Audit Evidence

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Audit Evidence

  1. 1. AUDIT EVIDENCE (Statement of Auditing Standards # 500)
  2. 2. Mohamed Sameh Abdelsalam B.Sc. , Ain Shams Univ., Egypt, 1965. M.Sc. , UMIST, Manchester, UK, 1981. CPA . , Colorado, USA, 1994.
  3. 3. AUDIT EVIDENCE <ul><li>The auditor should obtain SUFFICIENT, APPROPRIATE audit evidence to be able to draw reasonable conclusions on which to base the audit opinion. (SAS 500.1) </li></ul>
  4. 4. SUFFICIENCY: <ul><li>Is the measure of the </li></ul><ul><li>QUANTITY </li></ul><ul><li>of audit evidence. </li></ul>
  5. 5. APPROPRIATENESS: <ul><li>Is the measure of the </li></ul><ul><li>QUALITY </li></ul><ul><li>of audit evidence, </li></ul><ul><li>its relevance to a particular assertion, and </li></ul><ul><li>its reliability. </li></ul>
  6. 6. APPROPRIATENESS: <ul><li>Generally, </li></ul><ul><li>The reliability of audit evidence is influenced by </li></ul><ul><li>its source & its nature : </li></ul><ul><li>independent sources … (expert opinion) </li></ul><ul><li>generated internally   …(strong I/C applied) </li></ul><ul><li>obtained directly … (3rd party confermation) </li></ul><ul><li>in documentary form … (not oral) </li></ul><ul><li>original documents … (not photocopy/fax) </li></ul>
  7. 7. ASSERTION: <ul><li>Is representation by management , </li></ul><ul><li>explicit or otherwise, </li></ul><ul><li>that is embodied in each balance </li></ul><ul><li>or </li></ul><ul><li>class of transactions in the F/S. </li></ul>
  8. 8. Procedures for obtaining Audit evidence <ul><li>Inspection </li></ul><ul><li>Observation </li></ul><ul><li>Enquiry & Confirmation </li></ul><ul><li>Computation </li></ul><ul><li>Analytical procedures. </li></ul>
  9. 9. Assertion Categories: <ul><li>Assertions about classes of transactions & events for the period under audit. </li></ul><ul><li>Assertions about account balances at the period end. </li></ul><ul><li>Assertions about presentation & disclosure. </li></ul>
  10. 10. <ul><li>Assertions about classes of transactions & events for the period under audit. </li></ul><ul><li>Occurrence </li></ul><ul><li>Completeness </li></ul><ul><li>Accuracy </li></ul><ul><li>Cutoff </li></ul><ul><li>Classification </li></ul>
  11. 11. <ul><li>Assertions about account balances at the period end. </li></ul><ul><li>Existence </li></ul><ul><li>Rights and obligations </li></ul><ul><li>Completeness </li></ul><ul><li>Valuation and allocation </li></ul>
  12. 12. <ul><li>Assertions about presentation & disclosure. </li></ul><ul><li>Occurrence, rights & obligations </li></ul><ul><li>Completeness </li></ul><ul><li>Classification & understandability </li></ul><ul><li>Accuracy & valuation </li></ul>

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