Search and verification inspecting assets confirming receivables and observing

Search and verification inspecting assets confirming

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Search and verification: inspecting assets, confirming receivables, and observing the counting of inventory Internal inquiries and comparisons: perform analytical procedure (ratio analysis) based upon the inquiries conducted with the internal personnel
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A. Evidence - General Examination Reviews Agreed-upon procedures Compilation Independent source > internal source Direct > indirect w/ effective internal control > w/o effective internal control
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A. Evidence - General Sufficient Appropriate Audit Evidence Sufficiency: quantity of audit evidence that should be obtained Appropriateness: relevance (assertion related) and reliability – Reliability Obtained from knowledgeable independent source outside the client company rather than non-independent sources Generated internally through a system of effective controls rather than ineffective controls Obtained directly by the auditor rather than indirectly or by inference (e.g. observation of application of a control is more reliable than an inquiry to the client concerning the control) Documentary in form (paper, electronic, or other) rather than an oral representation Provided by original documents rather than copies or facsimiles
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A. Evidence - General Appropriate and sufficient evidences are hard to define for estimates since the nature of the estimates are subjective Developed Reasonable Follow GAAP Methodology: Review & test control for developing estimates Develop one by yourself and compare that to the management’s estimation Review subsequent event Types of Audit Evidence Risk assessment procedures Test of controls Substantive procedures Testing Plan always changing (NET)
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B. Evidence – Specific (Substantive Procedures) Types of substantive procedures Substantive analytical procedures (Financial/Nonfinancial NET) Ratio Comparison Approach: Develop an expectation for the account balance Determine the amount of difference from the expectation that can be accepted without investigation Compare the company’s account balance / ratio with the expected account balance Investigate significant differences from the expected account balance Test of details of transactions, account balances, and disclosures Substantive procedures Near the end of the audit
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B. Evidence – Specific (Substantive Procedures)
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  • Audit Evidence Topics, Specific Audit Evidence

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