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CHAPTER 6 A Framework for Audit Evidence

Accounting records
The records of initial accounting entries and supporting records.
Analytical procedures
Evaluations of financial information through analyzing plausible
relationships among both financial and nonfinancial data.
Appropriateness of audit evidence
A measure of the quality of audit evidence, and includes both the
relevance and reliability of the evidence.
Audit adjustment
Correction of a misstatement of financial statements that was or
should have been proposed by the auditor, whether or not recorded by
management, that could, either individually or when aggregated with
other misstatements, have a material effect on the companys financial
statements.
Audit documentation
The written record that forms the basis for the auditors conclusions.
Audit program
A workpaper that specifies the procedures to be performed in
gathering audit evidence and is used to record the successful
completion of each audit step.
Auditors specialist
An individual or organization possessing expertise in a field other than
accounting or auditing, whose work in that field is used by the auditor
to assist the auditor in obtaining sufficient appropriate audit evidence.
An auditors specialist may be either an auditors internal specialist
(who is a partner or staff, including temporary staff, of the auditors
firm or a network firm) or an auditors external specialist.
Corroboration
Obtaining sufficient evidence that managements explanation is
accurate.
Cross-footing

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CHAPTER 6 A Framework for Audit Evidence

Checking the agreement of the cross-addition of a number of columns
of figures that sum to a grand total.
Cutoff period
A period of time usually covering several days before and after the
clients balance sheet date.
Cutoff tests
Procedures applied to transactions selected from those recorded during
the cutoff period to provide evidence as to whether the transactions
have been recorded in the proper period.
Direct evidence
Audit evidence that requires only one inference to reach a conclusion
about the assertion being tested. Usually that inference is that the
sample taken is representative of the population as a whole.
Directional testing
An approach to testing account balances that considers the type of
misstatement likely to occur in the account balance and the
corresponding evidence provided by other accounts that have been
tested. The auditor normally tests assets and expenses for
overstatement, and liabilities and revenues for understatement,
because (1) the major risks of misstatements on those accounts are in
those directions or (2) tests of other accounts provide evidence of
possible misstatements in the other direction.
Disaggregation
Breaking data down into their component parts, such as different time
periods, geographical locations, customer type, or product lines.
Footing
Adding a column of figures to verify the correctness of the clients
totals.
Indirect evidence
Audit evidence that requires a linkage of inferences to provide
assurance about the assertion being tested, that is, one or more
inferences are made. Examples include inferences made when using
analytical procedures as audit evidence.

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CHAPTER 6 A Framework for Audit Evidence

Interim date
A date at which audit evidence is collected earlier than the balance
sheet date.
Managements specialist
An individual or organization possessing expertise in a field other than
accounting or auditing, whose work in that field is used by the entity to
assist the entity in preparing the financial statements.
Quantification
Determining whether managements explanation for
differences can in fact account for the observed difference.

observed

Reasonableness test
The development of an expected value of an account by using data
partly or wholly independent of the clients accounting information
system.
Recalculating estimated amounts
Recomputing an amount that the client has already estimated, such as
recomputing the allowance for doubtful accounts based on a formula
related to the aging of accounts receivable ending balances.
Related-party transactions
Transactions that a client has with other companies or people who may
be related to either the client or clients senior management.
Relevance of audit evidence
Evidence that provides insight on the validity of the assertion being
tested; that is, the evidence bears directly on the assertion being
tested.
Reliability of audit evidence
A measure of the quality of the underlying evidence. It is influenced by
risk, potential management bias associated with the evidence, and the
quality of the internal control system underlying the preparation of the
evidence.

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CHAPTER 6 A Framework for Audit Evidence

Reperformance
The auditors independent execution of controls that were originally
performed as part of the entitys internal control.
Roll-forward period
The period between the confirmation date and the balance sheet date.
Scanning
A type of analytical procedure involving the auditors review of
accounting data to identify significant or unusual items to test.
Significant issues or audit findings
Substantive matters that are important to the procedures performed,
evidence obtained, or conclusions reached on an audit.
Sufficiency of evidence
Measure of the quantity of audit evidence.
Tests of extensions
Recomputing items involving multiplication.
Tracing
Taking a sample of original source documents and ensuring that the
transactions related to the source documents have been recorded in
the appropriate journal and general ledger.
Vouching
Taking a sample of recorded transactions and obtaining the original
source documents supporting the recorded transaction.