Auditing evidence is the information collected by an auditor
to ascertain the accuracy and compliance of a company’s financial statements
. The auditing evidence is meant to support the company’s claims made in the financial statements and their adherence to the accounting laws of their legal jurisdiction.
How does an auditor gather evidence?
Audit procedures to obtain audit evidence can include
inspection, observation, confirmation, recalculation, reperformance and analytical procedures
, often in some combination, in addition to inquiry.
Why is documentation important in auditing?
Audit documentation also
facilitates the planning, performance, and supervision of the engagement
, and is the basis for the review of the quality of the work because it provides the reviewer with written documentation of the evidence supporting the auditor’s significant conclusions.
What is sufficient evidence in audit?
Sufficiency
is the measure of the quantity of audit evidence. The quantity of audit evidence needed is affected by the following: … As the risk increases, the amount of evidence that the auditor should obtain also increases. For example, ordinarily more evidence is needed to respond to significant risks.
What are the advantages of audit evidence?
Advantages of Audit Evidence
It forms the basis on which the auditor of the company expresses his opinion on the financial statements of the company during the period under consideration
, i.e., whether the financial statements of the company presents the right and fair picture or not.
What are the 5 audit procedures?
There are five phases of our audit process:
Selection, Planning, Execution, Reporting, and Follow-Up
.
What are the stages of an audit?
Although every audit process is unique, the audit process is similar for most engagements and normally consists of four stages:
Planning (sometimes called Survey or Preliminary Review), Fieldwork, Audit Report and Follow-up Review
. Client involvement is critical at each stage of the audit process.
What is continuous audit advantages?
Advantages of Continuous Audit
The books can be extensively checked and mistakes can be rectified then and there
. … Since the audit is conducted continuously, the audit can be carried on more effectively. 6. Continuous audit motivates the staff of the client and ensure proper maintenance of accounts.
What is the overall objective of audit documentation?
ISA 230 states that the objectives of audit documentation are to provide:
a sufficient and appropriate record of the basis for the auditor’s report evidence that the audit was planned and performed in accordance with ISAs, and applicable legal and regulatory requirements
.
What is permanent and current audit file?
Audit files contain records that comprise the audit documentation for a specific engagement or client. Usually, permanent audit files include
information about a client’s legal and organizational structure
. Current audit files contain documents relating to a particular engagement or period about a client.
What is the strongest form of audit evidence?
Because this form of audit evidence is generated by the auditor, not by the entity being audited,
observation
is considered to be strong evidence for existence.
What are the six characteristics of reliable audit evidence?
Relevance – must pertain to the audit objective being tested.
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.
What is the most reliable audit evidence?
Audit evidence obtained directly by the auditor
(for example, observation of the application of a control) is more reliable than audit evidence obtained indirectly or by inference (for example, inquiry about the application of a control).
What are the 7 types of audit evidence?
- Physical examination. Is the inspection or count by the auditor of a tangible asset. …
- Confirmation. …
- Documentation. …
- Analytical procedures. …
- Inquiries of the Client. …
- Recalculation. …
- Reperformance. …
- Observation.
What are examples of audit evidence?
Examples of auditing evidence include
bank accounts, management accounts, payrolls, bank statements, invoices, and receipts
. Good auditing evidence should be sufficient, reliable, provided from an appropriate source, and relevant to the audit at hand.
What is the limitation of auditing?
Limitation of auditing:
The complexity of business and system could sometime limited auditor from obtaining the completed view on entity critical internal controls
. Auditors may not be able to perform the correct risk assessment. Management intention and override controls are sometimes could not detect by auditors.
