Inspection is an evidence gathering activity that refers to the inspection of documentary evidence (as opposed to looking at physical assets, which is referred to as physical examination, and watching client's staff performing a procedure, which is referred to as observation.) The documentary evidence may be documentation obtained from the client (such as a procedures manual, a copy of a sales invoice, etc.) or independently of the client (such as relevant industry and financial publications, suppliers' invoices, etc.). Inspection is an activity that auditors perform in all of the audit stages [fn].
In the control testing stage, inspection refers to the process of inspecting documentation for evidence of the performance, usually by an employee of the entity, of a control procedure. Inspection can provide evidence that the control was performed in the manner planned and continuously throughout the period of intended reliance.
Where auditors undertake inspection in the substantive testing stage i.e. for the purpose of gathering substantive evidence (as to the completeness, validity or accuracy of an account balance or underlying class of transaction) it is referred to as vouching .
The reliability of evidence obtained through inspection of documentary evidence is variable. It depends, for example, not only on the primary source of the documentation (i.e. either from the client or independently of the client) but also on the reliability of the individual who initiated the documentation.
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