RR Chapter 07

Learning Objective 1
Audit Evidence Contrast audit evidence with

evidence used by other
professions.
Chapter 7
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 7-1 2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 7-2
Nature of Evidence Learning Objective 2

The use of evidence is not unique to auditors Identify the four audit evidence
Evidence is also used by scientists, lawyers,
decisions that are needed to
and historians create an audit program.
Audit Evidence Decisions Audit Program
1. Which audit procedures to use It includes a list of the audit procedures

the auditor considers necessary.
2. What sample size to select for a given procedure
Sample sizes
3. Which items to select from the population Items to select
Timing of the tests
4. When to perform the procedures (timing)
Most auditors use computers to facilitate
the preparation of audit programs.
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1-1

Learning Objective 3 Persuasiveness of Evidence
Specify the characteristics that Two determinants:
determine the persuasiveness Appropriateness

of evidence.
Sufficiency
Six Characteristics of Reliable Six Characteristics of Reliable

Evidence Evidence
1. Independence of provider 4. Qualification of individuals
providing the information
2. Effectiveness of clients
internal controls 5. Degree of objectivity
6. Timeliness
3. Auditors direct knowledge
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 7-9 2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 7 - 10
Relationships Among Audit

Persuasiveness and Cost
Evidence and Persuasiveness
Qualities Affecting Persuasiveness
Audit Evidence Decisions of Evidence In making decisions about evidence
Audit procedures and timing Appropriateness
Relevance for a given audit, both persuasiveness
Reliability and cost must be considered.
Independence of provider
Effectiveness of internal controls
Auditor's direct knowledge
Qualifications of provider The auditors goal is to obtain a
Objectivity of evidence sufficient amount of appropriate
Timeliness
When procedures are performed evidence at the lowest total cost.
Portion of period being audited
Sample size and items to select Sufficiency
Adequate sample size
Selection of proper population items
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 7 - 11 2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 7 - 12

Learning Objective 4 Types of Audit Evidence
1. Physical examination
Identify and apply the eight types
2. Confirmation
of evidence used in auditing. 3. Documentation
4. Analytical procedures
5. Inquiries of the client
6. Recalculation
7. Reperformance
8. Observation
Relationships Broad guidelines

concerning auditor Physical Examination
Auditing qualifications and
standards conduct, evidence
Qualifications accumulation,
and conduct and reporting It is the inspection or count by the
Evidence
accumulation
auditor of a tangible asset.
Physical examination
Confirmation Reporting
Documentation
Analytical procedures
Inquiries of the client
Types of
Broad categories of
This type of evidence is most often
evidence
Recalculation evidence available associated with inventory and cash.
Reperformance for the auditors
Observation accumulation
Audit
procedures Specific instructions
FOUR for the accumulation
AUDIT of types of evidence
EVIDENCE Sample size
DECISIONS and items
to select Timing
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
of tests 7 - 15 2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 7 - 16
Confirmation Confirmation
Information Source Information Source
Assets Liabilities
Cash in bank Bank Accounts payable Creditor
Accounts receivable Customer Notes payable Lender
Notes receivable Maker Advances from customers Customer
Owned inventory out on consignment Consignee Mortgages payable Mortgagor
Inventory held in public warehouses Public warehouse Bonds payable Bondholder
Cash surrender value of life insurance Insurance company

Confirmation Documentation
Information Source It is the auditors inspection of the
Owners Equity clients documents and records.
Shares outstanding Registrar and
transfer agent
Other Information
Internal External
Insurance coverage Insurance company documents documents
Contingent liabilities Bank, lender, and
clients legal counsel
Bond indenture agreements Bond holder
Collateral held by creditors Creditor
Analytical Procedures Inquiries of the Client
Understand the clients industry and business It is the obtaining of written or oral information
from the client in response to questions
Assess the entitys ability to continue as a
from the auditor.
going concern
Indicate the presence of possible misstatements

in the financial statements
Reduce detailed audit tests
Recalculation Reperformance
It involves rechecking a sample of calculations It is the auditors independent tests of client

made by the client. accounting procedures or controls that
were originally done.

