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
Audit of Current Assets Verification of Work and Stocks in Progress Authoritative documents: IAS 2/ISA 500/501 IAS 1 Preparation of financial statements requires inv

You are auditing the accounts receivable balance of a cable television provider. Individual accounts receivables tend to be similar in amount to each other and cover one or two mon

Stock Taking - Audit Process The procedures for carrying out physical stock taking vary in detail according to the circumstances and size of the business and the life of its

Q. What is ordinarily the first step in the formation of a corporation? a. Development of by-laws for the corporation b. Issuance of the corporate charter c. Application for incorp

Ask question #MA. Evaluate the strengths and weaknesses of preview Company''s control environment B. What factors in Preview company''s control environment have led to and facilit

Auditor's Duty - Audit Process The auditor has a responsibility to express a thought on the truth and fairness and compliance along with legislation, of the accounts. The valu

IFRS 5 Non-Current Assets IFRS 5 Non-Current Assets Held for Discontinued and Sale Operations The Discontinuing Operation is a component of an enterprise: (a)  Such the

In previous times, the Kings used to hear their accountants narrate the accounts verbally. Though, as the complexity of the accounting function grew, require was felt to thoroughly

list four assertions that relate to account balances

Q. What is Withholding Allowance? Withholding Allowance -Every taxpayer is allowed to claim a withholding allowance, which exempts a certain amount of wages from being subject