sufficient appropriate audit evidence has been obtained. ... Internal documentary evidence can be very reliable when it is developed within a strong internal … The auditor should be alert of the source and reliability of evidence, for example: – Audit evidence is generally more reliable if obtained from external source, than from the client – Effectiveness of internal control will affect reliability of audit evidence generated internally Internal evidence not subject to strong controls. 8 ISA 330, paragraph 26. All audit techniques and procedures are derived from the concept of evidence. These documents and records can be either from internal or external sources. Evidence is more reliable if it is (1) obtained from sources independent of the engagement client, (2) corroborated by other information, and (3) direct, such as the internal auditor's personal observation. Basic principle sources 1. This standard explains what constitutes audit evidence and establishes requirements regarding designing and performing audit procedures to obtain sufficient appropriate audit evidence. Better with original documents than photocopies. Even when audit evidence is obtained from sources external to the en-tity, circumstances may exist that could affect the reliability of the information AU §326.04. A) Information that is indirectly obtained from external sources is the most reliable audit evidence. Photocopies, faxes etc. By Craig Cochran Objective evidence is the proof that the organization did or did not meet its requirements. This source is more appropriate than an internal one. Some audit evidence is obtained by performing audit procedures to test the accounting records, for example, through analysis and review, reperforming procedures followed in the Some audit evidence is obtained by performing audit procedures to test the accounting records, for example, through analysis and review, reperforming procedures followed in the financial re porting process, and reconciling related types and applications of the same information. When a client’ s internal controls are effective, evidence obtained is … Sometimes it is indicate to obtain audit evidence from other sources outside of the entity being subject to audit. Sources of Audit Evidence A7. a. Auditor’s direct knowledge refers to the degree to which evidence can be believable or worthy of trust Evidence obtained from a source outside the entity is more reliable than that obtained from within. Source Documents and the Audit Trail The University is required by statute to retain documents which support the financial transactions recorded in its accounts. Which of the following sources of evidence will the auditor generally find to be of the highest quality ... What two audit evidence characteristics determine the appropriateness of audit evidence? Audit evidence 3. For summaries: the auditor's degree of assurance is greater while evidence obtained from different sources is consistent along with each other. - The level of competence of the internal audit function i.e. Inspection of Documents Inspection of records and documents provides audit evidence of varying degrees of reliability depending on their nature, source, and the effectiveness of internal controls over their processing: The nature of documents includes quantity of information contained, the difficulty of access to them, and who has custody. 9. audit evidence 1. 1.1 SUFFICIENT This is a measure of quantity and is influenced by: •… The following ï¬ ve factors that influence the reliability of audit evidence are taken from ISA 500 Audit Evidence: (i) Audit evidence is more reliable when it is obtained from independent sources outside the entity. For example, audit evidence obtained from an independent external Senior Auditor by Fpsc, Junior Auditor, Accountant, Internal Auditors, External Auditors. .02 Audit evidence is all the information, whether obtained from audit procedures or other sources, that is used by the auditor in arriving at the conclusions on which the auditor's opinion is based. Audit evidence is all the information, whether obtained from audit procedures or other sources, that is used by the auditor in arriving at the conclusions on which the auditor's opinion is based. C) Reliability of evidence refers to the amount of evidence obtained. Gathering evidence as part of an audit involves a mix of techniques that are used interchangeably: visual observation, examination of records, and employee interviews. This requirement imposes a responsibility to ensure that the recorded transactions can be traced back to the source documents. 2. Audit Evidence 2. their qualifications. The accounting and documentary records of your company usually are internal sources, whereas external sources can include information provided by banks, suppliers, debtors, stock exchanges and the Internal Revenue Service. You can broadly divide the many sources of audit evidence into internal and external sources. However, external sources usually provide a better quality of evidence. Audit evidence is a reflection of the realities found during the course of an audit. Auditing Mcqs, Audit Mcqs for preparation of various posts i.e. Weaknesses in internal control, especially those not addressed by management. Recognize potential sources of evidence. Auditing evidence is information collected to review a company's financial transactions, internal control practices, and other items needed for an audit. Discuss the relevance and reliability of audit evidence. One of the primary objectives of an audit is to collect objective evidence. Evidence generated internally to the entity. Not just random objective evidence, but evidence specific to the requirements in the audit. BY Atta-ur-Rahman Arif 2. The reliability of audit evidence is influenced by its source: internal or external, and by its nature: visual, documentary or oral. Less Reliable. For example, bank confirmations can offer audit evidence concerning the existence of bank accounts at the reporting date and this kind of 1 INTRODUCTION Audit evidence is the information the auditor is to rely on that leads to an unqualified or qualified audit report. Changes in the IT environment. Some audit evidence is obtained by performing audit procedures to test the accounting records, for example, through analysis and review, reperforming procedures followed in the financial reporting process, and reconciling related 7 ISA 200, paragraph 5. According to Bob Dohrer, CPA, CGMA, the AICPA’s chief auditor during the project and when the new standard was issued, the prior standard was developed when audit evidence primarily was obtained from the audit client’s internal sources. Sources of Audit Evidence A7. B) Reliability of audit evidence is dependent upon the evidence being subjective. Indirect or inferred evidence. 2. 3–extent of audit tests The extent of audit procedures relates to the auditor’s decision about how much audit evidence to obtain. Auditors can gather evidence by using various audit procedures such as examining various records and supporting documents. 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. The auditor selects requirements to verify, and then looks […] It mostly consisted of paper documents. Audit Evidence 1861 obtained. obtaining an understanding of internal control, assessing control risk, and application of substantive tests to transactions, can be done prior to the balance sheet date. Audit Evidence Sources. Effectiveness of client’s internal controls 3. AUDIT EVIDENCE 7 Sources of Audit Evidence A7. Several factors increase the reliability of audit evidence. Inconsistencies between the entity's IT strategy and its business strategies. Audit evidence obtained directly by the auditor (for example, observation of the application of a control) is more reliable than audit evidence obtained indirectly or by inference (for example, inquiry about the application of a control). Reliability: The reliability of evidence refers to the nature and source of the evidence and circumstances under which it is obtained. The auditor needs to obtain sufficient (enough) and appropriate (relevant and reliable) evidence in order to draw a reasonable conclusion. - Whether the internal audit function applies a systematic and disciplined approach including quality control. .01 This standard explains what constitutes audit evidence and establishes requirements regarding designing and performing audit procedures to obtain sufficient appropriate audit evidence. The reliability of audit evidence is increased when it is obtained from independent sources outside the entity. Mcqs Provided here are very Important for Federal Public Service Commission Tests/examinations, National Testing Service etc It helps the auditor in perceiving the types of evidences available in an audit situation, collecting them through the various audit techniques and evaluating their sufficiency and appropriateness to support the accounting data. responsibility of the internal audit activity; distinguish between assurance and consulting services. 1. Independence Integrity Objectivity Professional behavior Technical standard Basic Principles 4. First, it requires that the auditor, in forming conclusions about whether sufficient appropriate audit evidence has been obtained, evaluate the relevance and reliability of information to be used as audit evidence -- notwithstanding the source (internal or external) of the information, or the methods used to obtain the evidence.