Appropriateness of Types of
Observation
Evidence
It is the use of the senses to assess client activities. Type of evidence
Independence of provider
The auditor may tour the plant to obtain a general Effectiveness of clients internal controls
impression of the clients facilities.
Auditors direct knowledge
Qualifications of provider
Objectivity of evidence
Terms and Types of Evidence Learning Objective 5

Terms Type of Evidence Understand the purposes of
Examine Documentation
Scan Analytical procedures audit documentation.
Read Documentation
Compute Analytical procedures
Recompute Recalculation
Foot Recalculation
Trace Documentation/Reperformance
Compare Documentation
Count Physical examination
Observe Observation
Inquire Inquiries of client
Vouch Documentation
Audit Documentation Audit Documentation
Audit documentation is the principal record Purposes of audit documentation

of auditing procedures applied, evidence
obtained, and conclusions reached by Ownership of audit files
the auditor in the engagement.
Confidentiality of audit files

Sarbanes-Oxley Act Learning Objective 6
The Sarbanes-Oxley Act requires auditors of Prepare organized audit

public companies to prepare and maintain
audit working papers for a period of no
documentation.
less than seven years.
Audit File Contents and Organization

Financial Statements
and Audit
Financial Report
Statements
and Audit Report
Working
Balance
Financial
Trial
Statements
Permanent Files
and Audit ReportJournal
Adjusting
Entries
and AuditContingent
Report
Liabilities
and Audit Report
Operations
These files are intended to contain
and Audit Liabilities
Report
and Equity
data of a historical or continuing
Robinson Associates
Trial Balance
and Audit Report
Assets
nature pertinent to the current audit.
12/31/07 and Audit Report
Analytical
Procedures
and Audit Report
Tests of Controls and
Cash $165,237
Substantive
Financial TOT
Statements
Accounts Receivable 275,050 and Audit Report
Internal
Prepaid Insurance 37,795 Control
Interest Receivable 20,493 and Audit Report
General
Information
and Audit Report
Audit
Programs
and Audit Report
Permanent Files
and Audit Report
Relationship of Audit Documentation

Current Files to Financial Statements
FINANCIAL STATEMENTS
Audit program Cash 122
Acc.
General information
WORKING TRIAL BALANCE AJEs
Prelim. AJEs Final Expense 90
Working trial balance Cash 212 (90) 122 Cash 90
Adjusting and reclassification entries LEAD SCHEDULECASH

Per G/L AJEs Final
A-1
Petty Cash A-2 5 5

Supporting schedules Cash in Bank:
General A-3 186 (90) 96
Payroll A-4 21 21
212 (90) 122

Relationship of Audit Documentation Types of Supporting
to Financial Statements Schedules
LEAD SCHEDULECASH A-1
Per G/L AJEs Final Analysis
Petty Cash A-2 5 5
Cash in Bank:
General A-3 186 (90) 96 Trial balance or list
Payroll A-4 21 21
212 (90) 122 Reconciliation of amounts
A-2 A-3 A-4

Tests of reasonableness
Cash Count Sheet Bank Reconciliation Bank Reconciliation
A-3/1 A-3/2 A-4/1

Confirmation O/S Check List Confirmation
A-4/2
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder O/S Check List 7 - 37 2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 7 - 38
Types of Supporting Preparation of Audit

Schedules Documentation
Summary of procedures Each audit file should be properly identified
Examination of supporting documents Documentation should be indexed and

cross-referenced
Informational
Completed documentation must clearly
Outside documentation indicate the audit work performed
It should include sufficient information
It should plainly state the conclusions reached
Learning Objective 7 Effect of E-commerce
Describe how e-commerce Audit evidence is increasingly in electronic form
affects audit evidence and Auditors must evaluate how electronic information
affects their ability to gather evidence
audit documentation.
Auditors use computers to read and examine
evidence
Software programs are typically Windows-based

End of Chapter 7
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 7 - 43

RR Chapter 07

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

RR Chapter 07

Hochgeladen von

Copyright:

Verfügbare Formate

Learning Objective 1

Audit Evidence Contrast audit evidence with

Nature of Evidence Learning Objective 2

Audit Evidence Decisions Audit Program

1. Which audit procedures to use It includes a list of the audit procedures

2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1-1

Specify the characteristics that Two determinants:

determine the persuasiveness Appropriateness

Six Characteristics of Reliable Six Characteristics of Reliable

Relationships Among Audit

2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1-2

Relationships Broad guidelines

2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1-3

Analytical Procedures Inquiries of the Client

Indicate the presence of possible misstatements

Reduce detailed audit tests

It involves rechecking a sample of calculations It is the auditors independent tests of client

2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1-4

Terms and Types of Evidence Learning Objective 5

Audit Documentation Audit Documentation

Audit documentation is the principal record Purposes of audit documentation

2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1-5

The Sarbanes-Oxley Act requires auditors of Prepare organized audit

Audit File Contents and Organization

Relationship of Audit Documentation

Adjusting and reclassification entries LEAD SCHEDULECASH

Petty Cash A-2 5 5

2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1-6

A-2 A-3 A-4

A-3/1 A-3/2 A-4/1

Types of Supporting Preparation of Audit

Examination of supporting documents Documentation should be indexed and

Learning Objective 7 Effect of E-commerce

Describe how e-commerce Audit evidence is increasingly in electronic form

2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1-7

2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 7 - 43

2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1-8

Das könnte Ihnen auch gefallen