The 3rd field work standard of GAAS requires the auditor to obtain sufficient and
competent evidence through various methods.
Some of the methods by which the auditor
can obtain evidence are explicitly set forth in the standard (inspection, observation,
inquiries, confirmations) but, as discussed in Chapter 7, they are by no means the only
Below, I will briefly address the decisions that must be made by the auditor
with respect to evidence gathering, the types of evidence that might be gathered, the
procedures used to gather such evidence, and the auditor’s documentation of evidence.
Audit evidence decisions
The auditor must rely heavily upon his/her judgment in determining the types and the
amounts of evidence to accumulate for each audit.
In making decisions relating to
evidence accumulation, the auditor must develop what are called
detailed instructions or steps for collecting audit evidence (discussed below).
on page 187 sets forth some examples of audit procedures, such as scanning the sales
journal for unusual transactions, or reading the minutes of the board of director’s
In developing the audit procedures, the auditor often must determine:
the number of
items to be tested out of the total population (sample size) (ie., select 50 cancelled checks
out of total population of 6,600 checks to compare to cash disbursements journal),
(2) which items to select from the population (ie., random selection of 50 items, 50
largest $ amount items, etc.), and (3) the timing of the audit procedures (ie., count of
inventory as close to balance sheet date as possible).
Again, the auditor must use his/her
judgment in making such decisions.