1 2 Cheat Sheet on Evidence and DocumentationACC/491 July 3, 2017Cheat Sheet on Evidence and Documentation Relevance, Reliability and Sufficiency of Evidence The basic property of an audit report is that it should entail relevance. The report t should be written in a standard format which is usually mandated by generally accepting the set auditing standards. Accounting is an important task since it ensures financial details of a business are kept considerably clean. Going through the terminologies in order to know everything that is involved in auditing is important when auditing the financial records. The first step involves dividing the field into the foremost part known as the financial statement. Soares (1997). All businesses hold their financial statements in high regards since it is a legal requirement to provide and they provide them when they are requested by relevant bodies. These statements represent the picture of the business in reference to its financial robustness. The audited report reports are used to verify that the details given in their statements. For instance, the public corporations are supposed to ensure that their statements are professionally audited in order to secure their investors’ wealth. It is important to note that the concept of reliability is of real interest to a wide variety of audit participants. This is due to many quotations and references that are required for well-founded financial information and the role of audit. It has been said that having a genuine financial and economic data should be the principle assumptions of a society. Being reliable increases confidence in and reliance on financial statements. Some of the aspects of reliability include faithful representation, fitness for purpose, robustness as well as the audit firm reliability. The quantity of audit evidence is in simple words what sufficiency of audit evidence means. The risk of material and the inclusive quality of the evidence presented is what needs to be considered to fulfill the sufficiency needed. One should rely on an eloquent order other than the convincing one. Yang (2007). Impressive evidence shows the scale one way or the other and provides one with a basis beyond a sensible doubt for forming a viewpoint (Loughran, Maire, 2011). Convincing evidence is one which is perfectly reliable. It involves looking for all clients' records in order to achieve this level of assertion. Careful documentation of the work and the audit opinion must be fact-based and should be retractable so that a different review of the audit should depict the same conclusion (Loughran, Maire, 2011). Confidentiality: Financial statements should be handled with confidentiality. Confidential information should not be disclosed to anyone. The accountant must protect the information from unauthorized disclosure or public release. The auditor should be accountable for any access by unauthorized people. In most times, clients see the auditors as trusted ...

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Cheat Sheet on Evidence and DocumentationACC/491
July 3, 2017Cheat Sheet on Evidence and Documentation
Relevance, Reliability and Sufficiency of Evidence
The basic property of an audit report is that it should entail
relevance. The report t should be written in a standard format
which is usually mandated by generally accepting the set
auditing standards. Accounting is an important task since it
ensures financial details of a business are kept considerably
clean. Going through the terminologies in order to know
everything that is involved in auditing is important when
auditing the financial records. The first step involves dividing
the field into the foremost part known as the financial
statement. Soares (1997). All businesses hold their financial
statements in high regards since it is a legal requirement to
provide and they provide them when they are requested by
relevant bodies. These statements represent the picture of the
business in reference to its financial robustness. The audited
report reports are used to verify that the details given in their
statements. For instance, the public corporations are supposed
to ensure that their statements are professionally audited in
order to secure their investors’ wealth.
It is important to note that the concept of reliability is of real
interest to a wide variety of audit participants. This is due to
many quotations and references that are required for well-
founded financial information and the role of audit. It has been
said that having a genuine financial and economic data should
be the principle assumptions of a society. Being reliable
increases confidence in and reliance on financial statements.
Some of the aspects of reliability include faithful

2. representation, fitness for purpose, robustness as well as the
audit firm reliability.
The quantity of audit evidence is in simple words what
sufficiency of audit evidence means. The risk of material and
the inclusive quality of the evidence presented is what needs to
be considered to fulfill the sufficiency needed. One should rely
on an eloquent order other than the convincing one. Yang
(2007). Impressive evidence shows the scale one way or the
other and provides one with a basis beyond a sensible doubt for
forming a viewpoint (Loughran, Maire, 2011). Convincing
evidence is one which is perfectly reliable. It involves looking
for all clients' records in order to achieve this level of assertion.
Careful documentation of the work and the audit opinion must
be fact-based and should be retractable so that a different
review of the audit should depict the same conclusion
(Loughran, Maire, 2011).
Confidentiality: Financial statements should be handled with
confidentiality. Confidential information should not be
disclosed to anyone. The accountant must protect the
information from unauthorized disclosure or public release. The
auditor should be accountable for any access by unauthorized
people. In most times, clients see the auditors as trusted
advisors. An audit document should be held in an electronic or
paper format for keeping audit records. This is characterized by
exceptions. The application of these policies and procedures is
the use of Teammates. The auditor is supposed to respect and
ensure the confidentiality of information acquired and he should
not disclose this information to anyone without authority from
the authority. This is usually stated in the constitution.
Conclusion
The main goal of this cheat sheet is to obtain fair-minded
assurance as to whether the financial statements are free from
material inaccuracy. This is to ensure that the auditor can
express an opinion on the financial statements and report

3. accordingly in the auditor’s report. The main duty of an auditor
is to obtain and evaluate the audit proof. This is usually
undertaking from audit procedures carried out during the
auditing process.
References
ACCA. (2011). Legal ownership of, and rights of access to,
books. Retrieved from
http://www.accaglobal.com/content/dam/acca/global/PDF-
members/2012/2012l/Legal_ownership.pdf
Arens, Elder, & Beasley (2014). Auditing and Assurance
Services, 15/E. Prentice Hall.
CPlusglobal. (2014). monetary unit sampling. Retrieved from
http://cplusglobal.wordpress.com/2014/04/15/monetary-unit-
sampling-mus/
Hall, T. W., Higson, A. W., Pierce, B. J., Price, K. H., &
Skousen, C. J. (2013). Current Issues in Audit Sampling:
Haphazard Sampling: Selection Biases and. American
Accounting Association, 7(2), 16-22. Retrieved from
http://aaajournals.org/doi/pdf/10.2308/ciia-50568?code=aaan-
site
Loughran, M. (2010) Collecting and Documenting Audit
Evidence, in Auditing for Dummies®, Wiley Publishing, Inc.,
Hoboken, NJ, USA. doi: 10.1002/9781118269268.ch6
Soares, C. (1997). Advances in safety and reliability:
proceedings of the ESREL'97, international conference on
safety and reliability, 17-20 June 1997, Lisbon, Portugal.
Oxford, England New York: Pergamon.
Yang, G. (2007). Lifecycle reliability engineering. Hoboken,
N.J: Wiley.

