A6 Procedures to Obtain Evidence Flashcards
Observation
Involves watching a process or procedure being performed by others and serves as a direct method for audit evidence.
Inspection
Involves examining records, documents, or tangible assets to verify the accuracy & completeness of information.
Recalculation
Involves checking the mathematical accuracy of documents or records in order to verify controls are operating effectively & transactions are recorded accurately.
Reperformance
Independent execution of controls or other procedures that were originally performed as part of the entity’s internal control. It helps evaluate the effectiveness of internal controls & also verifies the accuracy & completeness of the entity’s accounting records.
Reconciliations
These involve company financial amounts from 2 independent sources for agreement, and also substantiate the existence & valuation assertion
Footing & Cross Footing
Footing is Adding down, cross footing is adding across
Analytical Procedures
These consist of evaluations of financial information made by a study of meaningful relationships among data. They also help highlight unusual fluctuations that could be the result of errors of fraudulent omissions or overstatements.
Vouching
A directional Testing where the auditor examines support for what has been recorded in the records & statements by going from the FS back to the supporting documents. The goal is to gather evidence regarding possible overstatement errors. This also challenges the existence or occurrence assertions.
Records to Source & Source to Records
From Records to Source = Testing Existence
From Source to Records = Testing Completeness
Tracing
A directional testing that involves looking for coverage in the opposite direction from vouching. It starts with source documents & traces forward to provide assurance that the event is being given proper recognition in the books/records. This also challenges completeness assertion by gathering evidence regarding understatement of errors.
Positive Confrimation
A request that the confirming party respond to the auditor.
Negative Confirmation
A request that the confirming party respond directly to the auditor only if that party disagrees with the information in the request.
Relevant Assertions
When audit procedures relate to asset, liability, & equity account balances, the most relevant assertions is everything EXCEPT Cutoff (Completeness, Valuation, Presentation of Disclosures, Existence, Rights & Obligations)
COVERUP
Completeness (AP = Tracing, Observation)
Off [Cutoff] (AP = Cutoff Procedures)
Valuation (AP = Inspection, Recalculation)
Existence (AP = Confirmation, Observation)
Rights & Obligations(AP=Inspection Confir)
Understandability of… (AP = Inspection)
Presentation & Class (AP = Inquiry)
**AP means Analytical Procedure
