What does "alternative procedures" mean in audit?

 

Alternative procedures are additional audit tests used by auditors when the planned original set of audit procedures cannot be performed or are considered to be ineffective. The original procedures which auditors usually plan to perform to get audit evidence are inspection, observation, external confirmation, recalculation and inquiry. ISAs allow the use of alternative procedures in audit of inventory, accounts payable, accounts receivable as well as in the audit of claims and litigation.

For accounts receivable balances, the example of alternative procedures is examining specific subsequent cash receipts, shipping documentation, and sales near the period end.

For accounts payable balances, the example of alternative procedures is examining subsequent cash disbursements or correspondence from third parties, and other records, such as goods received notes.

As for inventory, in some cases where attendance of auditors at physical inventory counting is impracticable the auditors may use an alternative procedure such as inspection of documentation of the subsequent sale of specific inventory items acquired or purchased prior to the physical inventory counting.