the reliability of the evidence obtained.Ĭonsider, for example, the audit of a bank balance:Īuditors will confirm year-end bank balances directly with the bank.the size of the sample selected to test and.the auditor's knowledge and experience of the business.the nature of accounting and internal control systems.However, when determining whether they have enough evidence on file the auditor must consider: What is ‘enough' at the end of the day is a matter of professional judgement. There needs to be ‘enough' evidence to support the auditor's conclusion. Appropriateness relates to the quality and reliability of evidence.Sufficiency relates to the quantity of evidence."The objective of the auditor is to design and perform audit procedures in such a way to enable the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor's opinion.' The overall objective of an auditor, in terms of gathering evidence, is described in audit standards, namely ISA 500 Audit Evidence. Auditors must come to their conclusions having completed a thorough examination of the books and records of their clients and they must document the procedures performed and evidence obtained, to support the conclusions reached. Similarly, in order for the auditor's opinion to be considered trustworthy it must be based upon more than simple judgement and gut feeling. They must consider evidence gathered by both the defence and the prosecution and then, based upon the evidence presented, reach a conclusion. Imagine a court case where someone has been accused of theft: a jury could not simply say someone is or is not guilty based upon their appearance. Discuss the extent to which external auditors are able to rely on the work of internal audit.Discuss the extent to which auditors are able to rely on the work of experts and.Explain the use of computer-assisted audit techniques.Discuss and provide relevant examples of, the application of the basic principles of statistical sampling and other selective testing procedures.Define audit sampling and explain the need for sampling.Explain the need to modify the audit strategy and audit plan following the results of tests of control.Explain why an auditor needs to obtain an understanding of internal control.Explain the purpose of substantive procedures.Discuss the quality and quantity of audit evidence.When you have completed this chapter you will be able to:
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