Chapter 11: Evidence and sampling Flashcards
Name procedures to obtain evidence
- inspection
- observation
- analytical procedures
- inquiry
- external confirmation
- recalculation
- performance
What are the 3 main types of CAAT?
- test data
- audit software
- data analytics
Test data supports auditors in what test?
Test of control
What are the options for deciding upon test data?
- dummy data -> careful to reverse all effects
- real data -> data may not contain all the errors
- dummy data against a verified copy of the client’s system -> safer
What does audit software make use of?
Assurance providers’ own specialized software
Name some examples of what audit software can do
extract a sample according to specific criteria (random, over a certain amount, at certain dates, below a certain amount); calculate ratios and select those outside set criteria; prepare reports; check calculations and casts; follow items through a system and flag where they are posted
Audit software supports auditors in what test?
Substantive procedures
What can data analytics do?
discover and analyze patterns, deviations and inconsistencies, extract other useful information
Does data analytics have to create tailor-made software?
No
Name some examples of what data analytics can do
analyse all trans in a population, match trans, assist in segregation of duties, compare entity data to externally obtained data, manipulate data to assess different assumptions, three-way matches, matches of orders to cash and purchases to payments
Are analytical procedures compulsory in the performing stage?
No. Only compulsory in the planning stage and overall review stage
What are some factors that the auditors should consider when using analytical procedures as a substantive procedure?
- objectivity
- suitability
- reliability
If is overstated (existence), which directional test should auditors use?
Book to fact
If is understated (completeness), which directional test should auditors use?
Fact to book
Name some methods to audit accounting estimates
- use a point estimate
- review events occurring up to the date of the auditor’s report
- test the process that mgt used to estimate the figure
- test the operating effectiveness of controls over how mgt made the accounting estimate