Audit evidence and Procedures Flashcards
What is Audit Evidence?
Information used by the auditor to draw conclusions and form an audit opinion.
What standard covers audit evidence?
NZAISA 500 - Audit evidence
What factors influence the sufficiency and appropriateness of audit evidence?
- Risk of Material Misstatement
- Materiality
- Reliability and relevance of evidence
-Results of other audit procedures - Auditors’ previous experience
What is sufficient audit evidence?
The quantity of evidence needed - more evidence for higher risk areas.
What is appropriate audit evidence?
The quality - relevance and reliability of the evidence
What factors affect the reliability of audit evidence?
- Evidence from independent sources is more reliable
- Direct evidence is more reliable than indirect evidence
- Written evidence is more reliable than oral
- Effective internal controls improve internal evidence reliability.
What are examples of types of audit evidence?
- Analytical procedures
- Confirmations
- Documentary evidence
- Written representations
- Mathematical recalculations
- Oral evidence
- Physical Inspection
- Electronic evidence
What is professional scepticism?
A questioning mind that critically assesses audit evidence without assuming management is honest
What are the three categories of audit procedures?
- Risk assessment Procedures
- Test of controls
- Substantive procedures
What are the Risk assessment procedures used for?
To identify and assess the risks of a material misstatement at the financial statement
What are the tests of controls?
Audit procedures are designed to test the operating effectiveness of internal controls
What are substantive procedures?
Procedures performed to detect material misstatements at the assertion level.
