Which are the methods of obtaining audit evidence?

      

Which are the methods of obtaining audit evidence?

  

Answers


Wilfred
The auditor may rely on sufficient appropriate evidence obtained by substantive testing to form
his opinion. Alternatively he may be able to obtain assurance from presence of a reliable internal
contrast system and therefore reduce the extent of substantive testing the auditor obtains
evidence in performing compliance and substantive procedures using the following methods.

a) Inspection.
This consists of examining records, documents or tangible assets. The reliability of the evidence
obtained from inspection depends on nature, source and effectiveness of the internal control
system. Inspection of tangible assets provides evidence with the respect to the existence but not
to their value and ownership.

b) Observation
This involves looking at procedures being performed by others e.g. stock counting by client

c) Inquiry and confirmation.
Inquiry consists of seeking information from knowledgeable persons inside and outside the company. It ranges from formal written inquires addressed to the third parties to oral inquiries addressed to persons within the entity. The information may be new to the auditor or may corroborate evidence from other sources. Confirmation is the response to inquiry to corroborate information contained in financial statements e.g. debtors circularization.

d) Recalculation and re-performance
This involves checking the arithmetic accuracy of source documents and accounting records or performing independent computations e.g. re-computing amount of provision for depreciation and comparing this against that computed by client.

e) Analytical procedures.
This is the analysis of relationships such as between items of financial data to identify consistency and predicted patterns or significant fluctuations, unexpected relationships and results of investigations thereof.
Wilfykil answered the question on April 11, 2019 at 13:23


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