Audit Evidence Flashcards
What is persuasive evidence?
Sufficient and appropriate (competent)
What kind of evidence is needed?
Reliable & relevant
What is considered reliable?
STOCK
Source Timeliness Objectivity Client controls (strength) Knowledge (direct vs. indirect)
What is relevance or competency in evidence?
- Must relate to management assertion
- Reasonably free from error or bias & faithfully represents what it purports
Direction of Testing
Completeness = Tracing
Existence or Occurrence = Vouching
Financial Statement Assertions
Presentation & disclosure Existence or occurrence Rights & Obligations Completeness Valuation
Ways to Obtain Evidence
IC Corea
Inquiry Confirmations CAATS Observation Recalculation or recompute Examine documentation (vouch or trace) Analytical procedures
Hierarchy of Documentation Evidence
- Externally generated and sent to auditor (confirmation)
- Externally generated, but obtained from client (bank statement)
- Internally generated, but some external validation (cancelled checks)
- Internally generated (sales invoice)
What is the primary purpose of audit procedures?
To gather corroborative information
The sufficiency and competency of evidential matter ultimately is based on the:
Judgement of the auditor
Audit programs
document the planned audit procedures
Tickmarks are added to workpapers to
document audit procedures performed
Evidential matter is generally considered sufficient when:
There is enough of it to afford a reasonable basis for an opinion on financial statements
Which of these is an example of vouching?
Comparing recorded purchases to vendor invoices and purchase orders
Determining whether the client has recorded all material liabilities relates to which assertion?
Completness
