Reperformance in auditing is when the auditor independently re-executes a procedure or control that the client’s own staff originally carried out, either to confirm that an internal control worked as designed or to verify that a recorded amount is accurate. The Public Company Accounting Oversight Board defines it in AS 1105 as “the independent execution of procedures or controls that were originally performed by company personnel.” Because the auditor puts their own hands on the work rather than relying on documents or explanations, reperformance produces some of the strongest evidence available in an audit.
The Two Jobs Reperformance Does
Reperformance answers two different questions depending on why the auditor is doing it, and the distinction matters because “success” looks different in each case.
The first is testing whether a specific internal control actually operates. Say a company requires a supervisor to match the purchase order, receiving report, and invoice before releasing a vendor payment. When the auditor independently re-executes that match on a sample of payments, the point isn’t the dollar amount. The point is to confirm the control functioned throughout the period. Payments that went through without a proper match are a control failure even if the amounts happen to be right.
The second is substantive testing, where the auditor re-executes a calculation to verify a recorded number. The auditor takes the same inputs the client used, applies the same methodology, and checks whether they land on the same result. If the client recorded $42,000 in depreciation for a group of assets, the auditor pulls the asset register, applies the client’s depreciation policy, and sees whether the math produces $42,000. A mismatch points to either arithmetic error or a misapplied accounting policy.
How Reperformance Differs From Recalculation and Inspection
These three procedures get used interchangeably in casual conversation, but each tests something different.
Recalculation checks arithmetic and nothing more. AS 1105 defines it as “checking the mathematical accuracy of information.” If a client sums a column of invoices to $150,000, the auditor re-adds the column. Recalculation answers one narrow question: was the addition correct? It says nothing about whether the right invoices were included or whether accounting policy was applied properly.
Inspection means examining records, documents, or physical assets. Looking at a signed approval form confirms someone signed it. Counting inventory confirms items exist. Inspection provides evidence about existence, authenticity, or condition, but it doesn’t test whether a process worked end to end.
Reperformance covers the whole process. Take depreciation on a fleet of delivery trucks. Recalculation checks whether the depreciation formula was computed correctly. Inspection might confirm the asset register lists the trucks. Reperformance means the auditor independently pulls the original cost, salvage value, useful life, and in-service date for each truck, applies the company’s depreciation policy, and compares the result to what was recorded. It tests the logic, the inputs, and the output together.
The practical difference: recalculation catches math errors, inspection catches missing or fabricated documents, and reperformance catches flawed processes. An auditor who only recalculates might confirm that a wrong number was computed correctly. Reperformance can catch the wrong number itself.
How Auditors Actually Do It
The process follows the same pattern whatever is being tested.
The auditor first picks what to reperform. The choice flows from the risk assessment. Areas with higher risk of material misstatement or weaker controls get more attention. A complex revenue recognition policy applied across thousands of transactions is a likelier target than a routine bank reconciliation.
Next comes gathering the exact inputs the client used. For a depreciation test, that’s the fixed asset register with original cost, salvage value, useful life, and in-service dates. For a three-way match test, it’s the purchase order, receiving report, and vendor invoice for each sampled transaction. Getting the right inputs is essential because the whole point is running the same process on the same data.
The auditor then executes the procedure independently using their own tools. Often that means building a spreadsheet or using audit software to apply the client’s documented policy to the gathered data. The important word is “independently.” The auditor doesn’t re-run the calculation in the client’s system; they build their own version. For automated processes, computer-assisted audit techniques can test entire populations of transactions rather than samples, filtering large volumes for anomalies that manual testing would miss.
Finally, the auditor compares their result to the client’s. If the numbers match, the control or calculation passed. If they don’t, the auditor investigates. A small difference might trace to rounding. A large one could indicate a data entry error, a misapplied policy, or a control that didn’t work as designed. Material variances require the auditor to find the root cause and decide whether an adjustment is needed.
Where Reperformance Shows Up in Practice
Inventory Valuation
When a company values inventory using FIFO, weighted average, or another cost flow assumption, the auditor selects a sample of items and independently applies the same method to the same purchase and production data. The point is to confirm that the right costs attached to the right units. Inventory is a frequent target because the calculations are intricate and the balances are usually material.
