AUDIT EVIDENCE SOMETIMES THE MOST IMPORTANT EVIDENCE IS NOT FOUND IN THE ACCOUNTING RECORDS Arens, Loebbecke: Auditing, 8/E @2000 Prentice hall. Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. AUDIT EVIDENCE 7 SOMETIMES THE MOST IMPORTANT EVIDENCE IS NOT FOUND IN THE ACCOUNTING RECORDS
Four evidence decisions d which audit procedures to use d What sample size to select for a given procedure d which items to select from the population d When to perform the procedures Arens, Loebbecke: Auditing, 8/E @2000 Prentice hall. Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. ¶ Which audit procedures to use ¶ What sample size to select for a given procedure ¶ Which items to select from the population ¶ When to perform the procedures Four Evidence Decisions
rogan Audit program-Includes all audit procedures the audit considers necessary in the circumstances. Thinke PERCV Arens, Loebbecke: Auditing, 8/E @2000 Prentice hall. Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. Audit program - Includes all audit procedures the audit considers necessary in the circumstances. Think: P E R C V
TABLE 7-1 Characteristics of Evidence for a Scientific Experiment, Legal case and audit of Financial statements Scientific Experiment Basis of Involving Testing a an Accused Thiefe Legal Case Involv Audit of Financial Comparison Medicine Statements Use of the evidence Determine effects of using Decide guilt or innocence of accused Determine whether statements are the medicine fairly presented Nature of evidence Results of repeated Direct evidence and testimony various types of audit evidence use experiments witnesses and parties invol generated by the auditor, third parties, and the client Party or parties Scientist Jury and judge Auditor evaluating evidence Certainty of conclusions Vary from uncertain to Requires guilt beyond a reasonable High level of assurance from evidence near certainty Nature of conclusions Recommend or not Innocence or guilt of party Issue one of several alternative recommend use of medicine types of audit rep Typical consequences of Society uses ineffective or Guilty party is not penalized or Statement users make incorrect incorrect conclusions harmful medicine innocent party found guilty decisions and auditor may be frcm evidence Arens, Loebbecke: Auditing, 8/E @2000 Prentice hall. Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. Characteristics of Evidence for a Scientific Experiment, Legal Case, and Audit of Financial Statements TABLE 7-1
Persuasiveness of Evidence Relevance Independence of provider Competence Effectiveness of internal controls Sufficiency Auditors direct knowledge Qualifications of individual Timeliness Objective nature of evidence Arens, Loebbecke: Auditing, 8/E @2000 Prentice hall. Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. Relevance Competence • Independence of provider • Effectiveness of internal controls • Auditor’s direct knowledge • Qualifications of individual • Objective nature of evidence Sufficiency Timeliness