BAB 5 EVIDENCE

Evidence In Different Disciplines.

Different field of knowledge use different methods of research, have different type of propositions
to resolve, and rely upon different types of evidence. To explore the nature of audit evidence
further, it will be help to compare and contrast it with evidence in some other field.

The nature of anything may be defined as (1) its essential character,(2) its distinguishing of qualities,
or (3) its constitution. The character and constitution of evidence are effected considerably by the
nature of the field in which it is use, that is, the purpose which the evidence is to serve. Among
the characteristics which vary from field to field are the following:

1. The special purpose of the area of interest.

2. The subject matter to which the evidence is pertinent.
3. The method of collection of development
4. Rule of the use of evidence
5. The influence of time on the judgment process.
6. The degree of compulsion exerted on the mind of the judgment-maker by the evidence.

The table on page 92 and 93 contracts the evidence required in five important area of research
including auditing. It present some interesting facts to the careful reader, both with respect to
differences in the type of evidence required in different field and the nature of judgment formation
problem in those fields.

The rules of formal logic or of mathematical manipulation of term govern the deductive process of
creating evidence. Time is not an important factor in judging the evidence thus made available. The
extent that the deductive evidence is valid, it is absolutely compelling on the judgment maker.

Turning finally to auditing, we find additional different in the nature of its problem and in the
evidence on which it relies. Auditing is concerned with the protection of those who read financial
statement; its purpose is to assure them that certain standard of accuracy, clarity, and completeness
have been met.

Time is controlling factor in most audit work; the auditor’s judgment is normally required within a
relatively short time after the occurrance of the transactions and other events reflected in the
financial statement.

Audit evidence will influence the auditor the auditor in degrees which very all the way from being
compelling to being little more than persuasive.

Because audit evidence is our principal interest in the chapters, we will examine it more intensively
in the following section. At this point we are interested in establishing certain general nations about
evidence in any field and in dispelling mistaken impression.

Another erroneous impressions may be that all evidence is alike in usefulness and applicability. As
problems and pressures differ, evidence will differ. Thus, if auditing is to have a theory of evidence,
it will have to look to itself for the development of that concept. What is the legitimately accepted as
truth in one field may not meet either the standard or the need of another field. This suggests that a
 first step toward the development of a theory of evidence for auditing is to examine the nature of
the propositions to be judged and for which evidence is required.

Comparative classification of evidence in five fields: perbandingan bukti dalam 5 bidang

Significant Pure or exact Physical science Law History Auditing

characteristics science (experimental or
(mathematics, observational)
formal logic)
Tujuan khusus dari Statement of all Development of MaintenancInterpretation Protection of a
setiap bidang significant generalizations e of justice
and statement
dimana bukti itu relationship governing natural Pemeliharaa
understanding of readers
penting within close universe n keadilanthe part Melindungi
system governed Pengembangan pembaca laporan
by accepted peraturan umum Interprestasidan
postulates. yang mengatur pengembangan
alam semesta dari setiap
bagian
pokok bahasan Abstract Natural and/or Occurrences The influence of Financial
dimana bukti itu relationship physical at given events and statement
penting phenomenal time and development on propositions
places human
organization and
behavior
Metode Deduction from Introduction for Presentatio Collection of Submission by
pengumpulan/pen established experimentation n by existing material interested and
gembangan postulates and observation opposing and submission disinterested
deduction parties to critical parties
combination of rational examination Collected and
induction and deduction developed by
deduction. and independent
inference party
rationalization
Peran pembuat Positive Both positive and Passive Positive-yet Both positive and
keputusan dalam passive difference from passive
rangkaian mathematics
pengembangan and experimental
scientist
Jenis peraturan Rules of formal Standard of Logical Rules of external Professional
yang mengatur logic laboratory presumptio and internal standards
studi tentang bukti experiment to ns criticism
permit replication Rules of
Rules of statistical admissibility
inference and
Rule of logic relevance
Pentingnya waktu None None A Little A controlling
dalam pembuatan controlling factor
keputusan dan factor
pengumpulan
bukti
Bukti kompulsif Absolute Variable from Persuasive Persuasive Varies from
mutlak dalam near absolute to absolute to
penilaian informasi probable persuasive
Often subject to
mathematically
measurable
probability

Bab 6

DUE AUDIT CARE

The important role which judgment plays in professional practice, and the exercise of judgment is
never free from unfortunate consequences, contributes to this. The difficulty which laymen and for
this purpose all non practitioners must be considered laymen, have in understanding and
appreciating not only the potentialities but the limitations of the profession, also play a part in
making the establishment of definite responsibilities a trying and continuing problem.

In this some general respect, auditors have much the same problems and tendencies as the
members of other professions.

The Profession’s Acceptance Of Responsibility.

Although there is not complete unanimity on all this points in the literature of the profession,
textbook and other references generally support them strongly. Among the most important source
are the following:

1. The rules of professional conduct

The rules of professional conduct are explicit with respect to number of points of good
professional conduct with a member of the institute must not be breach.
2. Generally accepted auditing standards
If Generally accepted auditing standards had been viewed as a first step in the development
of realistic and useful standards for the profession it would have been a milestone indeed.
Standards should provide guides:
- For the evaluation of performance by practicing public accountants
- To indicate accepted requirement of practice to those outside the profession who have
occasion to judge or evaluate the work of practicing accountants
- To suggest the extent and nature of educations expected of those preparing for entry
into the profession.
3. Codification of statement on auditing procedure.
Codification of statement on auditing procedure contains a great deal of useful introduction
both to practitioners and to those who rely on their work, and it is unfair to characterize it
with a few selected quotations. The first of these points has to do with accepted of primary
responsibility for the assertions made in a company’s financial statement.
 The positions apparently taken, if we read the paragraph correctly is:
1. Independent auditor accept no responsibility for the detection of trauma and other
irregularities.
2. If the independent auditor were to search for irregularities his examination would
necessarily be so extensive that the cost would be prohibitive.
3. Cheaper, although not necessarily better, protection is provided by good internal
control and surety bonds.
4. If circumstances in a given examination are such as to arouse the independent auditor’s
suspicions, he must extend his procedures to some unspecified extent.

The importance of the generally accepted auditing standards in establishing the extent of
responsibility here can scarcely be overestimated.

Approaches to a statement of responsibility.

In an attempt to develop a statement of the auditor’s responsibility for the detection of

irregularities, a number of approaches appear to hold promise. Stated differently, there are a
number of factors that require consideration before a valid conclusion can be reached. At least the
following are included;

1. A careful consideration of the various types of irregularities, searching for characteristics

that may provide a clue to those for which the auditor should accept the burden of discovery
and those for which he cannot.
2. A consideration of the social responsibility of the profession and the part it can play in the
reducing the social cost of losses due directly to shortages and resulting indirectly from
faulty decisions made on the basis of unreliable data.
3. A consideration of the relationship which irregularities bear to audit evidence, in other
words, the possibility and likelihood of detection.
4. The development of concept of audit care as a possible way of indicating the responsibility
the profession should accept not only for the discovery of irregularities but for the
performance of its professional duties generally.

Characteristics Of Irregularities

Perhaps irregularities are so well understood that any attempt to define them is superfluous. With
this working definition as a base, irregularities have one or more af a variety of characteristics or
attributes. These include:

1. Materiality
2. Intent
3. Relationship to internal control
4. Influence on financial statement
5. Extent of concealment
6. Responsibility