The surprise checks constitute an important part of normal audit procedures. Audit procedures cannot consist merely of any set of rules to be applied to all and every situation but must be allowed to develop in the light of experience with regard to the circumstances of each audit. An element of surprise can significantly improve the effectiveness of an audit and therefore, wherever practicable, an element of surprise should be incorporated into the audit programme.
Surprise checks are mainly intended to ascertain whether the system of internal control is operating effectively and whether the accounting and other records are prepared concurrently and kept up to date. It has often been found that manipulations and frauds are facilitated under a system of book keeping, which does not give proper emphasis to the need to keep the books up to date. Errors in book keeping are often indicative of weaknesses in internal control, which may be taken advantage of in order to perpetrate frauds or manipulations. Surprise checks are useful method of determining whether or not such errors exit and where they exist, of bringing the matter promptly to the attention of the management so that corrective action is taken immediately. Consequently, surprise visits by the auditor can exercise a good moral check on the client’s staff.
The auditor according to his best judgment, having regard to the nature, size and materiality of transactions, picks up the entries for examination. Normally, entries involving large amounts or relating to material accounts are seen exhaustively and entries are picked up for verification at random from the remainder according to certain plan. Sometimes, entries are checked for a few specified months exhaustively and the rest go unchecked. Though it is state that the technique is an adaptation of the sampling theory, it is in reality far from it. It lacks any acceptable basis and gives the auditor no idea about the degree of reliability that can place on the findings for application to the whole set of entries. The so-called random picking is not random in the statistical sense. To be truly random, the selection should be free from any bias that is possible only through a statistical process and by reference to the random under tables. The only quality that this technique can claim lies in its keenness to cover amounts and material accounts. Even if errors, fraud etc. remain undetected in the part not checked, they‟re not likely to be too big as to upset the truth and fairness of the financial statement.