ISA 500 - Audit Evidence

Question 1

ISA 500: Audit Evidence:

Answer 1

> Audit Evidence is information collected by the Auditor for purpose of giving the opinion on Financial Statements.
What constitutes of Audit Evidence:
It must be Sufficient and Appropriate Audit Evidence.
- Sufficient refers to quantity or volume.
- Appropriate refers to quality, it must be relevant and reliable.
Reliability:
More reliable:
- External Evidence
- Written document
- Directly by Auditor
- Original document

> Not so reliable:
- Internal Evidence
- Oral Evidence
- By client
- Photocopies/ Digitized documents.

Question 2

ISA 500: Audit Procedure

Answer 2

1. RAP - Risk Assessment Procedure
2. FAP - Further Audit Procedure
3. Test of Controls
4. Compliance Procedure
5. Substantial Procedure
6. Test of details - Cheking Transactions and balances.

Above are the Procedures we follow to gather Audit Evidence.

Methods to obtain Audit Evidence:
> Inspection
> Observation
> External Confirmation
> Recalculation
> Reperformance
> Analytical Review Procedure (ARPs)
> Enquiry

Question 3

ISA 500: Inconsistency of Audit Evidence:

Answer 3

> Do Additional Audit Procedures
Impact on opinion of FS.

Question 4

ISA 500: Management’s Expert:

Answer 4

• Hired by management
• Experts other than in Accounts and Audit.
• Cs, CMA, Advocate, Chartered Engineer, etc.
• Evaluation of the Expert person in Competence by the Auditor:
  > Competence
  > Capability
  > Objectivity
  > Understanding of his work
  > Relavance of his work with with respect to Audit.
  > Only when we are satisfied with the above as good will we rely on the Expert’s work as part of Audit Evidence.

Auditor can also use information produced within the Entity as Audit Evidence:
> Accuracy and completeness of data.
> Precice and detailed enough for Audit Evidence.