The importance of quality evidence in auditing your business. In an audit area that has a higher inherent risk, it would be prudent to. Audit evidence is a reflection of the realities found during the course of an audit. It is served as the firsthand knowledge about the situation 4. We published this guide to help auditors assess the reliability of data. Jan 14, 2019 the six reliable characteristics of evidence are as follows. Auditors obtain such evidence from tests that determine how well accounting controls work called compliance tests and tests of accounting details such as completeness and disclosure of information called. The quantity of audit evidence needed is affected by the risk of misstatement the greater the risk, the more audit evidence is likely to be required and also by the quality of such audit evidence the higher the quality, the less the audit evidence that may be required. Evidence collected by the auditor should support the contents of its audit report. Reliability of audit evidence home forums ask acca tutor forums ask the tutor acca audit and assurance aa exams reliability of audit evidence this topic has 2 replies, 2 voices, and was last updated 2 years, 7 months ago by yceng1. Introduction scope of standard on auditing sa 500 1. As 1215, audit documentation, establishes requirements regarding documenting the procedures performed, evidence obtained, and conclusions reached in an audit. An auditors opinion, to be economically useful and profitable to the auditing firm needs to be formed within a reasonable time and based on evidence obtained that. The type and amount of the considered auditing evidence varies significantly on the basis of the.
Auditing standards suggest that the auditors should obtain evidence to support their opinions ifac, 2010 and it is also a argued that audit evidence is the substance of the audit process soltani, 2007. Sufficiency is the measure of the quantity of audit evidence. The provider who sends the information must be reliable and authentic 2. Audit evidence refers to information or data that use or collect by auditors as part. However, merely obtaining more audit evidence may not compensate for its poor quality. The type and amount of the considered auditing evidence varies significantly on the basis of the type. Auditing standard asa 500 audit evidence by nghi ngo on. For example, asking client sta what checks they do when goods are received, or asking third parties such as a bank to con. Audit evidence, documentation, and reporting july 21, 2010 apipa 2010 pohnpei, fsm 1 stephen l. It helps the auditor in perceiving the types of evidences available in an audit situation, collecting them through the various audit techniques and evaluating their sufficiency and. Relating reliability of evidence, isaca states 09 properties such as the source, nature e.
The examining of records and documents or inspection of tangible assets reliability of these records and documents depend on the nature and effectiveness of internal control four major type of documentary evidence which provide. This requires auditors to assess the reliability of the data they are usingi. Audit evidence the foundation of any audit is the evidence obtained and evaluated by the auditor. Which of the following statements relating to audit evidence. Reliable evidence is evidence which the auditor can have faith is trustworthy. What are the factors affecting the reliability of audit evidence. Audit evidence is evidence obtained by auditors during a financial audit and recorded in the audit working papers auditors need audit evidence to see if a company has the correct information considering their financial transactions so a c.
Audit evidence obtained directly through the auditor as for example, to observation of the application of a control is more reliable rather than audit evidence obtained directly or indirectly or. Sufficiency of audit evidence is the measure of the quantity of audit evidence. What sample size to select for a given procedure 3. Audit evidence is much more reliable whenever it is got from independent sources outside the entity. Morgan, cia, cgap, cfe, cgfm general course objectives upon completion of this course, participants should be able to. The examining of records and documents or inspection of tangible assets reliability of these records and documents depend on the nature and effectiveness of internal control four major type of documentary evidence which provide different. Basis on which an auditor expresses audit opinion on the accounts and financial operations of the firm being audited. Remote work advice from the largest allremote company.
Which of the following statements relating to audit. Isa 500, considering the relevance and reliability of. All audit techniques and procedures are derived from the concept of evidence. Reliability of audit evidence is influenced through its nature and its source and since it is dependent upon the specific circumstances, we can create some generalizations that. Meaning the information obtained by the auditor in arriving at the conclusions on which the audit opinion is based. What are the six reliable characteristics of an evidence. The auditor should obtain sufficient appropriate audit evidence to be able to draw. The different methods of obtaining audit evidence college.
Standard on auditing500 sa500 revised audit evidence. Understand how critical thinking is the basis for auditor jjg, pppudgment, appropriate and sufficient audit evidence, and. Numerous accountancy members have noted that low fees are associated with inadequate audit work. Audit evidence 409 whether unexpected events,changes in conditions,or the audit evidence obtained from the results of audit procedures indicate that it may be necessary to reconsider the initial evaluation of thecompetence,capabilities,andobjectivityofthemanagements specialistastheauditprogresses. Which of the following statements relating to audit evidence is the most from acc 411 at saint leo university. All the information auditors use to reach their opinion about your companys financial statements are included as audit evidence. The purpose of this statement of auditing standards sas is to establish standards and to provide guidance on what constitutes audit evidence in an audit of financial statements, the quantity and quality of audit evidence to be obtained, and the audit procedures that auditors use for obtaining that audit evidence. Audit evidence and specific considerations for certain items. This paper discusses the problems associated with the collection of audit evidence in an information technology it environment. This audio is hosted on a service that uses preferences tracking cookies. Audit evidence collection and documentation the basics of internal auditing october 9.