Accruals and Estimates
Warranty reserves, allowance for doubtful accounts, and similar estimates layer judgment on top of calculation. For a warranty reserve, the company typically applies historical claim rates to current-period sales to project future liability. The auditor re-executes that calculation using the company’s own history and methodology, then checks whether the recorded reserve matches. Because estimates involve judgment, reperformance here also tests whether the methodology itself is reasonable and consistently applied.
Payroll
Payroll involves statutory rates that create a clear right answer per employee. Auditors reperform withholding and employer contribution calculations for a sample of employees, checking that the payroll system applied current federal and state rates correctly. Errors compound quickly across a workforce, which makes payroll an efficient area for reperformance to surface systemic problems.
Lease Liabilities
Lease liability calculations have become a common target since ASC 842 required most leases on the balance sheet. The auditor pulls the payment schedule from the lease, the lease term including any renewal options the company determined it would reasonably exercise, and the discount rate. The auditor then independently computes the present value of remaining payments and compares it to the recorded liability. With many companies holding dozens or hundreds of leases, small methodology errors can add up to material misstatements.
The Three-Way Match
Reperforming the three-way match is one of the most straightforward applications in the expenditure cycle. The auditor independently matches the purchase order, receiving report, and vendor invoice for a sample of payments. This tests both the control (did someone actually verify these documents agreed before authorizing payment?) and the amount (does the payment match what was ordered and received?). It gives strong evidence about the accuracy of accounts payable.
Why the Evidence Is Considered Strong
Not every audit procedure carries the same weight. PCAOB standards rank the common tests from weakest to strongest: inquiry, observation, inspection of relevant documentation, and reperformance of a control. Reperformance sits at the top because the auditor actually does the work rather than trusting what someone said or what a document appears to show.
That ranking has practical consequences. AS 2301 describes testing the operating effectiveness of controls as involving “a mix of inquiry of appropriate personnel, observation of the company’s operations, inspection of relevant documentation, and re-performance of the control.” For controls tied to significant risks, the auditor leans harder on the procedures that produce stronger evidence, and reperformance is the strongest single option available.
What Reperformance Can’t Catch
The evidence is strong, but there are real blind spots.
Reperformance normally tests a sample, not every transaction. Sampling risk means the auditor’s conclusions might differ from what testing the whole population would show. A control might pass on every sampled item and fail on others. AS 2315 notes this risk “varies inversely with sample size: the smaller the sample size, the greater the sampling risk.” Statistically designed samples manage the risk, but it never fully disappears short of testing everything.
There’s also nonsampling risk. Even when an auditor examines a transaction, they can miss a problem. AS 2315 acknowledges this happens “because the auditor may fail to recognize misstatements included in documents that he examines.” Applied to reperformance, an auditor working from a flawed understanding of the client’s methodology could re-execute the procedure incorrectly and still conclude it works.
The most important limitation is that reperformance uses the client’s own inputs. If management manipulated those inputs, the auditor will re-execute the calculation and arrive at the same wrong answer. AS 2401 addresses this directly: “Management has a unique ability to perpetrate fraud because it frequently is in a position to directly or indirectly manipulate accounting records.” A company that inflates its asset register will show inflated depreciation whether the auditor or the client runs the numbers. Reperformance confirms process accuracy, not input integrity. Auditors close that gap with separate fraud-focused procedures like examining journal entries, reviewing estimates for bias, and evaluating unusual transactions.
Documenting the Work
Every reperformance procedure has to be documented. Under AS 1215, auditors have “an unconditional requirement to document their work.” The workpaper should show the inputs gathered, the methodology applied, the auditor’s independently computed result, and the comparison to the client’s figure. If there was a variance, the documentation must explain the cause and how it was resolved.
Conclusions have to be captured too. AS 1215 requires auditors to “document a final conclusion for every audit procedure performed, if that conclusion is not readily apparent based on documented results of the procedures.” For reperformance, that means stating outright whether the control operated effectively or the balance was fairly stated, not just showing matching numbers and leaving the reader to infer the outcome.