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Unformatted text preview: Chapter 8
Assurance RECAP - Audit Assertions
Balance and Presentation related
COCAC Slide 2 Procedures to gather
For sufficient and appropriate audit
evidence, need CIAROE - not ZERO. Slide 3 Examples
Technique Type of Evidence Recalculation
Inspection • Auditors calculations
• Physical observation
• Statements by independent parties
• Statements by client personnel
• Documents prepared by
• Documents prepared by the client
• Physical inspection of tangible
• Data interrelationships Analysis Slide 4 Particular Inspection Techniques
Tracing vs Vouching
– What is the difference? Source
Trace Account /
summary Slide 5 Audit
Sufficient and appropriate audit evidence
is needed to substantiate a clean audit
•Appropriate – Slide 6 Appropriateness of Evidence
To be considered appropriate, evidence
must be relevant and reliable.
– 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
– 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
– 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
•Tests of Details of Balances
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.
- Fall '09