Académique Documents
Professionnel Documents
Culture Documents
Presentation Outline
I. Defining Audit Evidence
II. Types of Audit Evidence
III. Audit Documentation
C. Competence Considerations
Relevance must pertain to the audit objective being
tested.
Independence evidence from outside the client is a
stronger form of evidence
Effectiveness of client internal controls good internal
controls can mean better information.
Auditor direct knowledge auditor determinations are
stronger that client comments.
Qualifications individual is a qualified source.
Degree of objectivity objective evidence is stronger
than subjective evidence.
Timeliness balance sheet account evidence is better
when it is collected around the date of the financial
statement. Income statement evidence should sample
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entire period.
Physical examination
Confirmations
Documentation
Analytical
Procedures
E. Inquiries of the
Client
F. Reperformance
G. Observation
A. Physical Examination
Inspection or count by
the auditor of a
tangible asset.
Different from
examining
documentation is that
the asset has inherent
value.
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B. Confirmations
The receipt of a written or oral response from an
independent third party. Auditor has client request
that the third party respond directly to the auditor.
Positive Confirmations
Asks for response even
if balance is correct.
More reliable than
negative
confirmations.
B. Confirmations (Continued)
1. Customers Confirm A/R balances
2. Vendors Confirm A/P balances
3. Banks Confirm checking account and loan
balances
4. Attorneys Confirm contingent liabilities
5. Inventory Agents Confirm consignments
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C. Documentation
1. Types of Documents
2. Document Vouching
3. Document Tracing
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1. Types of Documents
Examine supporting evidence in client files.
Internal Documents
Prepared and used
within client company.
Does not go outside the
client.
Recorded Item
Supporting
Document
2. Document Vouching
Examination of
documents that support a
recorded transaction or
amount.
The direction of testing
must be from the
recorded item to the
supporting document.
Tests existence or
occurrence
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Supporting
Document
Recorded
Item
3. Document Tracing
D. Analytical Procedures
Audits studies relationships among data. Unusual
fluctuations occur when significant difference are
not expected but do exist or when significant
differences are expected but do not exist.
Required during the planning and completion
phases on all audits.
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Auditor obtains
information from the
client in response to
questions.
Although much
evidence is obtained
through inquiry, it can
not be regarded as
conclusive and may be
biased in the clients
favor.
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F. Reperformance
Reperformance involves rechecking a sample of the
computations and transfers of information.
Rechecking of computations consists of testing
mathematical accuracy. Rechecking of transfers
of information involves seeing if information is
recorded consistently in the accounting records.
I dont think
this is what they
meant by
reperformance!
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H. Observation
Auditor witnesses the physical activities of
the client.
Differs from physical examination because
physical examination counts assets, while
observation focuses on client activities.
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Information relevant
for a given audit client
for aCurrent
particular
Fileaudit
year.
(See examples on
page 178)
(See examples on
pages 178-182)
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Prepared by: KM
Reviewed by: J.S.
A1
Ricky
Corporation Cash
1st Savings
234.00
Traced to bank
reconciliation.
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Working papers of
continuing clients are
maintained
indefinitely.
Check with legal
counsel before
discarding any
working papers.
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Summary
I. Audit Evidence and Persuasiveness
II. Types of Audit Evidence
III. Working Paper Format, Storage,
and Ownership
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