Auditing( Audit Evidence )

Introduction

Audit evidence is all the information used by the auditor in arriving at the conclusions on which the audit opinion is based and includes the information contained in the accounting records underlying the financial statements and other information. Auditors are not expected to examine all information that may exist.2 Audit evidence, which is cumulative in nature, includes audit evidence obtained from audit procedures performed during the course of the audit and may include audit evidence obtained from other sources, such as previous audits and a firm's quality control procedures for client acceptance and continuance.

Accounting records generally include the records of initial entries and supporting records, such as checks and records of electronic fund transfers; invoices; contracts; the general and subsidiary ledgers, journal entries, and other adjustments to the financial statements that are not reflected in formal journal entries; and records such as worksheets and spreadsheets supporting cost allocations, computations, reconciliations, and disclosures. The entries in the accounting records are often initiated, authorized, recorded, processed, and reported in electronic form. In addition, the accounting records may be part of integrated systems that share data and support all aspects of the entity's financial reporting, operations, and compliance objectives.

Methods of Obtaining Audit Evidence

Auditors can gather audit evidence using a variety of procedures including:

• Inspection

• Observance

• External confirmation

• Recalculation

• Reperformance

• Analytical procedures

• Inquiry

Audit Procedures and the Financial Statement Assertions

The above procedures identified for the purposes of obtaining audit evidence can be linked into the financial statement assertions as shown below. Financial statement assertions are the representations of management that are embodied in the financial statements. By approving the financial...