Question

1. Discuss what the term audit evidence means and explain the need for audit evidence. Explain what sufficiency means in terms of audit evidence. Explain what appropriateness including relevance and reliability mean in terms of audit evidence. 2. What does trust but verify mean in regard to audit evidence? Explain how audit evidence is verified. Discuss audit evidence gathering procedures. 3. What is the nature and rationale for audit documentation? Explain the structure of audit documentation. Give an example of audit documentation. 4. Discuss materiality, different levels of materiality, and bases for setting materiality. 5. Explain the meaning of the term audit risk assessment. Explain the structure and use of the audit risk model.

Answer 1

1. audit evidence means information obtained by the auditor to conclude audit.a udit evidence must be sufficient and appropriate where sufficiency refers to quantaum and appropriateness referes to quality of audit evidence

for example:evidence from original documents is more appropriate than xerox documents.

sufficiency in terms audit evidence specifies quantity of audit evidence that means how much material is to be check to reflect true and fair view of company

and appropriateness refers ton quality of audity evidence that signifies that imprtant and qualifies documents is to checked.no important documents is to be missed

(2)verify means to checkn the assets.verification is done of assets and liablities.

that assets shown in company shows adequate amount and properly recorded.

audit evidence is verified by.(A)physical examination

(B) checking of documents made

audit evidence can be collected by

(a)third party

(b)from past year documents

(c0by written representation made

mainly procedures are categoriosed are as follows

(1)inspection:evidence can be obtained from inspection

(b)observation

(c)recalculation