BU477 Study Guide - Midterm Guide: Control Risks, Internal Control, Financial Statement
Document Summary
Recalculation is redoing calculations already performed by auditee personnel. Mathematical evidence can serve the objectives of both existence and valuation for financial statements that result from calculations. The auditor must audit every significant part of the original computation if recalculation is to provide strong persuasive evidence. Re-performance is a related type of evidence usually applied to control testing providing evidence about the effectiveness of a control procedure: observation. Looking at how policy or procedures are applied by others. Does not reflect performance at other times or over long periods: external confirmation. Direct correspondence with independent external parties is a confirmation procedure. Produces evidence of existence, ownership, valuation and cutoff. Direct communication is required so that auditee personnel cannot alter responses. Confirmation of receivables: positive confirmation requests a reply in all cases, whether the account balance is considered correct of incorrect, negative confirmation request replies only if the account balance is considered incorrect, enquiry.