4. Week 3: General Electric Report
ACC/491
June 26, 2017
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Section 1
Introduction
General Electric has very aggressive competition through
changing technology where they continue to do researching and
development. They are affected by world economies and the
instability in commodity prices, price of oil, and foreign
currency volatility. Some factors that may affect General
Electric’s business is the quality and efficiency in the product
development department, research and development
expenditures, and the regulatory standards of their products
(United States Securities and Exchange Commission, 2016).
Do to the size and global market of General Electric, it could
take them at least three months to do a proper audit. One month
for planning, one month for fieldwork, and one month for the
audit report.
Section 3
Materiality
During the audit process, auditors have the main goal of finding
out whether the financial statements of a company that has been
prepared are right and consistent with the reporting framework.

5. However, the financial entry, their reasons for creating their
financial statements is totally different from that (Burke, 2015).
Therefore, materiality refers to that the amounts audited and
quantified are not just figures that add up but rather have a
significant and right effect under various contexts applicable to
the financial institution. The auditor determines the level of
materiality be achieved. This is regarding the types of testing as
well as the financial statements prepared.
Misstatement
A misstatement of audits takes place when the results of the
audit process show that the relevant financial reporting
frameworks were not adhered to. When the auditor sets down to
conduct an audit, there are inherent risks due to human errors or
errors of omission. The misstatement also occurs when the
auditor gives an opinion is deemed inappropriate or unfit in
regards to the financial statements at hand (Chandler, 2016).
Audit Risk
Audit statements that are made during the auditing process by
auditors usually have a clause declaring that the reports have
been crosschecked and are free from any material
misstatements. However, the audit risk appears where there are
misstatements suspected or identified in the reports even after
the reports have been declared free from any misstatements. The
audit risk can be categorized into two (Chan & Kogan, 2016).
The first category is a risk of material misstatement while the
second is the detection risk.
Audit Risk Model
The audit risk model is used to establish the entire amount of
risk that was incurred during the auditing process. Further, the
model goes ahead to offer management solutions regarding the
type of risk established and the magnitude and nature of the risk
(Chandler, 2016). The total audit risk is arrived at as being the
total product of control risk, detection risk and inherent risk
which are the major components of the audit risk model. If the
risk identified is too high, the auditors must put in measures to
restore the risk to the most acceptable level.

6. Inherent Risk
Inherent risk is one of the three components of the audit risk
model. The other two components of the audit risk model
include the control risk and the detection risk. Inherent risk
occurs when the auditing process is characterized by very
complex accounting and financial transactions (Chan & Kogan,
2016). It results from errors of omission from factors that are
difficult to control. To mitigate the risk, it is recommended that
qualified and experienced auditors be involved in the process.
Relationship of Risk to Audit Evidence
Evidence during the auditing process is necessary to be gathered
and collected to mitigate the risks inherent in the process. The
evidence is used to support their statements in the audit reports
and minimize the risk of misstatements. The auditors are
required to gather their evidence from material financial
statements in the organizations and have the evidence certified
by the management (Chandler, 2016). The evidence is required
to be part of the audit process documentation. Therefore, the
relationship that exists between risk and audit evidence is that
risk evidence minimizes and mitigates audit risk.
Conclusion
Overall, the auditing of General Electric will require some time
as it is a global company dealing with multiple economies.
Analytical procedures can help limit these risks and help
General Electric make better future decisions. Additionally,
understanding the different terms and tests that come with
auditing will enable them to identify different misstatements
that may occur on their financial statements.

7. References
Accounting. (2017). Return on common stockholders’ equity
ratio. Retrieved from
http://www.accountingformanagement.org/return-on-common-
stockholders-equity-ratio/
Arens, Elder & Beasley (2014). Auditing and Assurance
Services, 15/E. Prentice Hall.
Burke, A. (2015). Introduction to Audit Planning Certified
Public Accountant. Retrieved from
http://www.cpaireland.ie/docs/default-source/Students/Study-
Support/P1-Auditing/introduction-to-audit-
planning.pdf?sfvrsn=0
Chan, D. Y., & Kogan, A. (2016). Introduction to using
Analytics in Auditing. Journal of Emerging Technologies in
Accounting, 13(1), 121-140. Retrieved from
http://aaajournals.org/doi/abs/10.2308/jeta-51463?code=aaan-
site
Chandler, R. (2016). Auditing and assurance: University of
London. Retrieved from
http://www.londoninternational.ac.uk/sites/default/files/program
me_resources/lse/lse_pdf/subject_guides/ac3093_ch1-4.pdf
My Accounting Course. (2017). Return on assets ratio.
Retrieved from
http:////www.myaccountingcourse.com/financial-ratios/return-
on-assets
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION-Emerson. (2016). Form 10-K. Retrieved from
http://www.emerson.com/documents/corporate/180344.pdf
United States Securities and Exchange Commission. (2016).
Form 10-K. Retrieved from
http://www.ge.com/ar2016/assets/pdf/GE_2016_Form_10K_Sum
maryAndFull.pdf