AUDI

TEVI
DENCE
Audi t
ing isa sy stemat i
cpr ocessofobj ectivelyobt aining and ev aluating evi
dence r egar di
ng
assert
ionsa bouteconomi cact i
onsandev ents.I
ti stheaudi t
or’sjobt o“ obt ainsuff
ici
entappr opri
ate
auditevidencet obeabl etodr aw reasonableconcl usionsonwhi cht obaset heaudi topi nion.”
Evidencei sany t
hingthatcanmakeaper sonbel i
evet hataf act ,proposition,orasser tioni st r
ue
orfalse.Audi tevdencei
i salloftheinf or
mat i
onusedbyt heaudi torinar ri
v i
ngatt heconcl usi onson
whicht heaudi topinioni sbased.I tincl
udest heaccount ingr ecordsandot heri nformat i
on
under lyi
ngt hef i
nancialstatement s.Auditev i
dencei sdi ff
erentf rom t hel egalev i
dencer equi r
ed
byf orensicaccountng.I
i naci vi
llawsuit,evi
dencemustbest rongenought oincli
neaper sont o
beli
ev eonesi deort heother.Inacr iminalcase, evi
dencemustest abli
shpr oofofacr i
mebey ond
areasonabl edoubt.Auditevidencepr ovi
desonl yreasonableassurance.

 Account
ingRecor
ds
Account ingrecords,t hepr i
mar ybasi sofaudi tev idence,gener all
yi ncludet herecor dsofi ni
tial
entriesandsuppor ti
ngr ecords.I nit
ialentri
esi ncludepoi ntofsal est ransact i
ons,el ect
roni
cdat a
i
nterchange(EDI,
)el
ectr
oni cfundtransf
ers(EFT),
contr acts,invoices,shi ppingnot i
ces,pur chaseor ders,
salesor ders,thegener alandsubsi diaryledger s,journalent ri
es,andot heradj ustment st othe
fi
nanci alstatements.Suppor t
ingr ecordsex ampl esar ecomput erfiles,dat abases,wor ksheets,
spreadsheet s,comput erandmanuall ogs,comput ati
ons,r econci li
ations,anddi sclosures.Most
account ingrecordsar ei niti
ated,recorded,processed,andr eportedi nel ectronicf orm suchasa
database.Fort helargercompani es,account i
ngr ecor dsar epartofent erpri
seresourcepl ng(
anni ERP)
whichi sasy stem thati ntegratesal laspectsofanor ganization’sact iv
iti
es( suchasdat abase
mai ntenance,f i
nancialr eporting,oper at
ionsandcompl iance)i nt ooneaccount i
ngi nformation
system.

 Subst
ant
ivePr
ocedur
es
Themai nworkofanaudit
oristofi
ndevi
denceusi
ngtestpr
ocedures.Subst
ant
iveprocedures
aretest
sperfor
medt oobt
ainaudi
tevi
dencetodet
ectmater
ialmisstat
ementsi
nt hefinancial
st
atementsandareoftwoty
pes:

Subst
ant
ivepr
ocedur
es

Testofdet
ail
soft
ransact
ionandbal
ances Anal
yti
cal
procedur
es

Auditevi
denceistheinformati
onusedbytheaudi t
ori
nar r
ivi
ngattheconclusi
onsonwhicht
he
audi
topinionisbased.Audi tevi
denceconsist
sofsour cedocumentsandaccount i
ngr
ecor
ds
underl
yi
ngt hef
inanci
alstatement
sandcorroborat
ingi
nformati
onfr
om othersources

Thischapterprovidesguidanceont hebasi
sofev i
dence(standar
dsofpr oofanddocumentat
ion
andfinancialst
atementasser t
ions),whatconst
it
utessuffi
cientappr opr
iateaudi
tevidence(
the
quanti
tyandqual it
yofaudi tev i
dence)andthesubst
anti
veauditpr est
ocedur hataudi
torsusefor
obtai
ningthatauditevi
dence.