Pdf international standards audit isa requires the auditor to obtain sufficient. In an audit, the more of an auditors work, is to obtain and evaluate evidence, using different methods inspection, observation, evaluation, confirmation, recalculation, etc. A given set of audit procedures may provide audit evidence that is relevant to certain assertions, but not others. In auditing, an auditor cannot just form an opinion on the state of a companys financial statements without first gathering information and analyzing if the information gathered corroborates with the assertions by the companys management in the financial statement of the company. Audit evidence 7 conclusions on sufficient appropriate audit evidence whether sufficient appropriate audit evidence has been obtained to reduce audit risk to an acceptably low level, and thereby enable us to draw reasonable conclusions on which to base our opinion, is a matter of professional judgment. Adhere to these principles for relevant and sufficient audit conclusions, as well as, to enable auditors, working independently from one another, to reach similar conclusions in similar circumstances. Audit evidence which is generated internally is more reliable whenever the related controls imposed through the entity are effective.
Audit evidence that is collected can be divided into the following categories. This standard on auditing sa explains what constitutes audit evidence in an audit of financial statements, and deals with the auditors responsibility to design and perform audit procedures to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditors opinion. The six reliable characteristics of evidence are as follows. It comprise source documents and accounting records underlying the financial statements and corroborating information from other sources. The effect of an inability to obtain audit evidence relating to income tax accruals. Which of the following is considered audit evidence. However we can say that audit fees have an impact in the performance of auditors. The role of audit evidence source in enhancing the quality.
Audit evidence was established to provide guidance for this statement. The provider who sends the information must be reliable and authentic. Which of the following statements relating to audit evidence is the most from accounting 331 at lewis and clark community college. There is limited empirical evidence on the linkage between low audit fees and audit quality. For audit evidence to be compelling to the auditor it must be sufficient and appropriate. Auditing standard asa 500 audit evidence by nghi ngo on prezi. Pdf audit evidence necessity to qualify a pertinent opinion. To obtain sufficient and appropriate audit evidence is one of the key steps the.
The crux of audit work is the collection and the evaluation of evidence abouseada and abdelkader, 2003. The aim of the document is to provide auditors with an overview of. In part one of this twopart series on contradictory audit evidence, thomas ray, distinguished lecturer at baruch college and former chief auditor of the pcaob, describes the auditors responsibility for investigating contradictory evidence and hints that a companys management might have a significant role to play. As explained in hksa 200,7 reasonable assurance is obtained when the auditor has obtained sufficient appropriate audit evidence to reduce audit risk that is, the risk that the auditor.
This evidence can include your organizations policy documents, documented processes, invoices and reports. The quantity of the audit evidence needed is affected by the auditor s assessment of the risks of material misstatement and also by the quality of such audit evidence. Sep 20, 2016 these responses can reduce incidents involving conflicting audit evidence, help the companys auditor satisfy its responsibility, and improve company processes. For example, an auditor might use his judgment to the client rather than. Tweet the auditor obtains evidence by performing compliance and substantive procedures by the following methods inspection. Proposed information system auditing standard on audit. The internal audit charter is a formal document that defines the internal audit activitys purpose, authority, and responsibility.
The auditor must have the knowledge and skill to accumulate sufficient appropriate evidence on every audit. Gathering audit evidence the procedures for obtaining audit evidence are. Isa 500, considering the relevance and reliability of audit. The measure of the quality of audit evidence that is, its relevance and reliability in provid ing support for the conclusions on which the auditors opinion is based. Challenges obtaining audit evidence by deana marris ssrn. Certified public accountant can confirm their financial statements. Check back for part two of this blog series, where thomas ray examines seven considerations for companies preparing and evaluating contradictory audit evidence. The auditor must have the knowledge and skill to accumulate sufficient appropriate evidence on every audit to meet the standards of the profession. The level of reliability of evidence that obtains from clients. Audit evidence is more persuasive when items of evidence from different sources or of a different nature are consistent.
Audit evidence is all the information used by the auditor in arriving at the conclusions on which the audit opinion is based and includes the information contained in the accounting records underlying the financial statements and other information aicpa, 2006. The quantity of audit evidence needed is affected by the risk of misstatement the greater the risk, the more audit evidence is likely to be required and also by the quality of such audit evidence the higher the quality, the less may be required. Which statement below is not correct regarding the appropriateness of audit evidence. Gao assessing data reliability supersedes gao09680g. Concept of audit evidence the international standard on auditing isa 500 5 describe what constitutes audit evidence in an audit of financial statements, and promote the auditors responsibility to design and perform audit procedures to obtain sufficient appropriate audit evidence. There has been a profound shift regarding the nature of audit evidence. Proposed redrafted international standard on auditing isa 500, considering the relevance and reliability of audit evidence ed. In obtaining audit evidence from substantive testsprocedures, auditors should consider the extent of the evidence together with any evidence from tests of control to support the relevant financial statement assertions. The main objective of the work performed by the auditor in an audit engagement is that of obtaining reasonable assurance as to whether the financial statements, as a whole, are free from material misstatement, so that the auditor is able to express an opinion on the financial statements and report accordingly in the auditors report. When to perform the procedures timing about what evidence to gather and how much of it to accumulate. Confirmations can be an effective tool for auditors working with accounts including payables and receivables, inventory, investment securities, lines of credit and other actual or contingent liabilities.
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