Identify the accountdisclosure 3 Identify relevant assertions 4 Design the test

2. Identify the account/disclosure 3. Identify relevant assertion/s 4. Design the test Starting point For example, where selecting sample from Evidence Evidence you are expecting to see Action/verb For example: • Inspect • Reperform • Recalculate • Confirm • Agree • Count

Quick Reference Guide 11.1 Evaluating audit evidence – ISA 500 Audit & Assurance Chartered Accountants Program Page 1 of 1 Quick reference guide 11.1 – Evaluating audit evidence – ISA 500 Quantity of audit evidence (para. 5(e)) Relevance (para. 5(b)) Reliability (para. 5(b)) • Number of items being tested • Evidence from multiple sources Evaluate whether the evidence meets the objective of the procedure (links to the assertion) Consider source, nature and circumstances of how information was obtained Consider if evidence supports initial risk assessment OR changes the initial risk assessment at the assertion level Factors which will increase reliability of evidence • Independent external source • Controls over its preparation are effective • Obtained directly by auditor • Documented (as opposed to oral) • Original document (rather than copy) Sufficiency Assess if have obtained Sufficient Appropriate Audit Evidence (SAAE) Appropriateness Risk of material misstatement Quantity and quality of audit evidence Practice Professional scepticism • Take objective view when critically evaluating audit evidence • Be alert of contradictions of audit evidence and indications of fraud

Quick Reference Guide 11.2 Evaluating Misstatements – ISA 450 Audit & Assurance Chartered Accountants Program Page 1 of 1 Quick reference guide 11.2 – Evaluating Misstatements – ISA 450 For each misstatement (other than those clearly trivial) Example1. Determine the journal entries necessary to correct the misstatement. 2. Identify the smallest class of transaction, account balance and/or disclosure impacted by each uncorrected misstatement. 3. Calculate the misstatement as a % of (2.) above (i.e. the smallest financial statement line item impacted by the errors). 4. Determine whether each uncorrected misstatement is individually material:= Immaterial: ($200K v $300K)= Immaterial: (6.7% v 10%)5. Determine whether uncorrected misstatements are material in aggregate:= Immaterial: ($200K v $300K) Note:as there are no other errors to aggregate here the answer would not differ to individual misstatement.6. Form a conclusionThe XYZ 30 June 20X6 financial statements are materially correct. Consider accounts and disclosures individually and in aggregate even though they are lower than materiality for the financial statements as a whole.