A summary of the methods to obtain audit evidence namely substantive procedures and test of controls. Discussion of audit approaches and risks of material misstatement are included
Sufficient (Right quality and quantity)
Appropriate (Relevant and reliable)
Source
External > Internal
Internal reliable if strong ICs
Direct acquired > Client supplied
Nature
Written > Oral
Originals > Copies
AE for each assertion
Persuasive rather than conclusive
If inconsistency arises additional procedures needed
Cost consideration
If cannot attain sufficient and appropriate evidence = QAO
Obtaining Audit Evidence
Procedures
RAPS
Procedures to obtain understanding of organisation’s environment incl
ICs to determine risk of MMS
Consist of enquiries of management, observation and inspection and
analytical procedures
TOCs
Test operating effectiveness of ICs
Specifically tests suitability of design and existence & effective
operation of systems
SPs
Designed to detect MMS on assertion level
Consist of detail testing and analytical procedures
Methods
Observation – process or procedures
• Enquiry – inside and outside entity
• Confirmation – internally and 3rd party
, • Recalculation
• Re-performance – process or controls
• Analytical procedures
Documentation
Documentation must:
Sufficient and appropriate information to support audit report
Be in line with ISA standards
Working papers:
Assist planning and performance
Assist supervision and review
Serve as proof of work done and support audit opinion
Facilitates QC
Timely preparation
Prepared as work is done to enhance the opinion given and facilitate QC
Documentation afterwards not as accurate
Info to be Documented
Engagement and planning
Audit Plan
Audit procedures
Documented findings
Significant matters discussed with man
How inconsistencies were resolved
Reasons for departures from ISAs
Stances on matters which occurred after report
Audit differences and matters affecting the audit opinion
Information usually included in WPs
Compiler and date of work
Legal and organisational info
Excerpts
Industry and environment info
Proof of planning
Consideration of IA work
Analysis of transaction, balances and accounts
Risk of mms
Nature, timing and extent of audit procedures
Proof of supervision and review
Component auditors
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