1.What is audit evidence and documentation and give an example
1.What is audit evidence and documentation and give an example
Audit evidence - We know that an audit is an independent examination of historical financial information inorder to express an opinion . Any option that is to be expressed by an auditor need to be sufficient and appropriate . Audit evidence is the information extracted by the auditor in order to derive a conclusion on the an opinion he expresses.
This information can be obtained from the management, from the financial records or through any other means as a result of procedures adopted by the auditor.
Example - An entity has trade receivables amounting to $1,50,000 . This is a material amount and auditor has sent a confirmation request to the customer in order to confirm the trade recievable amounting to $1,50,000. Confirmation received from the customer indicates that the customer has paid the amount and he is not due to the entity. The fact is that this is an employee fraud and the amount has been misused by the employees of the entity. Now for an auditor to qualify the audit report the confirmation report received from the customer serves as sufficient and appropriate audit evidence.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
