Question

Explain how the evidence developed and collected by the internal auditor.

Answer 1

7 basic ways for the auditor to gather audit evidence throughout the audit process:

1. Observation (look at a process)

2. Analytical Review (comparison of data with previous year, budget, industry standards)

3. Re performance (auditor executing controls that were originally performed as part of the entity''s internal control)/Recalculation (checking the mathematical accuracy of documents or records)

4. Inspection of Documentation

5. Confirmations (i.e. ask someone outside/inside the company)

6. Enquiry (i.e. ask someone inside the company)

7. Inspection of Assets (including the accounting system itself)

SOURCES OF EVIDENCE There are many sources of audit evidence, and the precise list will depend on the objective being tested, and the nature of the client. However, a useful list of typical sources is:

The accounting system

Underlying documentation

Tangible assets

Management and employees

Third Parties

Experts

Customers

Suppliers

Solicitors

Valuers

Insurers