Responding to
assessed risks -
evaluating audit
evidence
Consider the potential impact of
identified misstatement on the audit
Evaluating misstatements
Quantity of audit evidence
If RMM assessment changes, design and perform further procedures
Sufficiency
Relevance - connection between audit procedure and
assertion being considered
Reliability of audit evidence
Appropriateness
Sufficient appropriate audit evidence
From external independent sources
Controls over preparation of evidence are effective
Obtained directly by the auditor, rather than indirectly
or by inference
In documentary form rather than verbal
Obtained from original documents
Reliability of audit evidence is increased when:
Do findings change the initial risk assessment at the assertion level?
If not, attempt to obtain further audit evidence
Has sufficient appropriate audit evidence been obtained?
Form the auditor’s opinion
Responses to assessed RMM at the financial statement level
The linkage between procedures and assessed risks at the assertion level
The result and conclusions arising from audit procedures
Document
Process of evaluating audit evidence
Does the audit strategy and plan need to be revised?
Evaluate the effect of uncorrected
misstatements on the financial statements
Are individual or aggregated misstatements material?
Consider size and nature
Consider whether misstatements
are indicative of fraud
Modify or perform additional procedures
Consider whether there is an impact
on other aspects of the audit
Concerns over reliability
of audit evidence
Critically assess audit evidence
Be alert to audit evidence that might contradict other audit evidence
Be prepared to question the authenticity of documents
Challenge management’s assumptions and judgements
Remain alert to conditions that could indicate fraud
Professional scepticism
Using the work of
others, external
confirmations
and written
representations
Positive confirmation requests
Negative confirmation requests
Written representations
regarding management’s
responsibilities
Written representations
required under ISAs
Written representations
required to support other
audit evidence
External confirmations
ISA 505
Determine significant components
Set
‘component materiality’
Consider ethical requirements
(e.g. Independence)
Consider professional requirements
Understand consolidation process
and group-wide controls
Using component auditors
ISA 600
Evaluate the internal audit function:
Using the work of internal auditors
ISA 610
Objectivity (ISA 610 para. A7)
Technical competence (ISA 610 para. A8)
Use of systematic and disciplined
approach (including quality control)
(ISA 610 para. A11)
Evaluate the adequacy of an expert’s work:
Using the work of experts
ISA 620
Consider the consistency of the expert’s
work with other audit evidence
The methods and assumptions used
The source data used and whether
it is accurate
Written representations
ISA 580
Subsequent
events and
going concern
Material uncertainty?
