## Inspection as an Audit Procedure
Definition: Inspection involves examining records or documents — whether internal or external, in paper form, electronic form, or other media — or a physical examination of an asset.
### Reliability of Evidence from Inspection
Reliability varies depending on:
- Nature and source of the document/asset
- For internal records: effectiveness of controls over their production
### What Inspection Can and Cannot Establish
| Object Inspected | Can Establish | Cannot Establish |
|---|---|---|
| Financial instrument (stock, bond) | Existence | Ownership or value |
| Executed contract | Application of accounting policies (e.g., revenue recognition) | — |
| Tangible fixed asset | Existence | Rights/obligations, valuation |
| Inventory items | Existence and condition (with observation) | — |
| Internal records | Evidence of authorisation (test of controls) | Depends on control effectiveness |
### Inspection as Test of Controls
A common application is inspecting records for evidence of authorisation — e.g., checking that purchase orders carry an authorised signature.