Flashcards in A4 (1) - AUDIT EVIDENCE Deck (14):
TYPES OF AUDIT EVIDENCE
1- Underlying Accounting Records (invoices, contracts)
2-Corroborating Evidence (confirmations, inquiry)
3- Evidence in Electronic Form
THIRD STANDARD OF FIELDWORK
The auditor must obtain sufficient appropriate audit evidence by performing audit procedures to
afford a reasonable basis for an opinion regarding the financial statements under audit."
THIRD STANDARD OF FIELDWORK - A. Reasonable Basis for an Opinion
1- cost-benefit relationship may be a valid reason for performing only certain procedures,
2- The auditor must exercise professional judgment in determining the procedures to be performed and the sufficiency and appropriateness of the evidence gathered.
THIRD STANDARD OF FIELDWORK - Sufficiency of Audit Evidence
1. Greater risk of material misstatement implies more evidence will be required.
2. The quality of audit evidence: less audit evidence may be required when that evidence is of higher quality.
THIRD STANDARD OF FIELDWORK - Reliability of Evidence
1- Auditor's Direct Personal Knowledge
2- External Evidence
3- Importance of Effective Controls
4- Documentary Evidence
5- Information Produced by the Client
THIRD STANDARD OF FIELDWORK - Evaluation of Audit Evidence
Achievement of audit objectives.
1- Tests of Details
2- Analytical Procedures
SUBSTANTIVE PROCEDURES - Analytical Procedures
1. Comparisons of Financial Data
2. Ratio Analysis
3- Investigation of Significant Differences
SUBSTANTIVE PROCEDURES - Analytical Procedures Documentation
1- Auditor's expectation.
2. Factors considered in development of expectation.
3. Results of the comparison
4.Additional audit procedures to unexplained differences.
5. Results of such additional procedures
TESTS OF DETAILS - Directional Testing
IF test starts with items In the accounting records, the proper assertion is most likely to be existence-the auditor searches for evidence indicating that the item truly exists and has not been created by management. On the other hand, If a test starts with source documents, It Is most likely related to the completeness assertion since the goal Is probably to make sure all transactions (as Identified by the source documents) have been included in the accounting records.
TESTS OF DETAILS -Auditing Procedures
1- Footing, Cross footing, and Recalculation
4- Examination I Inspection
6- Analytical Procedures
7- Re - performance
11- Cut-off Review
12- Auditing Related Accounts Simultaneously
13 - Representation Letter
14- Subsequent Events Review
TESTS OF DETAILS - Relevant Assertions:- Account Balances (CVER)
2- Valuation, Allocation, and Accuracy
3- Existence and Occurrence
4- Rights and Obligations
TESTS OF DETAILS - Relevant Assertions :Transactions and Events (COVEU)
2- Cut. Off
3- Valuation, Allocation, and Accuracy
4- Existence and Occurrence
5- Understandability and Classification