What Are the Different Types of Audit Evidence?

Audit evidence is the basis that auditors must have for expressing audit opinions and drawing audit conclusions. At the end of the audit activities, the auditors shall issue audit opinions and make audit conclusions in accordance with certain audit standards on whether the economic activities of the audited unit are legal, compliant and reasonable, and whether their accounting and other information are true and correct. In order to ensure the soundness and reliability of audit opinions and conclusions, auditors must obtain sufficient evidence. ^[1]

Audit evidence

All information used by CPAs to draw audit conclusions and form audit opinions, including accounting information and other information on which financial statements are based. ^[2]

1. Information other than the accounting records obtained by the CPA from inside or outside the audited unit, such as the minutes of the audited unit meeting,

According to lSA 500: "Auditors must obtain sufficient and appropriate audit evidence to provide reasonable conclusions about their audit opinion."

1.The audit evidence is

There are many criteria for the classification of audit evidence, and the types of audits identified from this are numerous. In fact,

In order to make the collection, collation and evaluation of audit evidence more effective, and to achieve the audit objectives smoothly, so that people can better understand the audit evidence, here is a combination

Overview

The characteristics of audit evidence refer to the inherent characteristics and properties of audit evidence, which are specifically embodied in the basic requirements that a certified public accountant should meet when collecting audit evidence around these characteristics and properties. There are different international descriptions of the characteristics of audit evidence.

General steps of collation and evaluation of audit evidence The collation and evaluation of audit evidence can be generally divided into the following four steps:

1. Sorting and sorting: sorting scattered and fragmented audit evidence according to different audit objectives.

2. Verification and evaluation: Based on the results of the classification, review the relevant audit evidence, analyze and evaluate its probative power, and determine whether to choose or supplement the audit evidence.

3. Supplementary evidence collection: The certified public accountant may produce the following results after evaluating the audit evidence: the audit evidence is sufficient and appropriate; the formation of new valuable evidence; the discovery of new problems shall supplement the evidence collection. For supplementary evidence collection, scientific auditing procedures should be adopted in conjunction with audit objectives.

4. Comprehensive induction: For the audit evidence that the audit evidence is sufficient and appropriate, the CPA should summarize all the evidence to form a partial audit opinion, and finally form a comprehensive audit opinion.

Requirements for collation and evaluation of audit evidence

1. Stick to a holistic view. The certified public accountant should sort out and evaluate the audit evidence from the height of expressing opinions on the accounting statements as a whole. Put the whole

According to the "Independent Audit Specific Standards No. 5-Audit Evidence", audit procedures (or audit methods) such as inspection, supervision, observation, inquiry and corroboration, calculation, analytical review, etc. can be used in the audit process to obtain Audit evidence.

Audit evidence inspection

Inspection is the review and review of the reliability of accounting records and other written documents by a certified public accountant.

1.Review

Review is to carefully read and review accounting materials and other materials from form to content to determine their authenticity and legality. In general, the following aspects should be paid attention to when using audit methods to obtain audit evidence:

When reviewing the original voucher, pay attention to whether it has been altered or forged; whether the recorded economic business is reasonable and legal; whether there is a signature of the person in charge of the business.

When reviewing the accounting books and records, attention should be paid to compliance with the "Enterprise Accounting Standards" and other relevant financial accounting system requirements. For example, whether the original vouchers used for bookkeeping are correct and complete; whether the accounting entries prepared by the bookkeeping vouchers and the use of the accounts are appropriate; whether the contents of the bookkeeping records are consistent with those recorded in the bookkeeping vouchers and the original vouchers; Whether the amount is normal; whether the cost accounting and the selection of its methods are in compliance with the relevant national financial system regulations, etc.

(3) When reviewing the accounting statements, it should be noted: whether the preparation of the accounting statements is based on the books and records as required; whether the project classification is correct; whether the notes to the accounting statements are adequately disclosed for the issues disclosed.

2. Review

Review refers to the review and verification of the contents reflected in relevant accounting information and other materials in accordance with its accounting procedures, calculation requirements and linkage relationship. This includes:

Check whether the quantity, unit price, amount and total amount recorded in various original documents are correct.

Whether the records in the cash and bank deposit journals are consistent with the corresponding original voucher records.

(3) Whether the contents reflected in the cash and bank deposit journals and bookkeeping vouchers are consistent with the general ledger and the corresponding detailed ledger records.

Is the balance of the general ledger consistent with the total balance of the subsidiary ledger?

Whether the total debit balance of the general ledger account is equal to its total credit balance; whether the total debit balance of each ledger account is equal to the total credit balance.

Whether the amount of relevant items in the accounting statement is consistent with or related to the balance or total amount of the corresponding account.

Whether the calculation of the data about the accounting statements is correct, and whether the data about the items between the reports are consistent. If it is related to the previous period data, is it consistent with the relevant data on the previous period accounting statements?

Whether the foreign statement is consistent with the records of the relevant account of the unit, if not, whether it is adjusted according to regulations.

Audit evidence supervision

Supervision is an on-site inventory of various physical assets, cash, and securities of the audited unit by a certified public accountant, and appropriate spot checks are conducted. The certified public accountants shall adopt appropriate methods for the supervision of physical assets, cash and securities. For cash supervision, you can plan in advance, prepare relevant record forms or adjustment forms, and implement surprise surveillance inventory. For those materials and fixed assets with small hidden possibility, large volume and heavy quality, you can be audited in advance. The unit, even the relevant participants of the audited unit, should study the supervision planning matters, and then carry out the supervision work according to the predetermined procedures.

Because the supervision method emphasizes that: the inventory work is performed by the audited unit, and the certified public accountant only conducts on-site supervision, but for those high-value materials, the certified public accountant should conduct personal sampling, and if necessary, the materials and materials that are used frequently Pumping points should also be implemented.

