AUDIT EVIDENCE AND

DOCUMENTATION

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 AUDIT EVIDENCE
• All of the information used by the auditor in arriving at
the conclusions on which the audit opinion is based.
• Audit evidence includes the information contained in
the accounting records underlying the financial
statements and other information:
• Minutes of meetings
• Confirmations from third parties
• Analysts’ reports
• Comparable data (benchmarking)
• Information obtained by the auditor from audit procedures

• The auditor should obtain sufficient appropriate audit

evidence to be able to draw reasonable conclusions on
which to base the audit opinion:
• Sufficiency is the measure of the quantity of audit evidence.
• Appropriateness is the measure of the quality (relevance and
reliability) of audit evidence.

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 QUALITY OF EVIDENCE

• External

• Entity

• Auditor

• Written

• Original

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 AUDIT PROCEDURES

• Inspection of Assets
• Inspection of Documentation
• Observation
• Inquiry
• Confirmation
• Recalculation
• Re performance
• Analytical Procedures

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 MEANS OF TESTING
• Selecting all items (100% examination)
• Selecting specific items
• High value or key items
• All items over a certain amount
• Items to obtain information
• Items to test control activities
• Audit sampling
• The application of audit procedures to less than
100% of items within a class of transactions or
account balance such that all sampling units
have a chance of selection.
• Sample selection methods:
– Computerized random selection
– Systematic selection
– Haphazard selection
– Block selection 5
 FACTORS INFLUENCING SAMPLE SIZE

Factors Sample size

Increase in the risk of material misstatement Increase
Increase in the tolerable error Decrease
Increase in the amount of error Increase
Increase in the rate of deviation Increase
Increase in the auditor’s required confidence level Increase

Increase in the number of sampling units Negligible effect

Increase in the use of other substantive procedures Decrease

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 AUDIT DOCUMENTATION
Purpose
• Enable auditor to ensure adequate completion of work
• Provide details of work done for future reference
• Assist in planning and control of future audits
• Encourage methodological approach and quality

Working Papers
• The material prepared, obtained and retained by auditor
in connection with performance of the audit
• Working papers may be in the form of data stored on
paper, film, electronic media or other media.

Audit Programs
• Include the nature, timing and extent of audit procedures
to be performed by audit team members
• Obtain sufficient appropriate audit evidence to reduce
audit risk to an acceptably low level

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 AUDIT DOCUMENTATION

• Engagement letter
• Audit Planning Memorandum
• Risk Assessment Evaluation
• Assessment of internal audit
• Internal Controls Questionnaire
• Materiality Levels & Audit Sampling
• Audit Programs
• Physical stock count / Cash count
• Direct Confirmations
• Statutory Records Checklist
• Taxation Checklist
• Going Concern Review
• Financial and Production Analysis
• Financial statements disclosure checklist
• Audit Completion Checklist