Audit evidence

1¥ Info
qualitative
used by the auditor to arrive @ the conclusion to which, the auditor 's
opinion is based .

quantitative

Auditor's objective : design n

perform audit procedure to
gather evidence
to reach a conclusion about assertion using evidence gathered

classification of Audit evidence

quantitative 1 .
Info contained in the auto records Cacctg data)

qualitative 2. Other info corroborating info

•

obtained during audit

previous audit
audit evidence
from other sources ✗
•

quality control reports

what type of evidence is needed

I

① Sufficient

{
"""" "" " "" ""
affected by : inherent risk -
Not inverse

assessed risk of MM Tammi risk No direct

-

a.
b quality of audit Eirene
relevant -
able to relate to asano ,
② appropriate ability to influence auditors
-

can
affect direction of testing
-

reliable -

signal the true state of assertion

Inafune
4-
>
sources
circumstances it is obtained

Audit procedures → to gather evidence

a. Major Audit procedures

1. RAP 's

i. Inquiry all to better understand

the entity
2. Observation

3
Expect.in linen)

4- Analytical procedure i. assertion about classes

of transactions and event
CTOCCAC)

a- Occurrence

b. Completeness
2 TOC
c. Cut
OFF
-

3 Substantive
testing : audit
procedure : designed to detect material mistreatment @ assertion level
d. Accuracy
Test
i.
of details e. Classification

a. Substantive Analytical Pnoeduie

2. Assertions about Account balances at the period end LACERV)

a. completeness
audit
B. specific procedures b- Existence

""°^
" MSP OF
"

TYPE
c- 1219kt and Obligations
,n:µma , Directional
testing document
checks :
EXISTENCE / Overestimation
i.
vouching -
records →
d. Valuations allocation
9 '
tewrds COMPLETENESS / underestimation
External 2.
Tracing documents →
record
-

b. tangible assets Assertion about presentation 9 Disclosures CPOCAC )

3.

2 Observation a. Occurrence rights and

, Obligations
b- Completeness
3. inquiry
c. Accuracy and Valuation
4 ,
confirmation d. Classification and Understandability

5. Recalculation

6. Reperfirmanoe
7. analytical procedures
caudetplanning ]

RAP's TOC ST
1. inspection ✓ ✓ ✓

2 observation ✓
✓ ✓
3. inquiry ✓ ✓ ✓

4. confirmation ✓
5. Recalculation ✓

6. Reperformanoe ✓
7. analytical procedures ✓
✓
External confirmation
Patter
what ?
type of Inquiry evidence direct response auditor from 3rd / e- to transactions made to 3rd
specific an audit to
party relating party
-

as
copy
g- other
.

medium be
can
assertions ASSETS LIABILITY
-

Financial
- non financial

-
1- existence 1- completeness
tights crobliqation
Obligation
L
2. rights 9

usually confirmation of balances

blank letter
uses :
¥¥nd confirmation letter confirmation
-

types of external confirmation

1. Positive

2.
Negative

Positive
Negative
assume
to 3rd party
as responses from 3rd party responded
Do not agree
confirming party ✓ agreed i. responded →
"

agreed
✓ not
2 not responded → agrees
"
silence meals yes
t
provided into requested /not

as to related risk OF
MM

infoavailable to corroborate
as to availability of management assertion Is ONI
resources available OUTSIDE the
entity

as to characteristics of population comprises of

small number large account
-

balances
items involved
 items presented in
substantive Testing the Fst related notes
Fay
what ? audit designed to detect material statement @ assertion level
procedures
types
Test
i.
of details
a substantive Analytical Pnoeduie
Extent
Nature Timing of substantive procedures
-
-

dependent on : level of detection risk determined D Detection Risk

High DR
'

Low DR risk that audit procedures performed by auditor

→

acceptable acceptable
less effective
NC Qudhity) apply more
effective will NOT detect mistafement that exist
procedures procedures .

maybe :
T individually
year - end interim date → material
combined
intense extent reduce extent
ECQuantity )

① Test of details

objective : to qatar evidence that the actual details balances, disclosures Glendenning balances are fairly slated
of .

primary response to risk misstatement

of material
-

types :

small volume transactions

test of transactions and events t.to/E )
•

i. more
effect / more resolves need /
relative material amounts
costly
-

large volume transaction

•

test balances CTOB )

2.
of ←

relative immaterial amount

AR

fend
beg → 1013

sties sales 124A

Recoveries SD

Write
off
{ THE

2.
analytical Procedures
when required ? Planning
•

•
Review

optional ? Substantive testing , why ? bec we can

just do test of details

summary :

Phase : Objective Outcome Required ?

-
Identification of
understanding
Planning
echance items YES
of entity
•

✓
represent risk
.

to relevant to audit

Aid : planning
-

N T E ✓ relationship plausible
-

not
-

of
Audit procedures

procedures performed to Identification of flucfratrul

substantive
•

Testing respond to assessed level are

relationship that
inconsistent '
"°
level
Of MM in FS @ assertion

b ✓ Inquiry
'

✓ Her audit
aids in detection
of MIN performing procedures

Review determine if
assist to arrive @ overall conclusion ✓
relationship between
whether all FS as a whole are consistent accounts are consistent
with the auditor's understanding + YES
of the
entity If Not
↳ other
procedures
that may needto
I be
performed .

aid :
making a conclusion
Accounting Estimate

management responsibility :
responsible For making acctg estimates

auditor's responsibility ! obtain

sufficient evidence regarding estimates and determine
whether
autq estimates are :
how ? shall possess the ffg characteristics :
•

objective
1. reasonable in circumstances . consistent wit historical patterns
consistent w/ industry guidelines
•

2. properly acctd for ,

appropriately disclosed

Audit procedures
of the ffg
auditor shall adopt combination the audit of auto
1 or approaches in estimates

revised 1540)
review 9 test management to develop estimate seper-ateassec.ment of inherent
sainted risk to risk
the used by the regarding estimates
-

i.
process •
asses
of mm at assertion level

revised 640)

independent estimate to evaluate

comparison with
estimate / range managements
prepared by Mgmt POINT of rate 9 estimate related to auto estimates made
for that develops
→
2. use an .
.

auditor a

a review subsequent event

evaluation of result
4.
of audit process reasonable it mA4not_ require adjustment
-

↳
final assessment
of the reasonableness of estimates requested to revise estimates
not reasonable . management is

written representation : From management →

they believe that the estimate are reasonable .

documentation

revised 440)

1. key elements of auditor 's understanding of the entry or its environment + IC policies relating to
acctg estimates

2 Further audit procedure

3 response → when management has Not taken steps to understand estimation uncertainty
4 indicator of possible management bias If any ,

5 significant judgement made relating tho reasonableness of auto estimates

communication

to those charged 4 Governance Inquired )

i.
significant HIM aspects of the entity 's auto policy
2-
49h1 Fi cant
depficiencies In Internal control