Audit ch08 slides

Audit ch08 slides - Chapter 8 Audit Evidence and Assurance...

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Unformatted text preview: Chapter 8 Audit Evidence and Assurance RECAP - Audit Assertions Balance and Presentation related CEAVOC Transaction related COCAC Slide 2 Procedures to gather Evidence For sufficient and appropriate audit evidence, need CIAROE - not ZERO. Slide 3 Examples Technique Type of Evidence Recalculation Observation Confirmation Enquiry Inspection • Auditors calculations • Physical observation • Statements by independent parties • Statements by client personnel • Documents prepared by independent parties • Documents prepared by the client • Physical inspection of tangible assets • Data interrelationships Analysis Slide 4 Particular Inspection Techniques Tracing vs Vouching – What is the difference? Source documents Vouch Trace Account / other summary Slide 5 Audit Sufficient and appropriate audit evidence is needed to substantiate a clean audit opinion •Sufficient – •Appropriate – Slide 6 Appropriateness of Evidence To be considered appropriate, evidence must be relevant and reliable. – Relevant:. – Reliable: Slide 7 Reliability Different types of evidence have varying levels of reliability •Audit assertions may need multiple types of evidence (corroborating evidence) Auditor calculations Doc-prep by Independent party Auditor Observations Doc-prep by client Stmts by Independent Parties Physical inspection of assets Stmts by Auditee Personnel Data Interrelationships Slide 8 Reliability of Evidence 1. Auditors direct, personal knowledge: – Gained though observation and recalculation. – Reliable??? 2. External evidence: – Documentary evidence that is obtained directly from independent sources. – Reliable??? Slide 9 Reliability of Evidence 3. External-internal evidence: – Documentary evidence that originates outside the client’s system, but that has been received and processed by the client. – Reliable? Slide 10 Reliability of Evidence 5. Analysis – Broad analytical procedures of general nature are not considered highly reliable. • Used for preliminary risk identification and attention directing early in the audit. – Reliable? Slide 11 Reliability of Evidence 6. Spoken and written representations: – Evidence that comes from the client’s officers, directors, management, and employees in response to enquiry. – Reliable? Slide 12 Types of Testing Tests of controls Substantive tests •Tests of Details of Balances •Analytical Procedures Dual purpose tests Slide 13 ...
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This note was uploaded on 12/18/2011 for the course BUSINESS 4754 taught by Professor Khan during the Fall '09 term at Ryerson.

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