Modern Auditing Assignment

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1. Valuation or allocation

2. Existence or occurrence

3. Completeness

4. Presentation and disclosure

5. Rights and obligations

6. Presentation and disclosure

7. Completeness

8. Rights and obligations

9. Valuation or allocation

10. Valuation or allocation

11. Presentation and disclosure

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A-1) An auditor should consider the following when evaluating oral evidence; - The competence of the individual who is being questioned,- The disinterestedness of the party being questioned and thirdly the logic and reasonableness of the response. The auditor needs to be able to pick the right person to question and evaluate that answer as they become more familiar with the client. They will also observe a pattern of response and determine the consistency of the information.

A-2) The auditor relies on the responses given by the client personnel, but needs to realize that his information may not be very reliable. Information that was received independently of the client is generally more reliable than those who are dependent on the client. The auditor needs to seek other measures when they believe information is unreliable or ask for validation of what was stated in writing.

B) Evidence produced by ratio analysis is classified as circumstantial. It will rank lower on the account of reliability and validity. Direct evidence such as physical observation is often ranked higher when it comes to reliability and validity. Ration analysis does play an important role however, in that it will provide evidence when direct evidence is slim. Ration analysis provides a broad overview and allow the auditor to view any out of the norm areas.

C) Physical examination is considered one of the most reliable sources. The auditor must make some kind of physical examination of documents when it is considered material. The auditor should inspect the entire inventory since this inventory is individually valuable. The procedure to physical...