(Audit evidence) The third GAAS of field work requires that the auditor obtain s
ID: 2460831 • Letter: #
Question
(Audit evidence) The third GAAS of field work requires that the auditor obtain sufficient competent audit evidence to afford a reasonable basis for an opinion regarding the financial statements under audit. In considering what constitutes sufficient competent evidential matter, a distinction should be made between underlying accounting records and other information available to the auditor.
Required a. Discuss the nature of audit evidence to be considered by the auditor in terms of the underlying accounting records, other corroborating information available to the auditor, and the methods by which the auditor tests or gathers competent evidence.
b. State the presumptions that can be made about the validity of audit evidence with respect to (1) other information and (2) underlying accounting records. AICPA (adapted)
Explanation / Answer
Underlying accounting records are audited sometimes by auditing software toensure mathematically they are sound and accurate as it pertains to underlying accounting records. This also done to make sure they match with internal financial information and statements. This alone does not provide sufficient audit evidence and other procedures are needed on the underlying accounting documents. Other information could include minutes of meetings, analyst reports,and third party corroborating evidence can be collected to help ensure sufficient audit evidence.To gather and collect competent evidence an auditor has togather and collect relevant, reliable, and quality evidence.
This can be done by observing, inspecting of documentsand records, as well as other things such as assets Other methods used are inquiry, confirmation, recalculation, and analytical procedures.
The presumptions that can be made about validity of audit evidence with respect toother information and underlying accounting records are that competent evidence mustbe gathered and collected for an audit.
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