TheBasi
sofEv
idence
Ev
idencef
orpr
oofofaudi
tasser
ti
onsi
sdi
ff
erentf
rom ev
idencei
nal
egalsense.Audi
tev
idence
needsonlytoprov
ereasonabl
eassurance,wher
easi
nal
egalenv
ironmentt
her
eisamor
e
ri
gorousst
andar
dofpr
oofanddocumentati
on.

 LegalEv
idence
Legalst
andar
dsofpr oofareconcept
sthatdescr
ibet
hequal
i
tyofev
idencef
ormostl
egal
syst
ems.Therearefourstandar
dsofproof:
■ beyondareasonabledoubt;
■ pr
eponderanceofevi
dence;
■ cl
earandconvinci
ngevi
dence;
■ pr
obablecause.
Reasonabl ,
edoubtthest
rongestoft
hest
andar
ds,
isappl
i
edi
ncr
imi
nalcases.“
Areasonabl
edoubt
isadoubtf oundeduponaconsi derationofal ltheev i
denceandmustbebasedonr eason. ”
_In
civillaw,apr eponder anceofevdencei
i sthatuponl i
steningt obot hsides, t
hewei ghtoft heev idence
inclinesaper sonwi thani mpar tialmi ndt oonesi der athert hant heother .Clearandconv inci
ng
evidenceisapr ooft hatisst r
ongert hanamer epr eponder anceofev idence,butnotconv incing
bey ondar easonabl edoubt .Probabl ecauses er
v esast hebasi sforar r
estandsear chwar rant s.
Ev i
dencei nt hel egalenv i
ronmentmaybecl assifi
edaccor dingt oitspr oofr esul
ts( director
circumst ant i
al)oraccor di
ngt oit ssour ce(document ary,r
eal,ort esti
moni al
).Ther esul tsoft he
ev i
dencemayei t
herdi r
ectl
yorci rcumst anti
all
ysuppor tastandar dofpr oof.Directevdencec
i omes
from per sonalknowl edgeoft hewi tnessesunderoat hast ospeci fi
cf acts.Circumstantialev i
dence
isbasedonf act sandci r
cumst ancesf rom whi chacour tmayi nferthataf actualmat t
erhasbeen
prov ed.Thesour ceoft heev dencemayber
i eal ,i
.e.itistangibleandcanbepr esentedt oacour t
fori nspection,ort est i
monialevidencewhi chisev i
dencegi venbywi tnessesunderoat h.Fi nanci al
fact sarebestpr ov enbypr esent ationofor i
ginaldocument aryev i
dencebackedbyt het estimony
ofawi tnessunderoat h.

 Document
aryEv
idence
Document aryev i
dencei sgat heredf r
om wr i
tt
en,printedorel ectronicsour ces.Document ar
y
evidenceconsi stsofcomput erfil
esandr ecords,e-
mai l,accounti
ngr ecords,paper( invoices,
writi
ngs,pi ctures),document s( contr
acts,deed,reports),commer cialrecords( e.
g.from banks,
brokerage,r etail
ers,creditcard)andgov ernmentrecords( li
censes,realestate,legal
).Thebest
proofoft hecont entsofadocumenti stheor i
ginaldocumenti tself
.Howev er,i
ftheor iginalhas
been dest roy ed ori s otherwise unavailabl
e and the cour taccept st he ex pl
anation ofi t
s
unav ai
labi
lity,secondar yevidencemaybeused.Secondar yevi
dencemaybeei therthet esti
mony
ofawi tnessoracopyoft heev i
dence.

 Fi
nanci
alSt
atementAsser
ti
ons
Managementi sresponsibl
ef ort hefairpresentati
onoff inancialst
atementssothatt heyr
efl
ect
thenatureandoper ati
onsoft hecompanybasedont heappl i
cablefi
nancialr
epor
tingframework
(IAS,GAAP,OHADA et c.)
.Managementpr epar
es t he fi
nancialstat
ement sbased upon the
accounti
ngr ecordsandot herinf or
mat i
ont hattheaudi tormayuseasaudi tevidencesuchas
mi nut
esofmeet i
ngs;confirmationsf r
om t hi
rdpar t
ies;analyst
s’report
s;comparabledataabout
compet i
tor
s( benchmarking);andcont rol
smanual s.
 Occur
rence

