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Modern Auditing:
Modern Auditing:

Assurance Services and the Integrity
Assurance Services and the Integrity
of Financial ...
Chapter 6 Overview
Chapter 6 Overview
Audit Evidence Defined
Audit Evidence Defined
• Audit Evidence
– Accounting records
– Corroborating information

• Account...
Assertions and Specific Audit
Assertions and Specific Audit
Objectives
Objectives
• Five Management Assertions (GAAS)
– Ex...
Assertions and Specific Audit
Assertions and Specific Audit
Objectives
Objectives
• Transaction Class Audit Objectives
– O...
Assertions and Specific Audit
Assertions and Specific Audit
Objectives
Objectives
• Account Balance Audit Objectives
– Exi...
Assertions and Specific Audit
Assertions and Specific Audit
Objectives
Objectives
• Disclosure Audit Objectives
– Occurren...
Sufficiency of Audit Evidence
Sufficiency of Audit Evidence
• Materiality
• Risk of Material Misstatement
• Size of Popula...
Sufficiency of Audit Evidence
Sufficiency of Audit Evidence
Competency of Evidence
Competency of Evidence
• Relevance of Audit Evidence

• Reliability of Audit Evidence

• Profession...
Reliability of Audit Evidence
Reliability of Audit Evidence
Reliability of Documentary
Reliability of Documentary
Evidence
Evidence
Study Break
Study Break
1. Which of the following is not a
transaction class audit objective?
A. Existence
B. Occurrence
C...
Study Break
Study Break
2. Which of the following is not an
account balance audit objective?
A. Existence
B. Completeness
...
Study Break
Study Break
3. All of the following affect the sufficiency
of audit evidence except:
A. Materiality
B. Risk of...
Objectives of Audit Procedures
Objectives of Audit Procedures
• Obtain an understanding of the
entity and its environment
...
Types of Audit Procedures
Types of Audit Procedures
• Inspection of Documents or Records
– Vouching
– Tracing
Types of Audit Procedures
Types of Audit Procedures
• Inspection of Tangible Assets
• Observation
• Inquiry
• Confirmation
Types of Audit Procedures
Types of Audit Procedures
• Recalculation
• Reperformance
• Analytical Procedures
• Computer-Ass...
Four Decisions About Audit
Four Decisions About Audit
Procedures
Procedures
• Staffing and Supervising the Audit
• Nature ...
Documenting Audit Decisions
Documenting Audit Decisions
and Audit Evidence
and Audit Evidence
• Audit Program
– Recommende...
Types of Working Papers
Types of Working Papers
• Working Trial Balance
• Schedules and Analyses
• Audit Memoranda and Cor...
Preparing Working Papers
Preparing Working Papers
• Heading
• Index Number
• Cross-Referencing
• Tick Marks
• Signatures a...
Working Paper Example
Working Paper Example
Reviewing Working Papers
Reviewing Working Papers
• Scope of Work Performed
• Evidence and Findings Obtained
• Audit Judgm...
Working Paper Files
Working Paper Files
• Permanent File

• Current File

• Ownership and Custody
Study Break
Study Break
4. ________ involves selecting entries in the
accounting records and inspecting the
documentation ...
Study Break
Study Break
5. These decisions involve determining
whether the procedures will be
performed at an interim date...
Study Break
Study Break
6. This working paper file contains data
that are expected to be useful to the
auditor in future e...
Ch06 modern auditing boynton
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Transcript of "Ch06 modern auditing boynton"

