AUDIT EVIDENCE

Underlying Information
Accounting
Data

AUDIT
EVIDENCE Conclusions
(ISA 500)

Corroborating
Information Auditor’s
Opinion
 QUALITIES OF EVIDENCE

Factors: (CMaRE)
Sufficiency Quantity
Competence
Materiality
Risk
Experience
 Elements:

•Relevance – timeliness
- satisfaction of
audit objective
Appropriateness Quality
•Reliability - objectivity
Information Sources:
1. Obtained directly by
the auditor
2. Independent outside
sources
3. Documents and
written representations
4. Accounting & Internal
Control Systems
COST OR BENEFIT CONSIDERATION

 The auditor’s opinion to be economically useful

must be formed within a reasonable period of
time and based on evidence obtained at a
reasonable cost.

 There should be a rational relationship

between cost and usefulness.

 Persuasive audit evidence

AUDIT DOCUMENTATION/WORKING PAPERS
 PSA 230 requires the auditor to document
matters that are important to support an opinion
on financial statements and evidence that the
audit was conducted in accordance with PSA.
WHAT ARE WORKING PAPERS?

 Records kept and prepared by the auditor

 Documents the:

- Audit procedure applied

- Information obtained
- Conclusions reached
FUNCTIONS OF WORKING PAPERS
PRIMARY SECONDARY

 Support auditor’s  Planning future

opinion audits
 Support auditor’s  Providing useful
representation information for other
 Assist the auditor in services
planning,  Defense in case of
performance, review litigation
and supervision of the
engagement
FORM, CONTENT & EXTENT OF AUDIT
DOCUMENTATION
Factors to be considered are:
 Nature of audit procedures
 Identified risks of material misstatements
 Extent of judgement required
 Significance of audit evidence
 Nature and extent of exceptions identified
 Need to document a conclusion or its basis
 Audit methodology and tools used
FORM OF WORKING PAPERS
 Data recorded on paper
 Electronic Media

 Any other media

CONTENTS OF WORKING PAPERS
 Table of Contents
 Deliverables
 EQAR
 Engagement Letter
 Representation Letter
 Audit Completion
 Audit Planning
 Risk Assessment Documents including Fraud Risk
Assessment
 Assessment on Other Areas
 Discussions
 Correspondence
 Company incorporation documents
 Detailed Head-wise working
 Miscellaneous documents
EXTENT OF WORKING PAPERS

It is sufficient to enable an experienced auditor,

having no previous connection with the audit, to
understand:
- Nature, Timing and Extent of audit
procedures
- Results and Audit Evidence obtained
- Significant matters and conclusions
IMPORTANT ITEMS
 Discussions
of Significant matters with
management and other on a timely basis

 Departure from a basic principle or

essential procedure

 Documentation of the nature, timing and

extent of audit procedure performed