1. Auditor’s examination of the client’s documents and records.
1.1. Internal documents
1.2. External documents
2. Audit Evidence Decisions
2.1. 1. Which audit procedures to use?
2.2. 2. What sample size to select for a given procedure?
2.3. 3. Which items to select from the population?
2.4. 4. When to perform the procedures?
3. Characteristics of Reliable Evidence :
3.1. 1. Independence of provider
3.2. 2. Effectiveness of client’s internal control
3.3. 3. Auditor’s direct knowledge
3.4. 4. Qualification of individuals providing the information
3.5. 5. Degree of objectivity
3.6. 6. Timeliness
4. Audit Evidence
4.1. Observation
4.1.1. Use one’s senses to assess client activities.
4.1.2. Tour plant to obtain a general impression of client’s facilities.
4.1.3. Observation is rarely sufficient by itself.
4.1.4. Often need to corroborate with another kind of evidence.
4.2. Confirmation
4.2.1. Auditor must confirm accounts receivable
4.2.2. Auditors control the mailing and receipt of replies
4.2.3. Electronic confirmations are permitted
4.3. Analytical procedures
4.3.1. Understand the client’s industry and business
4.3.2. Assess the entity’s ability to continue as a going concern
4.3.3. Indicate the presence of possible misstatements in the financial statements
4.3.4. Reduce detailed audit tests
4.4. Inspection
4.4.1. The auditor’s independent tests of client accounting procedures or controls that were originally done as part of the entity’s accounting and internal control system.
4.5. Reperformance
4.6. Physical Examination
4.6.1. Inspection or count by the auditor of a tangible asset.
4.7. Recalculation
4.7.1. rechecking a sample of calculations made by the client
4.8. Client Inquiries
4.8.1. obtaining of written or oral information from the client in response to questions from the auditor
5. Audit Documentation
5.1. Record of the audit procedures performed, relevant audit evidence, and conclusions the auditor reached.
5.2. Sarbanes-Oxley Act
5.2.1. The Sarbanes-Oxley Act requires auditors of public companies to prepare and maintain audit working papers for a period of not less than seven years.
6. Effect of Technology
6.1. Audit evidence is increasingly in electronic form
6.2. Auditors must evaluate how electronic information affects their ability to gather evidence
6.3. Auditors use computers to read and examine evidence
6.4. Software programs are typically Windows-based
7. Preparation of Audit Documentation
7.1. Proper identification of each file
7.2. Files indexed and cross-referenced
7.3. Clear indication of work performed
7.4. Include sufficient information
7.5. State conclusions reached
8. Audit Program
8.1. Sample sizes
8.2. Items to select
8.3. Timing of the tests
9. Audit File Contents and Organization
9.1. Permanent Files
9.1.1. These files are intended to contain data of a historical or continuing nature pertinent to the current audit.
9.2. Current Files
9.2.1. Audit program
9.2.2. General information
9.2.3. Working trial balance
9.2.4. Adjusting and reclassification entries
9.2.5. Supporting schedules