The evidence obtained from the supervision is to confirm the following aspects: whether the physical form of the assets exists; whether the results of the supervision of the assets are consistent with the book value; if there are inconsistencies, the cause should be identified and adjusted, and Reasons for inconsistencies often include missing records, shortages, damage, corruption and theft. The physical method used to obtain the supervision method is often physical evidence, which cannot confirm the following determinations: whether the audited entity has ownership of the asset, how the inventory asset determines its value, and whether the inventory asset is complete. Therefore, the CPA should also implement separate audit procedures for the valuation and ownership of physical assets.

Audit evidence observation

Observation is the method by which a certified public accountant inspects the audited entity's business premises, physical assets, related business activities and the implementation of its internal control to obtain audit evidence. Observational methods can be used to obtain environmental evidence. It can only help the certified public accountant to evaluate the overall reasonableness of the matters under review, but cannot provide the most direct evidence for specific determinations. At the same time, the CPA should further audit the problems found in the observation.

Audit evidence inquiry and correspondence

Inquiries are a method by which a certified public accountant conducts written or oral inquiries on the matter under review to obtain audit evidence. Inquiry methods often obtain more oral evidence, and CPAs should be aware that different people need to be consulted on the same matter to determine whether the various oral evidences can be mutually corroborated. Correspondence refers to a method of obtaining evidence for a certified public accountant to send a letter to a third party other than the audited unit in order to verify the matters contained in the audited unit's accounting records. The letter of confirmation shall be signed and confirmed by the audited unit, and then the certified accountant shall personally deliver the letter and receive the reply. If there is no reply or the result of the reply is not satisfactory, the CPA should implement the necessary alternative procedures to obtain the corresponding audit evidence.

Audit evidence calculation

The calculation is a verification or additional calculation performed by the certified public accountant on the original vouchers and data in the accounting records of the audited entity. In the auditing of accounting statements, CPAs need to use a large number of calculation methods to obtain the necessary audit evidence.

The purpose of the CPA's calculations is to verify that the figures in the audited unit's vouchers, books and statements are correct. When the certified public accountant applies the calculation method to obtain evidence, it should adopt the policies and selected methods consistent with the audited unit, but in the form and order of calculation, it can be carried out in a manner that the certified public accountant believes is most conducive to improving efficiency. The original method and method of the audited unit.

Analytical review of audit evidence

Analytical review refers to the method by which a certified public accountant obtains audit evidence by analyzing important ratios or trends of the audited unit, including investigating abnormal changes in these ratios or trends and their differences from expected amounts and related information. The analytical review method can obtain evidence of abnormal changes in the project. For items with abnormal changes, the CPA should reconsider the appropriateness of the audit method adopted, and if necessary, additional audit procedures should be added to obtain more reliable audit evidence. When implementing analytical review procedures, CPAs can use simple comparison, ratio analysis, structural percentage analysis, and trend ratio analysis methods, and should consider whether there is some expected relationship between the data. If there is no expected relationship, analysis should not be used Sexual review.

Classification of audit evidence relationship

Classification of audit procedures

In order to obtain audit evidence, the certified public accountant may use auditing procedures such as inspection, supervision, observation, inquiry and corroboration, calculation, and analytical review throughout the audit of the accounting statements. These audit procedures are also called audit methods. Applicable to any part of the audit process (of course, it should be based on needs), without being limited by the audit stage. In fact, according to the requirements of modern accounting statement auditing, due to different purposes in different auditing stages, auditing procedures can be divided into the following three categories:

Procedures for obtaining an understanding of the internal control system of the audited entity. According to the requirements of auditing standards, each time a certified public accountant performs an audit of accounting statements, it must implement the procedures for obtaining an understanding of the internal control system of the audited unit to understand how the internal control system is designed and operated in order to plan the audit work fully and reasonably.

Conformance testing procedures. It is to obtain audit evidence to prove the appropriateness of the internal control policies and procedures of the audited unit and the effectiveness of its operation. In the compliance test, the CPA can make extensive use of observation methods and review methods, that is, to review various manuals and documents about the internal control system of the audited unit, to observe the implementation of a certain system, and of course, it is also possible to query the implementation of the internal control system. , Or the CPA re-executes a control procedure. Since the scope of compliance testing is related to the level of control risk estimation, if the level of control risk is high, the CPA can perform few or even ignore the compliance testing procedures.

(3) Substantive testing procedures. It includes detailed tests performed by certified public accountants on transactions and balances, and analytical tests on the application of financial and non-financial data. Such procedures can be used to obtain evidence confirming that the accounting statements of management authorities are fair. In the detailed testing of transactions and balances, individual procedures such as inspection, supervision, observation, inquiry, and confirmation and calculation can be applied. Both detailed testing and analytical testing have their unique functions, and the two cannot be replaced. Substantial testing procedures must be performed in each audit of accounting statements.

It is not difficult to see that the implementation of the three types of procedures: procedures for obtaining an understanding of the internal control system, compliance testing procedures, and substantive testing procedures have different purposes and requirements. They also reflect the progress of the audit work. Inspection, supervision, observation, inquiry and corroboration, calculation and analytical review can be implemented separately in different audit processes as required, and is a single audit procedure.

2. The relationship between audit procedures and audit evidence and identification

The implementation of a single audit procedure can obtain audit evidence related to multiple assertions. At the same time, if you want to obtain audit evidence used to confirm the same assertion, you can also choose multiple audit procedures. For example, the result of the correspondence letter of receivables can prove the existence of the accounts receivable, or the valuation of the accounts receivable. In order to obtain evidence to confirm the existence of the accounts receivable, the letter of credit can be obtained. It can also be obtained by checking accounting records and checking relevant information.