Compl
etenes

Classesof
tr
ansactions Accur
acy
andev entsf
ort
he
peri
odunderaudit
Cut
off

Cl
assi
fi
cat
io

Exi
stence

Ri
ght
sandobl
i
gat
ions

Asser
ti
on Accountbal
ancesat
Compl
etenes
t
heper i
odend

Val
uat
ion

Occur
renceandr
ight
sandobl
i
gat
ions

Compl
etenes

Present
ati
on
anddiscl
osur
e Under
standabi
l
ity

Accur
acyandv
aluat
ion

Managementi mplicit
lymakesasser ti
onst hatcanbegr oupedi ntot hreesubstanti
vet esti
ng
areas:classesoft ransacti
onandev ent s,accountbal ancesatt heperiodend,anddi sclosures.
Il
l
ustrati
onmakesagr aphi
cpr esentationoft heareasandasser t
ions.Thestandardasser ti
ons
arecompl eteness,occur r
ence,accur acy,rightsandobl igations,valuati
on,andex i
stence.Other
asserti
ons ar e: cut off
, classif
ication, t ranspar
ency , pr esent
ation and di sclosur
e, and
measur ement.Theaudi t
orassessesr isksofpot ent
ialmisstat ementsbasedont heseasser ti
ons
anddesi gnsauditprocedurestodi scov ersuffici
entappropriateev i
dence.
  St andar dAsser tions
Audi t
or shav eident ifiedsev eralasser tionst hatmanagementmakes, di rectlyori ndi rectly, relat i
ng
tot hef inanci alst at ement s.Thest andar dasser ti
onsar ecompl eteness,occur rence,accur acy ,r i
ght s
andobl i
gations, valuation,andexi stence.Comp letenessmeanst hatal ltransact ionsandev ent st hat
shoul dhav ebeenr ecor dedhav ebeenr ecor ded,i .e.t her ear enounr ecor dedasset s,l iabi l
ities,
transact i
onsorev ent s,orundi scl osedi tems.Thecompl etenessasser tioni si mpor tantinal l three
subst antivet estar eas.Occur r encei st heassumpt iont hatt ransact ionsandev entst hathav e
beenr ecor dedhav eoccur redandper taint ot heent ity,t hati s,at ransact i
onorev entt ookpl ace
whi chper tainst ot heent it
ydur ingt heper i
od.Ri ghtsandobl igat i
onsmeanst hatatagi v endat e
theent i
tycont rolst her i
ghtst oasset sandt hatl iabi l
itiesar et heobl igat ionsoft heent i
ty.
Val uat i
on af fir
ms t hatasset s,l i
abilit
ies and equi tyi nterest s ar ei ncluded i nt he f inanci al
stat ement satappr opr i
at eamount sandanyr esul tingv aluat i
onadj ust ment sar eappr opr iat ely
recor ded.Ex istencemeanst hatmanagementmai nt ainst hatal lasset s,l i
abili
ties,andequi ty
interest s
existatagi vendat e.
Ot herasser tionsar e:accur acy ,cutoff,classifi
cationa ndunder standabi l
ity,present ati
onanddi sclosur e,
andmeasur ement .Accur acymeanst hatamount sandot herdat ar elatingt or ecordedt r
ansact ions
andev entshav ebeenr ecor dedaccur ately.Cut of fasser t
st hatt ransact i
onsandev ent shav ebeen
recor dedi nt hecor rectaccount ingper i
od.Cl assificat iondecl arest hatt ransact ionsandev ents
hav ebeenr ecor dedi nt hepr operaccount s.Under standabi li
tyhol dst hatf inanci alinf ormat ioni s
discl osedf airly
.
Twoasser ti
onswhi char enotment ionedi nt heI FAC st andar d,butar eusedi nt hef ield,ar e
“present ationanddi sclosure”and“ measur ement .
”Pr esent ati
onanddi sclosurea sser tst hatani tem
isdi sclosed,cl assi f i
ed,anddescr i
bedi naccor dancewi tht heappl icabl ef inanci alr epor t i
ng
framewor k.Measur ementi sanasser t
iont hatat r
ansact ionorev enti sr ecor dedatt hepr oper
amountandr evenueorexpensei sallocat edt ot hepr operper iod.

