Techniques of Obtaining Evidence
ISA 500 mentions them as such:
- Inspection of documents or records,
- Inspection of tangible assets,
- Observation,
- Inquiry,
- Confirmation,
- Recalculation,
- Analytical procedures
- Re-performance.
These can be further analyzed as follows that:
a) The physical examination of tangible counting and assets them;
b) Confirmation. Here these should be in writing, external sources to be preferable to internal sources;
c) Examination of original documents. So vouching should be carried out which is comparing unique documents along with entries in the books;
d) Re-computation: This includes carrying out additions, summaries, extracting balances, calculations, rechecking postings.
e) Scanning: This is required in seeking the extra-ordinary or unusual item. It includes just flipping with the documents and records looking out for the odd items.
f) Inquiry: This is asking questions of knowledgeable persons along within and outside the entity. It is a valid and essential technique. However auditors, prefer confirmation to oral answers.
g) Correlation: This is seeking consistency in the accounts and in the records that using evidence obtained in other areas to given an additional assurance in other areas.
h) Observation: Visual evidence is much more satisfactory therefore, observing a procedure being performed is the best possible confirmation. However, observation has the draw back that you can only rely on it at the time you are observing. You cannot be confident that the procedure is carried out which way all the time.