Relevance of Audit Evidence
The relevance of audit evidence has to be determining in relation to the overall objective of forming a reporting and opinion on the financial statements. Just to achieve this objective, the auditor requires evidence to enable him to draw reasonable result. Compliance tests alone cannot give him along with this evidence. Therefore he has to use substantive tests. There are also certain assertions the auditor seeks evidence to confirm this and which the management is making.
a) Existence: as do the recorded assets and liabilities exist on the balance sheet date.
b) Rights and obligations: are the assets owned through the enterprise and are the liabilities properly those of the enterprise.
c) Occurrence: whether did the recorded transactions in fact happen and do them about to the enterprise.
d) Completeness: as have all the liabilities and assets been recorded. Have all expenses and income been recorded.
e) Valuation: have the amounts attributed to the liabilities and assets been arrived on in accordance along with stated accounting policies at a consistent and acceptable basis.
f) Measurement: Have the expenses and income been measured in accordance along with stated accounting policies on consistent and acceptable basis.
g) Disclosure and Presentation: have the assets, liabilities, reserves and capital been properly disclosed. Have expenses and income been properly disclosed whether suitable.