Chapter 5 _ Audit Evidence.docx

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Department
Financial Accounting
Course
MGAD10H3
Professor
Kevin Ha
Semester
Summer

Description
Chapter 5 – Audit Evidence 1. Outline the audit assertions 2. Identify and describe different types of audit evidence and define sufficient appropriate audit evidence 3. Determine the persuasiveness of audit evidence 4. Explain the issues to consider when using the work of an expert 5. Explain the issues to consider when using the work of another auditor 6. Describe the evidence-gathering procedures most often used by auditors 7. Explain how auditors arrive at a conclusion based upon the evidence gathered 8. Describe how auditors document the details of evidence gathered in working papers CAS 230 – audit documentation CAS 315 – identifying and assessing the risks of material misstatement through understanding the entity and its environment CAS 330 – the auditor’s responses to assessed risks CAS 500 – audit evidence CAS 501 – audit evidence – specific considerations for selected items CAS 505 – external confirmation CAS 580 – written representations CAS 600 – special considerations CAS 620 – using the work of an auditor’s expert 5.1 – assertions  Assertions – statements made by management regarding the recognition, measurement, presentation, and disclosure of items included in the financial statements  Auditors use assertions for transactions, account balances, and presentations and disclosures when assessing the risk of material misstatement and when designing their audit procedures Assertions Classes of transactions Occurrence (overstatement) Transactions and events that have been recorded have occurred and pertain to the entity Completeness All transactions, events, assets, liabilities, and equity items (understatement) that should have been recorded have been recorded Accuracy Amounts and other data relating to recorded transactions and events have been recorded appropriately Cut-off Transactions and events have been recorded in the correct accounting period Classification Transactions and events have been recorded in the proper accounts Assertions Account balances at year-end Existence (overstatement) Recorded assets, liabilities, and equity interests exist Rights and obligations Rights to assets held or controlled by the entity, and liabilities (obligations) of the entity Completeness All transactions, events, assets, liabilities, and equity items (understatement) that should have been recorded have been recorded Valuation and allocation Assets, liabilities, and equity interests are included in the (overstatement) financial statements at appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded Assertions Presentation and disclosure Occurrence, rights, and Disclosed events, transactions, and other matters have obligations occurred and pertain to the entity Completeness All disclosures that should have been included in the financial statements have been included Classification and Financial information is appropriately presented and understandability described, and disclosures are clearly expressed Accuracy and valuation Financial and other information is disclosed fairly and at the appropriate amounts 5.2.1 – sufficient appropriate audit evidence  Reliability depends on the following: the source of the information, the expertise of the respondent, the consistency of the information, the source of the information 5.2.2 – external confirmation  External confirmation – evidence obtained as a direct written response to the auditor for a third party, in paper form, or by electronic or other medium  Bank confirmation – a letter sent dir
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