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  • Audit Evidence

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    rera zeo
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    The document discusses audit evidence used in substantive testing. It defines audit evidence as information used to draw conclusions and fall under audit criteria. It discusses audit evidence decisions around procedures, sample size, items selected, and timing. It also covers common management assertions around existence/occurrence, completeness/cutoffs, rights and obligations, and valuation/allocation. The document outlines the audit program, persuasiveness of evidence, six characteristics of evidence, and types of evidence including physical examination, confirmation, documentation, analytical procedures, inquiry, recalculation, reperformance, and observation. It concludes with files used, including permanent and current files.

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    Notes on Substantive Testing

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    The document discusses audit evidence used in substantive testing. It defines audit evidence as information used to draw conclusions and fall under audit criteria. It discusses audit evidence decisions around procedures, sample size, items selected, and timing. It also covers common management assertions around existence/occurrence, completeness/cutoffs, rights and obligations, and valuation/allocation. The document outlines the audit program, persuasiveness of evidence, six characteristics of evidence, and types of evidence including physical examination, confirmation, documentation, analytical procedures, inquiry, recalculation, reperformance, and observation. It concludes with files used, including permanent and current files.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    6 views2 pages

    Audit Evidence

    Uploaded by

    rera zeo
    The document discusses audit evidence used in substantive testing. It defines audit evidence as information used to draw conclusions and fall under audit criteria. It discusses audit evidence decisions around procedures, sample size, items selected, and timing. It also covers common management assertions around existence/occurrence, completeness/cutoffs, rights and obligations, and valuation/allocation. The document outlines the audit program, persuasiveness of evidence, six characteristics of evidence, and types of evidence including physical examination, confirmation, documentation, analytical procedures, inquiry, recalculation, reperformance, and observation. It concludes with files used, including permanent and current files.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 2

    I.

    Audit Evidence (Substantive Testing)


    A. Nature of Evidence
    1. Information that falls under criteria
    2. Used to draw conclusions
    B. Audit evidence decisions
    1. Audit procedure to use - Related to audit objective
    2. Sample size to select procedure
    3. IItems to select from population
    4. When to perform the procedures
    C. Common Management Assertions
    1. Existence or Occurrence
    a) Address the risk of overstatement
    b) Existence - assets, liab, and equity actually exist at year end
    c) Occurrence - transactions during the year
    2. Completeness or Cutoffs
    a) Addresses the risk of understatement
    b) Completeness - Accounts that need to be recorded are actually
    recorded
    c) Cutoffs - TTransactions should be recorded in their reporting
    periods
    3. Rights and Obligations
    a) Rights - has control over asset
    b) Obligations - Actual liabilities of the client
    4. Valuation and Allocation
    a) Valuation - Are measured appropriately
    b) Allocation - Valuation adjustments are properly recorded
    5. Presentation and Disclosure
    a) Presentation - properly presented on the f/s
    b) Disclosure - Adequate disclosure should be made
    D. Audit Program
    1. List of audit procedures the auditor considers necessary
    2. Most auditors use audit softwares packages
    E. Persuasiveness of Evidence
    1. Appropriateness - Quality
    2. Sufficiency - Quantity
    F. Six Characteristics of Evidence
    1. Independence of Provider - From third party
    2. Effectiveness of Client's Internal Control - Effective Control
    3. Auditors direct Knowledge - Obtained by own effort
    4. Qualification of Individuals providing the information
    5. Degree of objectivity
    6. Timeliness
    G. Persuasiveness and Cost
    1. Obtain sufficient amount with the lowest cost
    H. Types of Audit Evidence
    1. Physical Examination
    a) Inspection of a tangible asset
    2. Confirmation
    a) A receipt by a third party verifying the accuracy of info requested
    by auditor
    b) Positive - requires the 3rd party to respond whether they agree
    with the info
    c) Negative - respond when they disagree
    3. Documentation/Inspection
    a) Internal
    b) Externa
    4. Analytical Procedures
    a) Determine plausible relationships between financial and non
    financial
    5. Inquiry
    6. Recalculation
    7. Reperformance
    8. Observation
    I. Files
    1. Permanent Files
    a) Historical or continuing nature
    2. Current Files
    a) Only available in the current audit
    (1) Audit program
    (2) General info
    (3) Trial balance

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