 El
ect
roni
cEv
idence
Someoft heent it
y ’
saccount ingdat aandot herinformat i
onmaybeav ail
ableonl yinelectr
onic
for m.Forex ampl e,ent it
iesmayuseel ectronicdat ai nter
change(EDI)ori magepr ocessing
sy stems.I nEDI ,theent it
yandi tscustomer sorsuppl i
er susecommuni cati
onlinkst otransact
busi ness el ectronicall
y.Pur chase,shi pping,bi ll
i
ng,cash r ecei
pt,and cash di sbur
sement
transact i
onsar eof tenconsummat edent ir
elybyt heexchangeofel ect
ronicmessagesbet ween
thepar t
ies.Ini magepr ocessingsy stems,document sarescannedandconv ert
edi ntoelectr
onic
i
magest of acili
tatest orageandr ef
erence,andt hesour cedocument smaynotber etai
nedaf t
er
conv er
sion.Cer tainel ectroni
ci nfor
mat i
onmayex i
statacer tai
npointintime,butmaynotbe
retrievableaf teraspeci fi
edper iodoftimei ffil
esar echangedandi fback-upf i
lesdonotexi st
.
Theel ectronicnat ureoft heaccount i
ngdocument at
ionusual l
yrequi
rest hatt heaudi t
oruse
comput er-assistedaudi ttechni ques( CAATs) .

Suf
fi
ci
entAppr
opr
iat
eAudi
tEv
idence
Theaudi torshoul
dconcl udewhet hersuf f
icientappropriat
eauditev i
dencehasbeenobt ainedto
reducet oanaccept abl
yl owl evelther i
skofmat eri
almisstatementsinthefi
nancialstatement s.
Suffi
ciency i
st hemeasur eoft hequant i
ty( amount )ofaudi tevidence.Appropr
i eness i
at sthe
measur eoft hequal it
yofaudi tev idence;t hatis,it
sr el
evanceandi t
sreli
abili
tyinpr ovidi
ng
suppor tfor,ordetecti
ngmi sstat
ement sin,the
classesoft r
ansacti
ons, accountbal ancesanddi scl
osures,andrel
atedassert
ions.

Rel
i
abi
l
ityi
sthequal
i
tyofi
nfor
mat
ionwheni
tisf
reef
rom mat
eri
aler
rorandbi
asandcanbe
dependeduponbyuser
stor
epr
esentf
ait
hful
l
ythatwhi
chi
tei
therpur
por
tst
orepr
esentorcoul
d
reasonablybeexpectedt orepresent.Relev
anceofev dencei
i st heappropri
ateness(pert
inence)of
theev i
dencet otheauditobjecti
vebei ngtested.Thequant i
ty(rel
evanceandr eli
abil
i
ty)ofaudit
evidenceneededi saf f
ect
edbyt her i
skofmi sstatement(thegreaterther i
sk,themor eaudit
evidenceisr equi
red)andal sobyt hequal i
tyoft heauditev i
dence( t
hehi gherthequal i
tyof
evidence,thelessisrequi
red).Therefore,thesuffi
ciencyandappr opri
atenessofauditev i
dence
areinter
rel
ated.

Considerati
on Suff i
cientandappr opri
ateev i
dence
Mat er
ial
ityoft
heitem bei
ng Themor emat eri
al theit
em thegr eatertheamount
examined. ofev idencer equi red.
Effect
ivenessofmanagement’
s Mor eef fecti
v emanagementr esponsest oriskand
responsest or
isk. cont r
ol sdecr easesqual it
yandquant it
yofev i
dence
required.
Pr
ioraudi
texper
iencewi
tht
he Prioraudi tex periencewi t
ht hecli
entwi lli
ndicate
cl
i
ent. howmuchev idencewast akenbef oreandi fthat
wasenough.
Audit
or’
sassessmentof Thehi gherthei nher entorcontrolrisk,t
hegr eater
i
nherentandcontrolr
isks. theamountofev i
dencer equir
ed.
Reli
abil
i
tyoftheavail
able Thel essr eli
abl ethesour ceofi nf
or mation,the
i
nformat i
on. greatert heamountofev i
dencer equired.
Whetherf r
audorerr
oris Iffraudi ssuspect ed,theamountofev i
dence
suspected. requiredi ncreases.

