6 Evidence Flashcards
Audit evidence should be?
Sufficent and appropriate
What factors can effect sufficient evidence?
Risk, materiality, nature of internal control system, relaibility and size of population
What should approrpriate audit evidence be?
Reliable and relevant
To be relevant for audit evidence, what does it need to be?
Prove one or more of the financial statement assertions
What are the assertions for classes of transactions and events, and related disclosures for the period under audit? (SOPL)
Occurrence, completeness, accuracy, cut-off, classifation and presentation?
What is meant by occurrence? (SOPL)
Transactions that have been recorded have occurred and pertain to the entity
What is meant by completeness? (SOPL)
All transactions that should have been recorded exisit
What is meant by accuracy? (SOPL)
Amounts have been recorded appropriately
What is meant by cut off? (SOPL)
Transactions have been recorded in the correct accounting period
What is meant by classificiation? (SOPL)
Transactions have been recored in the proper accounts and place
What is meant by presentation? (SOPL)
Transactions and events are appropriate aggregated and clearly described and related disclosures are relevant and understandable
What are the assertions about account balances, and related disclosures at the period end (SOFP)
Existence, rights and obligations, completeness, accurancy valuation and allocation, classification and presentation.
What is meant by existence? (SOFP)
Assets, liabilities and equity interest exist
What is meant by rights and obligations (SOFP)
The entity owns the assets, and the obligations are of the entity
What is meant by completeness? (SOFP)
All assets, liabilites and equity interests that should have been recorded have been recorded
What is meant by accuracy, valuation and allocation? (SOFP)
Assets, liabilites and equity interests are included in the FS at the appropriate amounts
What is meant by classification? (SOFP)
Assets, liabilites and equity interests have been reoceded in the proper accounts
What is meant by presentation? (SOFP)
Assets, liabilites and equity interests are appropriate aggregaed and clearly described and related discloiurs are relevent and understandable
What is the definition of tests of control?
Tests of control are designed to evalulate the operating effectiveness of controls in preventing or detectingand correcting material misstatement
What is the definition of substantive procedures?
Substantive procedures are designed to detect material misstatement at the assetion level
What is the definiton of tests of detail?
Tests of detail to verify individual transactions and balances
What is substantive analytical procedures?
Analytical procedures involve the evaluation of financial information through analysis or plausible relationships among both financial and non-financial data.
In order to rely on controls, what will the auditor need to do?
Ascertain how the system operates, document the system, test the operation of the system. assess the design and operating effectiveness of the control system and determine the impact on the audit approach
What does a test of control provide?
Evidence of whether a control procedure has operated effectively.
What is substantive procedures?
Test the numbers in the financial statements
What does following substantive procedures require?
Agreeing the financial statements to the underlying accounting records, examination of material journals and examination of other adjustments made in preparing the financial statements
What is the definition of a auditors expert?
An auditors expert is an individual or organisation whose work is used by the auditor to assist in obtaining sufficient appropriate audit evidence
What is the definition of a managements expert?
A managements expert is an individual or organisation whose work is used by the entity to assist in the preparing of the financial statements
What should an auditor and the expert have before the work is completed?
Engagement letter stating the nature, scope, objectives, roles and responsibilities
What can external auditors use that an internal auditor has prepared?
Tests of control
Risk assessment
Fraud investigations
Compliance with laws and regulations
