ACG 5637 Chapter Notes - Chapter 9: Audit Evidence, Analytical Review, Financial Statement Analysis
30 Sep 2020
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Chapter 9 textbook notes: inquiry and analytical evidence (including auditing of accounting estimates) Commonly linked to inquiry are various forms of auditor analysis (aka analytical procedures or analytical review). Preliminary analytic procedures (review) refers to the examination of performance results for indications of potential risk or problems within the financial statements. It can indicate areas of the fs where more in-depth audit testing is needed. Inquiry involves seeking appropriate information from knowledgeable persons located within or outside the entity. It is rarely an adequate source of evidence by itself as management responses to inquired may be na ve, overly optimistic, misinformed, or intentionally misleading. The auditor must gather other evidence to corroborate explanations provided by management that are critical for evaluating whether the fs are free of material misstatements. Inquiry permeates the audit and is reflected in both formal interviews that are planned and informal discussions with management.