 Rel
iabl
e
Ther el
iabil
iyo
t fauditev i
dencei si nf
luencedbyi t
ssourceandi t
snature.Theindependenceand
qualifi
cationoftheper sonpr ovidingev i
dencei simportantforreli
abi
li
ty.Audi
tev i
dencei smor e
reli
able when iti s obt ai
ned f r
om i ndependentsour ces outsi
de the enti
ty.The sour ce of
i
nf ormationmaybei nternal–or i
ginati
ngi nsi
det hecl i
entoperati
on–orex t
ernal,ori
ginati
ng
from amor eobject
ivepar tyoutsidetheor ganizat
ion.Thesour cemaybef rom anempl oyee, t
hir
d
par t
yort heauditor
.Internalinf
or mationthatcomesf r
om asy stem withgoodinternalcontrol
sis
mor er eli
ablethani nformationf rom asy stem wherei nter
nalcontrolsarenotef f
ecti
ve.The
natureoft heauditevidencemaybev i
sual
, documentary,ororal.

Leastrel
i
able Mostrel
iable
Sour
cer
elat
ivet
oent
it
y Int
ernal(
from i
nsi
deent
it
y) Ext
ernal
( f
rom out
side
ent
it
y)
Source–person:employ
ee Empl
oyeeofcompany Ext
ernal
audi t
or
oraudit
or
Source–person:employ
ee Empl
oyeeofcompany Thi
rdpar
ty
orthi
rdpart
y
Source:i
ndependenceof Associ
atedwi
thcompany Notassoci
atedwi
th
Provi
der Company

 Per
suasi
ve
Unli
kel egalevidence,audi
tevidencedoesnothav etobeconclusivetobeusef ul
.Ordinari
l
y,the
audit
orf i
ndsi tnecessarytorelyonauditevi
dencethatisper
suasiver at
herthanconclusi
veand
wil
loftenseekaudi tev i
dencefrom di
ff
erentsourcesorofadif
ferentnaturetosupportthesame
assert
ion.Notal ltheinformationavai
labl
ei sexamined.Conclusionscanber eachedabout
contr
ols, t
ransacti
ons,ortheaccountbalancebyusingasampleoft heav ai
labl
einf
ormat i
onthat
i
sanaly zedbyst ati
sti
calsamplingorj
udgment .

Audi
tevi
denceismor epersuasi
vewhent hereisconsistencybet weenitemsf r
om diff
erent
sour
cesorofadif
fer
entnat
ure.Evi
denceisusual
lymoreper suasi
vef orbal
ancesheetaccounts
wheniti
sobtai
nedclosetothebalancesheetdate.Forincomest atements,ev
idenceismor e
per
suasi
veifi
tisasamplefr
om theent
ir
eperi
od.Arandom sampl
efr
om t
heent
ir
eper
iodi
s
moreper
suasi
vethanasampl
efr
om thef
ir
stsi
xmonths.

 Ext
ernal
_I
nter
nal
Ingener al,auditevidencef r
om externalsour ces( e.
g.externalconfi
rmatonofc
i ashaccountr eceived
from abank)i smor erel
iablethanev idencegener atedi nternally.I
nternalinformati
oni smade
mor er eliabl
ei ftheaccount i
ngandi nternalcont rolsy stemsar eef fecti
ve.Ev i
denceobt ained
directlybyt heaudi torismor ereli
ablet hant hatobt ainedf rom t hecl i
entent i
ty.Auditevidence
obt ai
neddi r
ectl
ybyt heauditor(e.
g.obser vationoft heappl icati
onofacont rol)ismor ereli
able
thanaudi tev i
denceobt ainedindirectl
yorbyi nference( e.
g.i nquir
yaboutt heapplicati
onofa
cont rol).Wr it
tendocument sarethesecondmostr eliableaudi tev i
dence.Thel eastreli
ableaudit
ev i
dencei soralrepresentat
ionofthecl ientper sonnel.Or alintervi
ewswi t
hthirdparti
esar emor e
reli
abl et haninsiderinterv
iews,butlessr eli
ablet hanwr it
tendocument s.

