Chapter 5 Auditing

External confirmation

An external confirmation represents audit evidence obtained by the auditor as a direct written response to the auditor from a third party (the confirming party) in paper form or by electronic or other medium.

Other information

Audit evidence that includes minutes of meetings; confirmation from third parties, industry analysis reports; comparable data about competitors (benchmarking); controls manuals; info obtained by the auditor from such audit procedures as inquiry, observations and inspection and other info developed by or available to the auditor that permits the auditor to reach conclusions through valid reasining

Analytical procedures

Evaluations of financial information through analysis of plausible relationships among both financial and non-financial data

Inspection of records and documents

Examination of internal or external records or documents that are in paper form, electronic form, or other media.

Assertions

Expressed or implied representations by management regarding the recognition, measurement, presentation and disclosure of information in the financial statements and related disclosures

Audit evidence

Information used by the auditor in arriving at the conclusions on which the auditor's opinion is based. Audit evidence includes both information contained in the accounting records underlying the financial statements and other information

Observation

Process of watching a process or procedure being performed by others

Scanning

Reviewing accounting data to identify significant or unusual items

Inquiry

Seeking information of knowledgeable persons, both financial and non-financial, within the entity or outside the entity

Audit procedures

Specific acts performed by the auditor in gathering evidence to determine if specific assertions are being met

Recalculation

The auditor's checking the mathematical accuracy of documents or records either manually or electronically

Reperformance

The auditor's independent execution of procedures or controls that were originally performed as part of the entity's internal control, either manually or through the use of computer-assisted audit techniques

Audit documentation (working papers)

The auditor's principal record of the work performed and the basis for the conclusions in the auditor's report. It also facilitates the planning, performance, and supervision of the engagement and provides the basis for the review of the quality of the work by providing the reviewer with written documentation of the evidence supporting the auditor's significant conclusions

Reliability of evidence

The diagnostic of evidence; that is , whether the type of evidence can be relied on to signal the true state of the assertion

Accounting records

The records of initial entries and supporting records. Such as checks and records of electronic fund transfers, invoices, and other adjustments to the financial statement that are not reflected in formal journal entries, and records such as worksheet and spreadsheets supporting cost allocations, computations, reconciliations and disclosures

Relevance of evidence

The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested