Importance of audit evidence
During the process of investigation, the auditor should collect and evaluate the evidence to establish the facts and to draw conclusions and opinions. Auditing evidence is defined as a term by non-profit accounting boards whose goal is to protect investors by promoting transparent, accurate and independent audit reports. Appropriateness of evidence is the quality of the evidence, i. Inquiry and confirmation The two aspects of this method include searching about the info from a knowledgeable person inside or outside the company, and responding to any inquiry to substantiate information in the accounting records. Re performance: Auditor sometimes re-performs bank reconciliation that prepares by the client. There are various methods that can be adopted to obtain audit evidence. Now we shall see some of the definitions formulated by learned scholars and some professional bodies regulating the auditing profession. Audit evidence has assumed much importance in the company audits all over the world.
For example, the bank reconciliation that prepares by the auditor is more reliable than the bank reconciliation prepared by the accountant. These are the assertions that use by management to confirm the accuracy and completeness of the financial transactions and event in the income statement.
Therefore, before making any such opinion he should ensure the accuracy and authenticity of the information furnished to him.
For example, reliability of internal control procedures, and analytical review systems. Auditor expresses his opinion whether the financial statements of an entity are giving a true and fair view or not on the basis of audit evidence collected by him. Evidence collected by the auditor should support the contents of its audit report.
These responses might provide the auditor with info which is not previously possessed by him or even with corroborative evidence.
Different evidences should be collected under different auditing situations. These assertions are used by management to confirm the existence and completeness of accounts in balance items. Audit Inspection: Auditor inspect on certain documents or evidence that related to financial transaction or event. Procedures to obtain audit evidence: There are many procedures that auditors use to obtain audit evidence to support their conclusion. Auditor expresses his opinion whether the financial statements of an entity are giving a true and fair view or not on the basis of audit evidence collected by him. Inquiry and confirmation The two aspects of this method include searching about the info from a knowledgeable person inside or outside the company, and responding to any inquiry to substantiate information in the accounting records. The auditor should understand the nature and type of evidence available in different situations and also have the ability to evaluate the sufficiency, and appropriateness of the evidence available. Sufficiency of audit evidence is the measure of the quantity of audit evidence. Suggested Videos Meaning and Features of Auditing Essential of Audit Report Basic Principles Governing an Audit Audit Evidence An auditor applies various audit procedure to obtain audit evidence which enables him to form an opinion whether the financial statements of an entity are free from material misstatement and state a true and fair view or not. Reliability of audit evidence depends on its source and nature of such evidence. Compulsory Tax Audit is introduced in India.
Thus, the audit evidence will have a definite impact on the mind of the auditor to arrive at his professional judgement.
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