Documenti di Didattica
Documenti di Professioni
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Evidence
Chapter 7
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 7-1
Learning Objective 1
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 7-2
Nature of Evidence
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Learning Objective 2
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 7-4
Audit Evidence Decisions
1. Which audit procedures to use = nature, research:
by far the hardest – especially related to fraud.
2. What sample size to select for a given
procedure / budget = extent
3. Which items to select from the population = nature
4. When to perform the procedures = timing
5. Who should perform the procedure = staffing
WHAT AFFECTS THESE DECISIONS????????
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 7-5
Audit Program
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Learning Objective 3
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Persuasiveness of Evidence
Appropriateness - Quality
Sufficiency - Qty
Combined effect (mums vs. roses):
Examine client supporting doc. to support
sales transaction: sample size = 120.
Obtain external confirmation of A/R (sales
transaction): sample size = 25.
Persuasiveness and cost: Inspecting inventory
for Nordstrom’s 7-8
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley
Appropriateness
Relevance – to objective
Independence of provider – source objectivity
Effectiveness of internal controls
Auditor’s direct knowledge
Qualifications of individuals – source competence
Mgt (A/P), IT auditor research (CR Assessment)
Degree of objectivity – b/w or grey
Timeliness – B/S vs. I/S
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 7-9
Learning Objective 4
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 7 - 10
Types of Audit Evidence – Tools!
1. Physical examination - Inventory
2. Confirmation – A/R
3. Documentation – Sales transaction
4. Analytical procedures – Expectation for allowance
5. Inquiries of the client – A/P difference - Corroborate
6. Recalculation – Dep. Expense, FMV of invest. quant
7. Reperformance – Credit check, posting and summ.
8. Observation – Tour, Seg of duties
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 7 - 11
Terms and Types of Evidence
Terms Types of Evidence
Examine Documentation
Scan Analytical procedures
Read Documentation
Compute Analytical procedures
Recompute Recalculation
Simulation Reperformance
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 7 - 12
Terms and Types of Evidence
Terms Types of Evidence
Trace Documentation
Compare Documentation
Count Physical examination
Observe Observation
Inquire Inquiries of client
Vouch Documentation
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Learning Objective 5
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Why keep a record of
audit/WPs/Documentation?
Prepare organized
audit documentation.
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Audit File Contents
and Organization
Financial Analytical
Statements and Procedures
Audit Report
Working Test of Controls
Trial Balance & Substantive
Derrickson Associates TOT
Trial Balance Adjusting
Journal Entries Internal
12/31/2003 Control
Contingent
Liabilities General
Cash $165,237 Information
Accounts Receivable 275,050 Operations
Prepaid Insurance 37,795 Liabilities Audit
Interest Receivable 20,493 and Equity Programs
Assets Permanent
Files
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Permanent Files
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Example – WP Structure
1000 series = Planning WPs (ex. 1100 =
Planning Memo)
2000 series = Reporting (ex. 2100 = Trial
balance)
5000 series = Assets, 5100 = Cash, 5110 =
Cash Audit Program, 5120 = Cash Leadsheet,
5130 = Bank reconciliation for acct #XXXX.
8000 series = Income statement accounts
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 7 - 19
Current Files
Audit program – for each account
General administration - budget
Working trial balance – agreed to leadsheets and F/S
Adjusting and reclassification entries – from
supporting schedules and booked to
T/B or passed.
Supporting schedules – bank reconciliation,
confirmation of A/R, completeness tests
of sales transactions
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 7 - 20
Relationship of Audit
Documentation
to Financial Statements
FINANCIAL STATEMENTS
Cash 122
Acc. ………………….
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Relationship of Audit
Documentation
to Financial Statements
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Relationship of Audit
Documentation
to Financial Statements
A-2 A-3
Observe cash Bank
b/c pettty Reconciliation
cash Agreed to L/S
A-3/1 A-3/2
Confirmation O/S Check List
Dep. in transit, etc.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 7 - 23
Relationship of Audit
Documentation
to Financial Statements
A-4
Bank
Reconciliation
Agreed to L/S
A-4/1 A-4/2
Confirmation O/S Check List
Dep. in transit, etc.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 7 - 24
Learning Objective 7
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Effect of Technology
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