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What is Audit Evidence?
Audit evidence is the data or the information collected by auditors to review a company's financial reports and transactions. The reports may need to be verified to prove their authenticity, which can be conducted by the Auditor or the Certified Public Accountant (CPA). Hence, evidence is required to ensure the authenticity of these reports. Audit evidence is usually considered sufficient when the company's claims, which they make in the financial statements and their adherence to the accounting laws of their country's legal framework, are at par. Without any proper audit evidence, the entire audit process cannot be completed. Hence, such proof is required to complete the task.
Factors that Influence the Reliability of Audit EvidenceAll the factors that influence the reliability of audit evidence are listed below:
Characteristics of Audit EvidenceFeatures of Audit Evidence may depend on the following factors:
What are the sources of Audit evidence?Physical Observations: Auditors verify the tangible and intangible assets through inspections and on-spot observations. This is typically conducted during inventory audit procedures. Original Source Document: This means vouching of the claim made by the financial statements of the company to the original documents. The Auditor conducts this through verifying the claim against any asset by comparing its sale invoice. External Data: Certain company assets may be actively traded in the financial markets. In these cases, it should be noted if these assets are reported at a lower cost or the market value in the given financial statements. The characteristics of audit evidence become important in these situations. Recalculations: All the recorded documents and transactions are submitted to the Auditor based on which they make the financial statements, which then get compared to the company’s financial statement. The stated process is called recalculation. Types of Audit EvidenceThere are various types of Audit evidence that can be in any form, physical as well as non-physical. They can be in the form of sensory visuals like videos and other non-physical ways such as email and audio versions. Some of the types of audit evidence are listed below:
Sorts of Audit Evidence:Inspectors use Audit evidence in various structures and sources. Those Audit evidence could be information or data, physical or nonphysical. For an illustration of Audit evidence:
Also, others records use by organizations to help monetary exchanges or occasions in the fiscal reports. Audit evidence could likewise shape in the video, email, sound, and verbal. Systems to Acquire Audit EvidenceThere are numerous methods that reviewers use to get Audit evidence to help their decision. What is the Reason for Evaluating?Such methodology incorporates review request, review perception, review assessment, insightful system, review recalculation, review affirmation, and re-execution.
Nature of Audit Evidence:
The nature of Audit evidence is reliant basically on the structure and wellspring of the proof. Here is the detail:
Since the nature of Audit evidence is significant, the norm or nearby power that controls review firms required the review firm to have the appropriate review manual, arrangement, and systems set up so the firm could keep up with the nature of the review and the nature of Audit evidence. The Use of Assertions in Obtaining Audit Evidence:
Classes of Transactions and Events' Assertion:At times it is known as the pay explanation's affirmations. These are the attestations utilized by the executives to affirm the exactness and fulfillment of the monetary exchanges and occasions in the pay proclamation. These Declarations Including
Did You Know?
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What is sufficiency and appropriateness of audit evidence?Sufficiency of audit evidence is the measure of the quantity of audit evidence. Appropriateness of evidence is the quality of the evidence, i.e., its relevance and reliability to support the auditor's opinion. Audit evidence includes information provided in books of accounts as well as information from other sources.
Which of the following factors is most important in determining the appropriateness of audit evidence?The independence of the source of evidence.
What are the factors affecting the quality of auditing?Several determinants, both internal and external, can affect audit quality, including auditor professional knowledge and skills; skepticism; standards compliance; working conditions; audit duration and quality control.
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