  1. 1. Modern Auditing: Modern Auditing: Assurance Services and the Integrity Assurance Services and the Integrity of Financial Reporting, 8th Edition of Financial Reporting, 8th Edition William C. Boynton California Polytechnic State University at San Luis Obispo Raymond N. Johnson Portland State University Chapter 6 – Audit Evidence
  2. 2. Chapter 6 Overview Chapter 6 Overview
  3. 3. Audit Evidence Defined Audit Evidence Defined • Audit Evidence – Accounting records – Corroborating information • Accounting Records • Other Information
  4. 4. Assertions and Specific Audit Assertions and Specific Audit Objectives Objectives • Five Management Assertions (GAAS) – Existence and Occurrence – Completeness – Rights and Obligations – Valuation or Allocation – Presentation and Disclosure
  5. 5. Assertions and Specific Audit Assertions and Specific Audit Objectives Objectives • Transaction Class Audit Objectives – Occurrence – Completeness – Accuracy – Cutoff – Classification
  6. 6. Assertions and Specific Audit Assertions and Specific Audit Objectives Objectives • Account Balance Audit Objectives – Existence – Completeness – Rights and Obligations – Valuation and Allocation
  7. 7. Assertions and Specific Audit Assertions and Specific Audit Objectives Objectives • Disclosure Audit Objectives – Occurrence and Rights and Obligations – Completeness – Understandability – Accuracy and Valuation
  8. 8. Sufficiency of Audit Evidence Sufficiency of Audit Evidence • Materiality • Risk of Material Misstatement • Size of Population • Characteristics of Population
  9. 9. Sufficiency of Audit Evidence Sufficiency of Audit Evidence
  10. 10. Competency of Evidence Competency of Evidence • Relevance of Audit Evidence • Reliability of Audit Evidence • Professional Judgment
  11. 11. Reliability of Audit Evidence Reliability of Audit Evidence
  12. 12. Reliability of Documentary Reliability of Documentary Evidence Evidence
  13. 13. Study Break Study Break 1. Which of the following is not a transaction class audit objective? A. Existence B. Occurrence C. Accuracy D. Cutoff A. Existence
  14. 14. Study Break Study Break 2. Which of the following is not an account balance audit objective? A. Existence B. Completeness C. Classification D. Rights and Obligations C. Classification
  15. 15. Study Break Study Break 3. All of the following affect the sufficiency of audit evidence except: A. Materiality B. Risk of Material Misstatement C. Relevance of Audit Evidence D. Size and Characteristics of the Population C. Relevance of Audit Evidence
  16. 16. Objectives of Audit Procedures Objectives of Audit Procedures • Obtain an understanding of the entity and its environment • Test operating effectiveness of controls • Support assertion or detect material misstatements
  17. 17. Types of Audit Procedures Types of Audit Procedures • Inspection of Documents or Records – Vouching – Tracing
  18. 18. Types of Audit Procedures Types of Audit Procedures • Inspection of Tangible Assets • Observation • Inquiry • Confirmation
  19. 19. Types of Audit Procedures Types of Audit Procedures • Recalculation • Reperformance • Analytical Procedures • Computer-Assisted Audit Techniques
  20. 20. Four Decisions About Audit Four Decisions About Audit Procedures Procedures • Staffing and Supervising the Audit • Nature of Audit Procedures • Timing of Audit Procedures • Extent of Audit Procedures
  21. 21. Documenting Audit Decisions Documenting Audit Decisions and Audit Evidence and Audit Evidence • Audit Program – Recommended by GAAS – Documents decisions • Working Papers – Documents audit decisions – Documents audit evidence obtained
  22. 22. Types of Working Papers Types of Working Papers • Working Trial Balance • Schedules and Analyses • Audit Memoranda and Corroborating Information • Adjusting and Reclassifying Entries
  23. 23. Preparing Working Papers Preparing Working Papers • Heading • Index Number • Cross-Referencing • Tick Marks • Signatures and Dates
  24. 24. Working Paper Example Working Paper Example
  25. 25. Reviewing Working Papers Reviewing Working Papers • Scope of Work Performed • Evidence and Findings Obtained • Audit Judgment Exercised • Conclusions Reached by the Auditor
  26. 26. Working Paper Files Working Paper Files • Permanent File • Current File • Ownership and Custody
  27. 27. Study Break Study Break 4. ________ involves selecting entries in the accounting records and inspecting the documentation that served as the basis for the entries. A. Vouching B. Tracing C. Observation D. Inquiry A. Vouching
  28. 28. Study Break Study Break 5. These decisions involve determining whether the procedures will be performed at an interim date or at fiscal year-end. A. Staffing and Supervision B. Nature of Audit Tests C. Timing of Audit Tests D. Extent of Audit Tests C. Timing of Audit Tests
  29. 29. Study Break Study Break 6. This working paper file contains data that are expected to be useful to the auditor in future engagements with the client. A. Permanent file B. Current file C. Daily file D. Annual file A. Permanent file
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