Audit Chapter 6
CHAPTER 6
Audit Evidence
|Learning Check |
6-1. a. Audit evidence is all the information used by the auditor in arriving at the conclusion on which the audit opinion is based. Audit evidence includes (1) the accounting records underlying the financial statements and (2) other information that corroborates the accounting records and supports the auditor’s logical reasoning about fair presentation in the financial statements.
b. Any information that is obtained by the auditor to arrive at conclusions on which the audit is based is audit evidence. Information obtained while performing risk assessment procedures supports many important audit conclusions. Hence, this is important audit evidence and needs to have the traits of sufficient, competent evidence. In many cases the auditor uses knowledge and information from the prior year to make preliminary risk assessments. However, the auditor usually updates those conclusions with additional evidence from the current year.
6-2. a. Accounting records generally include the records of initial entries and supporting records. For example accounting records would include: • Checks and records of electronic funds transfers, • Invoices, • Contracts, • The general and subsidiary ledgers, • Journal entries, and other adjustments to the financial statement that are not reflected in formal journal entries, • Records such as worksheets and spreadsheets supporting cost allocations, computations, and reconciliations, and • Disclosures. b. Example, accounting records associated with the sales and collections cycle might include:
• Sales orders • Bills of lading and other shipping documents • Sales invoices • The sales journal • A remittance advice • A prelisting of cash receipts • Deposit slips • The cash receipts journal
c.
Audit Evidence
|Learning Check |
6-1. a. Audit evidence is all the information used by the auditor in arriving at the conclusion on which the audit opinion is based. Audit evidence includes (1) the accounting records underlying the financial statements and (2) other information that corroborates the accounting records and supports the auditor’s logical reasoning about fair presentation in the financial statements.
b. Any information that is obtained by the auditor to arrive at conclusions on which the audit is based is audit evidence. Information obtained while performing risk assessment procedures supports many important audit conclusions. Hence, this is important audit evidence and needs to have the traits of sufficient, competent evidence. In many cases the auditor uses knowledge and information from the prior year to make preliminary risk assessments. However, the auditor usually updates those conclusions with additional evidence from the current year.
6-2. a. Accounting records generally include the records of initial entries and supporting records. For example accounting records would include: • Checks and records of electronic funds transfers, • Invoices, • Contracts, • The general and subsidiary ledgers, • Journal entries, and other adjustments to the financial statement that are not reflected in formal journal entries, • Records such as worksheets and spreadsheets supporting cost allocations, computations, and reconciliations, and • Disclosures. b. Example, accounting records associated with the sales and collections cycle might include:
• Sales orders • Bills of lading and other shipping documents • Sales invoices • The sales journal • A remittance advice • A prelisting of cash receipts • Deposit slips • The cash receipts journal
c.