 Or
igi
nalDocument
ati
on
Auditevidenceprovidedbyor igi
naldocument sismor ereli
ablethanaudi tevidenceprovidedby
photocopiesorfacsimiles.Althoughf orensicaccount ingfrequentlyinv
olv estheaut hent
icat i
onof
document ati
on,financialst atementaudi tsr arel
ydo,nori st he fi
nanci alst at
ementaudi tor
expectedt obeanex pertinsuchaut henticati
on.Howev er,thefinancialst at
ementaudi tormust
considertherel
iabil
it
yoft heinformationt obeusedasaudi tevi
dence,f orexampl e,howr eliable
arephotocopies,facsimiles,orf i
lmed,di git
izedorot herel ectr
onicdocument s?Anaudi tormay
considertherel
evanceofcont rolsovertheirpr eparat
ionandmai ntenanceoft hedocument ati
on.

Audi
tPr
ocedur
esf
orObt
aini
ngAudi
tEv
idence
Theaudi t
orperformsriskassessmentproceduresinordert
oprovi
deabasisfortheassessment
ofr i
sks.Riskassessmentproceduresbyt hemselv
esdonotpr ov
idesuff
ici
entappropri
ateaudi
t
evidenceonwhi chtobaset heauditopinion,however.Ri
skassessmentproceduresmustbe
supplement edbyf ur
therauditproceduresi ntheform oftest
sofcont r
olsandsubst anti
ve
procedures.

■ Ev
idenceGat
her
ingTechni
ques
Anauditorobtai
nsauditev i
dencebyoneormor eofthef
oll
owingev
idencegat
heringtechniques:
i
nquiry;observat
ion;inspection (
oftangibl
e asset
s,recor
ds,ordocument s)recal
culati
on;
reper
formance;confi
rmation;anal
yti
cal
procedur
es.

Techni
que Definiti
on Exampl es
I
nquiry Consi st
sofseekinginf
ormationof Obt ainingwr it
tenoror al i
nformation
knowl edgeabl
epersonsinsi
deor from t hecl i
enti nr esponset o
outsidetheentit
y. speci ficquest i
onsdur i
ngt heaudi t.
Obser
vat
ion Consi st
soflookingataprocessor Obser vationbyt heaudi toroft he
procedur ebei
ngperfor
medby count ingofi nvent oriesbyent it
y’s
others. personnel ,sitev isi
tatt hecl i
ent’
s
facili
ties.
I
nspect
ion Consistsofexami ningrecords, Rev iewi ngsal esor ders, sales
document s,
ort angibl
easset s. i
nv oices, shi ppingdocument s,bank
statement s, cust omerr eturn
document s, cust omercompl aint
l
et t
er s,et c.
Recal
cul
ati
on Consistsofcheckingt heari
thmet i
cal Ex t
endi ngsal esi nvoicesand
accuracyofsour cedocument sand i
nv ent ory ,addi ngj our nalsand
accountingrecordsorper f
ormi ng subsi diar yr ecor ds, checki ngthe
i
ndependentcal culati
ons. calcul ationofdepr eci ationex pense
andpr epai dex pense.
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for
mance Consistsofindependentex ecutionof UseCAATst ocheckcont rols
 proceduresorcont r
olsthatwere recordedi nt hedat abase.
ori
ginall
yperf ormedaspar tofthe Reper form
enti
ty’si
nternal contr
ol. agingofaccount sreceiv able.
Conf
ir
mat
ion Consistsofresponset oaninquir
yto Usedt oconf irmt heex i
st enceof
corroborat
ei nformationcontai
nedin account srecei v
abl eandaccount s
theaccountingr ecords. payabl e,verifybankbal anceswi t
h
banks, cashsur renderv al ueofl if
e
i
nsur ance, not espay abl
ewi th
l
ender sorbondhol der s.
Anal
yti
cal
procedur
es Consi stoftheanaly
sisofsignif
icant Calculat i
ngt rendsi nsal esov erthe
ratiosandt r
endsincl
udingthe pastf ewy ear s,compar ingnetpr ofi
t
resulti
ngi nv
esti
gati
onoffluctuati
ons asaper cent ageofsal esi ncur rent
andr elat
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psthatare yearwi ththeper cent ageoft he
i
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compar ingcl ient
i
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atefrom currentr ati
ot ot hei ndust rycurrent
predictableamounts. rati
o, andcompar ingbudget sto
actual results.

