Summary Obtaining Audit Evidence

Audit Evidence
Nature of Audit Evidence

 Sufficient (Right quality and quantity)
 Appropriate (Relevant and reliable)
 Source
 External > Internal
 Internal reliable if strong ICs
 Direct acquired > Client supplied
 Nature
 Written > Oral
 Originals > Copies
 AE for each assertion
 Persuasive rather than conclusive
 If inconsistency arises additional procedures needed
 Cost consideration
 If cannot attain sufficient and appropriate evidence = QAO

Obtaining Audit Evidence

Procedures

 RAPS
 Procedures to obtain understanding of organisation’s environment incl
ICs to determine risk of MMS
 Consist of enquiries of management, observation and inspection and
analytical procedures
 TOCs
 Test operating effectiveness of ICs
 Specifically tests suitability of design and existence & effective
operation of systems
 SPs
 Designed to detect MMS on assertion level
 Consist of detail testing and analytical procedures




Methods

 Observation – process or procedures

• Enquiry – inside and outside entity

• Confirmation – internally and 3rd party

, • Recalculation

• Re-performance – process or controls

• Analytical procedures

Documentation

Documentation must:

 Sufficient and appropriate information to support audit report
 Be in line with ISA standards

Working papers:

 Assist planning and performance
 Assist supervision and review
 Serve as proof of work done and support audit opinion
 Facilitates QC

Timely preparation

 Prepared as work is done to enhance the opinion given and facilitate QC
 Documentation afterwards not as accurate

Info to be Documented

 Engagement and planning
 Audit Plan
 Audit procedures
 Documented findings
 Significant matters discussed with man
 How inconsistencies were resolved
 Reasons for departures from ISAs
 Stances on matters which occurred after report
 Audit differences and matters affecting the audit opinion



Information usually included in WPs

 Compiler and date of work
 Legal and organisational info
 Excerpts
 Industry and environment info
 Proof of planning
 Consideration of IA work
 Analysis of transaction, balances and accounts
 Risk of mms
 Nature, timing and extent of audit procedures
 Proof of supervision and review
 Component auditors