ISA 500 - Audit Evidence

Question 1

ISA 500

ISA 500 - AUDIT EVIDENCE

Answer 1

The auditor shall DESIGN & perform audit procedures that are appropriate in the circumstances (scenario – based) for the purpose of obtaining sufficient appropriate audit evidence.
1/ PRINCIPAL Audit Procedures - Focus on the specific risk arising in the question to enable auditor to determine whether the item is materially misstated. [Focus on the assertion specified in the question]

Focus on information given in the scenario.
Generic procedures not tailored to the scenario
will not obtain credit.

DADA

How to WORD audit procedures?

Verb - source of evidence - Obj of test

Use strong audit action verbs
(Eg: inspect, recalculate, obtain confirmation)
Use reliable sources of evidence.
(Eg: documentary evidence, 3rd party evidence or
physical evidence)

**2/ Matters & EVIDENCE **- Focus on the specific risk arising in the question. Focus on information in the scenario.

How to WORD audit evidence?
Verb - source of evidence - Obj of tes

3/ SUFFICIENCY of evidence
How to present answer?

OCWN

Question 2

ISA 500

ASSERTIONS used by the auditor

Answer 2

When preparing financial statements, management is making assertions about the entity’s financial position and operations.

The auditor needs to DESIGN AUDIT PROCEDURES to obtain sufficient and appropriate audit evidence for each of the following assertions.
TRANSACTIONS & EVENTS
C Completeness of recording

O Occurrence

C Cut-off

A Accuracy of recording

C Classification (recognition)

P Presentation

ACCOUNT BALANCES C	Completeness of recording

A Accuracy: Valuation & allocation FRAID

R Rights & obligation

E Existence

C Classification (recognition)

P Presentation