and completeness of the test.

Example

A common example traces a purchase-to-pay transaction:
1. Purchase requisition is created and approved.
2. Purchase order is issued and vendor delivers goods.
3. Invoice is received, matched to the PO and receiving report.
4. Accounts payable records the invoice and schedules payment.
5. Payment is authorized and posted to the general ledger.
An auditor observing these steps might discover missing approvals, inadequate matching procedures, or improper segregation of duties—each of which would be reported as a control weakness.

Key takeaways

• Walk-through tests confirm whether accounting controls operate in practice, not just on paper.
• They combine observation, interviews, and document inspection to trace transactions end-to-end.
• Tests can reveal process deficiencies and material weaknesses that require remediation.
• Regular walk-throughs, documented with flowcharts or checklists, strengthen control assessment and risk management.

Walk-through tests are a practical tool for auditors and organizations to validate control effectiveness and improve the reliability of financial reporting.