Nature and type of audit

evidence
The use of evidence is not unique to
auditors. Evidence is also used
extensively by scientists, lawyers,
and historians.
Evidence can be defined as any information used by the auditor to
determine whether the information being audited is stated in
accordance with the established criteria. The information varies
greatly in the extent to which it persuades the auditor whether
financial statements are fairly stated.
AUDIT EVIDENCE DECISIONS
There are four decisions about the evidence to
gather and how much of it to accumulate:
1- which audit procedures to use.
2- what sample size to select for a given procedure.
3- which items to select from the population.
4- when to perform the procedures.
PERSUASIVENESS OF EVIDENCE
Audit standards require the auditor to accumulate
sufficient appropriate evidence to support the opinion
issued.
Because of the nature of audit evidence and the cost
considerations of doing an audit, it is unlikely that the
auditor will be completely convinced that the opinion
is correct.
 Persuasiveness
of evidence

appropriateness sufficiency

Effectiveness
Relevance of Reliability of Expectation of
of internal
evidence evidence misstatements
control

Effectiveness
Independence Auditor’s direct Qualifications Degree of
of internal timeliness
of provider knowledge of providers objectivity
control
 Persuasiveness and Cost
In making decisions about evidence
for a given audit, both persuasiveness
and cost must be considered.

The persuasiveness and cost of all

The auditor’s goal is to obtain a alternatives should be considered
sufficient amount of appropriate before selecting the best type of types
evidence at the lowest total cost. of evidence.
 Physical
examination

Observation confirmation

Types of audit
Performance Inspection
evidence

Analytical
Recalculation
procedures

Inquiries of
the client
TERMS USED IN AUDIT PROCEDURES
Audit procedures are the detailed steps, usually
written in the form of instructions, for the
accumulation of the eight types of audit evidence.
They should be sufficiently clear to enable all the
members of the audit team to understand what is to
be done.
Examine Count Observe

Scan Compare Inquire

Copmute Trace Vouch

Recompute Foot
 Terms and Types of Evidence
Terms Type of Evidence
Examine Inspection
Scan Analytical procedures
Read Inspection
Compute Analytical procedures
Recompute Recalculation
Foot Recalculation
Trace Inspection/Reperformance
Compare Inspection
Count Physical examination
Observe Observation
Inquire Inquiries of client
Vouch Inspection
NEXT WEEK ASSIGNMENT
Prepare a presentation showing the main stages of
planning an audit