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Audit Evidence: ©2010 Prentice Hall Business Publishing, Auditing 13/e, Arens/Elder/Beasley 7 - 1
Audit Evidence: ©2010 Prentice Hall Business Publishing, Auditing 13/e, Arens/Elder/Beasley 7 - 1
Chapter 7
Sample sizes
Items to select
Timing of the tests
Two determinants:
Appropriateness
Sufficiency
1. Independence of provider
2. Effectiveness of client’s
internal controls
3. Auditor’s direct knowledge
4. Qualification of individuals
providing the information
5. Degree of objectivity
6. Timeliness
Assets
Cash in bank Bank
Marketable securities Customer
Accounts receivable Maker
Notes receivable Consignee
Owned inventory out on consignment Public warehouse
Inventory held in public warehouses Insurance company
Cash surrender value of life insurance Investment custodian
Liabilities
Accounts payable Creditor
Notes payable Lender
Advances from customers Customer
Mortgages payable Mortgagor
Bonds payable Bondholder
Owners’ Equity
Shares outstanding Registrar and
transfer agent
Other Information
Insurance coverage Insurance company
Contingent liabilities Bank, lender, and
client’s legal counsel
Bond indenture agreements Bond holder
Collateral held by creditors Creditor
©2010 Prentice Hall Business Publishing, Auditing 13/e, Arens//Elder/Beasley 7 - 18
Documentation
Internal External
documents documents
Evidence Decisions
Audit program
General information
Supporting schedules
A-4/2
©2010 Prentice Hall Business Publishing, Auditing 13/e, Arens//Elder/Beasley O/S Check List 7 - 37
Types of Supporting Schedules
Analysis
Reconciliation of amounts
Tests of reasonableness
Summary of procedures
Informational
Outside documentation