QUESTI
ONS
Whatar
esubst
ant
ivepr
ocedur
es?Descr
ibet
hedi
ff
erentt
ypesofsubst
ant
ivepr
ocedur
es.
Def
inet
het
hreemaj
orsour
cesofdocument
aryev
idence.Li
stt
hem i
ntheor
deroft
hei
r
r
eli
abi
l
ity
.
Li
stt
hemaj
orf
inanci
alst
atementasser
ti
ons.Def
inet
heasser
ti
onsaboutaccountbal
ances
att
heper
iodend.
Whydoesanaudi
torpr
eferper
suasi
veev
idenceasopposedt
oconcl
usi
veev
idence?
Di
ff
erent
iat
ebet
weent
hemostr
eli
abl
eev
idenceandt
hel
eastr
eli
abl
eev
idence.
Whatal
ter
nat
ivepr
ocedur
escananaudi
tordowhenhei
sunabl
etoat
tendaphy
sical
i
nvent
ory
?
Whatar
efourkeychar
act
eri
sti
csofconf
ir
mat
ion?
I
faconf
ir
mat
ioni
snotr
etur
nedt
otheaudi
torwhatal
ter
nat
ivepr
ocedur
escanheper
for
m?
Li
stt
hesi
xev
idencegat
her
ingt
echni
quesi
nor
derofr
eli
abi
l
ity
.Li
stt
hesi
xev
idence
gat
her
ingt
echni
quesi
nor
derofcostf
rom hi
ghestt
olowest
.

Suf
fi
ci
entAppr
opr
iat
eAudi
tEv
idence.Theaudi
torf
indsi
tnecessar
ytor
elyonaudi
tev
idence
t
hati
sper
suasi
ver
athert
hanconcl
usi
veandwi
l
lof
tenseekaudi
tev
idencef
rom di
ff
erent
sour
cesorofadi
ff
erentnat
uret
osuppor
tthesameasser
ti
on.Ther
eli
abi
l
ityofaudi
t
ev
idencei
snotonl
yimpor
tanti
ndet
ermi
ningsuf
fi
ciency(
quant
it
y)oft
hei
nfor
mat
ion,but
al
so t
he appr
opr
iat
eness (
qual
i
ty)oft
he i
nfor
mat
ion.Rel
i
abi
l
ity ofaudi
tev
idence i
s
i
nfl
uencedbyi
tssour
ceandi
tsnat
ure.
Requi
red:
A.Def
inet
heset
erms:r
eli
abi
l
ityofev
idence,per
suasi
venessofev
idence,andr
elev
anceof
ev
idence.
B.Ar
ranget
hef
oll
owi
ngpeopl
eassour
cesofi
nfor
mat
ionf
rom mostr
eli
abl
etol
eastr
eli
abl
e
andexpl
ainy
ourr
easoni
ng:
1newcompanyempl
oyee,
2companyempl
oyeewi
thf
ivey
ear
s’exper
ience,
3companyl
awy
er,
4i
nter
nal
audi
tor
,
5ext
ernal
audi
tor
,
6audi
tor
’sl
awy
er,
7banker
,
8t
opmanagement
,
9boar
dofdi
rect
ors,
10companysuppl
i
er,
11company