Forms of evidence, Auditing

Forms of evidence

a) Observation: is usually witnessing internal control and book-keeping procedures. It includes attendance at wages pay out. Observation of stock-take, opening of mail and receipting and issuing procedures at the stores warehouse.

b) Inspection: examining of physical assets to confirm their existence and their condition as an aid in determining their value for accounts purposes. It includes examining the records to ensure that book-keeping and internal control procedures have been carried out.

c) Testimony from independent third parties: These are obtaining bank letters, debtor’s circularisation, lawyer’s letters etc.

d) Review of authoritative documents: e.g title deeds, share and loan certificates, leases, contract, supplier's invoices, minutes of board meetings, internal sales invoices.

e) Testimony from management and employees: This can be formal for example a letter of representation or informal for example replies to questions in questionnaires.

f) Satisfactory internal control: Where the volume of transaction is large for example sales, purchases, wages and salaries, receipts and payments, this may be the most useful evidence.

g) Calculations performed by the auditor: These give him evidence of the correctness of many figures.

h) Review of post balance sheet events: In most cases the final audit is performed well after the end of the year and since the present is a function of the future many assertions can be verified by reference to subsequent events.

i) Relationship evidence: Evidence confirming truth about one item may confirm the truth about another, for example verifying the expense rates confirms to some extent existence and ownership of the property.

j) Agreement with expectation: Computation and comparison of ratios and absolute magnitude with those achieved in the past, by other companies, or budgeted can assist in verification.  Also inconsistencies, unusual, abnormal or unexpected items can alert the auditor.

k) External events: The auditor must consider external events in using his knowledge of current events to assist him in the assessment of a company's accounts. He must therefore consider prevailing economic circumstances that affect his client; he must also consider the political situation and legislation.

Posted Date: 12/3/2012 6:40:15 AM | Location : United States







Related Discussions:- Forms of evidence, Assignment Help, Ask Question on Forms of evidence, Get Answer, Expert's Help, Forms of evidence Discussions

Write discussion on Forms of evidence
Your posts are moderated
Related Questions
Co-operative Societies and Parastatals Co-operative Societies An audit in this case is carried out as a general audit except you should notice that the auditor is appoi


You are just appointed as the Trainee Accountant of the Compaq Computing Sdn Bhd - the newly established company. The manager is facing difficulties in maintaining the manual accou

Conducting a critical review of published literature about a topic is fundamental step in developing your research skills. A first step towards a review of the literature is to sea

Reserves - Audit Process Movements in reserves need disclosure in the balance sheet, the loss and profit account, the director's reports or in the notices to the accounts. The

Ask quesThe following situations involve a possible violation of the MIA ByLaws (on professional ethics, conduct and practice). For each situation, (1) decide whether or not the Co

Question : (a) Describe the following terms: 1) Forensic Accounting; 2) Forensic Investigation; 3) Forensic Auditing. (b) Explain the basic elements to consider for

With internal audit we always require to be careful of any manipulations within the company itself. Errors and frauds within the company cannot be denied /overlooked at any cost.

Building Societies - Specialized Audit Situation Building Societies are organisations that exist to offer a savings and investment intermediate to the public and to lend to pe

Q. Which of the following statements is not considered a disadvantage of the corporate form of organization? a. Additional taxes b. Government regulations c. Limited liability of s