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At.2503 Audit Evidence and Documentation The Framework

The document discusses audit evidence and documentation. It provides: 1) An overview of the two types of audit evidence: underlying accounting records and other information. 2) A summary of common audit procedures like inspection, observation, confirmation, analytical procedures and their purposes in obtaining evidence. 3) Guidance on making audit documentation sufficient and understandable for other auditors, and how to assemble and retain working papers in current and permanent files.

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137 views43 pages

At.2503 Audit Evidence and Documentation The Framework

The document discusses audit evidence and documentation. It provides: 1) An overview of the two types of audit evidence: underlying accounting records and other information. 2) A summary of common audit procedures like inspection, observation, confirmation, analytical procedures and their purposes in obtaining evidence. 3) Guidance on making audit documentation sufficient and understandable for other auditors, and how to assemble and retain working papers in current and permanent files.

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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Professional Review and

Training Center (PRTC)

Audit Evidence
and Documentation:
The Framework
(AT.2503)

Leomar R. Cabarles
Auditor’s Overall Objectives
All information on which the opinion
is based
Audit
Evidence Two types:
a. Underlying accounting
records b.
Other information
Summary of
Summary of Audit
Audit Procedures
Procedures
Summary of
Summary of Audit
Audit Procedures
Procedures

Purpose
Summary of
Summary of Audit
Audit Procedures
Procedures

Purpose
Types
Summary of
Summary of Audit
Audit Procedures
Procedures

Purpose
Types FAP
RAP
Summary of
Summary of Audit
Audit Procedures
Procedures

Purpose
Types FAP
RAP
ToC SP

To obtain
To test operating
“understanding” in order of
effectiveness To detect material
to identifycontrols
and assess
(assertion misstatements
ROMM level) (assertion level)
(F/S level and assertion
level)
Summary of
Summary of Audit
Audit Procedures
Procedures

Purpose
Types FAP
RAP
ToC SP

Inspection
Observation
External Confirmation
Recalculation
Reperformance
Analytical Procedures
Inquiry
Summary of
Summary of Audit
Audit Procedures
Procedures

Purpose
Types FAP
RAP
ToC SP

Inspection ✓
Observation ✓
External Confirmation
Recalculation
Reperformance
Analytical Procedures ✓
Inquiry ✓
Summary of
Summary of Audit
Audit Procedures
Procedures

Purpose
Types FAP
RAP
ToC SP

Inspection ✓ ✓
Observation ✓ ✓
External Confirmation
Recalculation
Reperformance ✓
Analytical Procedures ✓
Inquiry ✓ ✓
Summary of
Summary of Audit
Audit Procedures
Procedures

Purpose
Types FAP
RAP
ToC SP

Inspection ✓ ✓ ✓
Observation ✓ ✓ ✓
External Confirmation ✓
Recalculation ✓
Reperformance ✓
Analytical Procedures ✓ ✓
Inquiry ✓ ✓ ✓
Audit Risk
Audit Risk and
and Audit
Audit Procedures
Procedures
Information as
Information as Audit
Audit Evidence
Evidence

Audit Evidence

Sufficient Appropriate

Quantity Quality

ROMM Quality Relevance Reliability


Quantity

ROMM Quality

Direct Inverse

• All items
• Specific items
• Audit sampling
More audit evidence may not compensate
for its poor quality
Quality

Relevance Reliability

Purpose of
audit
procedure

Assertion

Direction of
test
Purpose of
Purpose of Audit
Audit Procedures
Procedures
Assertions
Assertions
Directional Testing
Directional Testing

Understatement

Record Completeness
Vouching

Tracing
Support
Existence

Overstatement
Quality

Relevance Reliability

Purpose of
audit Source
procedure

Nature
Assertion

Direction of Circumstance
test
More Reliable
More Reliable Evidence
Evidence
Evidence Framework
Evidence Framework Summary
Summary
Audit Documentation
Audit Documentation
Audit Documentation:
Audit Documentation: Main
Main Purpose
Purpose
Audit Documentation:
Audit Documentation: Other
Other Purposes
Purposes
Audit File
Audit File Preparation
Preparation

Sufficient information
Sufficient information
Understandable to
Understandable to
independent,
independent,
experienced auditor
experienced auditor
Audit Files
Audit Files

Current
Current Permanent/Continuing
Permanent/Continuing
Permanent/Continuing Files
Permanent/Continuing Files

• Long-term significance
• Examples:
 Debt agreements
 Pension contracts
 Articles of incorporation
 Flowcharts of internal control
 Bond indenture agreements
 Lease agreements
 Equity accounts
Current Files
Current Files

• Relate current period's audit


• Include:
 Reconciliation to F/S
 Lead schedules
 Supporting detailed schedules
 Supporting documents
 Audit programs
Documentation Assembly
Documentation Assembly and
and Retention
Retention
DIY Drill Answers
DIY Drill Answers
DIY Drill Answers
DIY Drill Answers
DIY Drill Answers
DIY Drill Answers
DIY Drill Answers
 end of AT.2503 

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