Professional Accounting Education Provided by Academy of Professional Accounting (APA) ACCA F8 Introduction to Audit Evidence ACCA Lecturer: Tom Liu ACCAspace 中国 ACCA 特许公认会计师教育平台 Copyright ACCAspace.com
Objective of this lesson 1 Audit evidence 2 Financial statement assertions 2
Audit evidence Auditors must design and perform audit procedures to obtain sufficient appropriate audit evidence. Audit evidence is all the information used by the auditor in arriving at the conclusions on which the auditor's opinion is based. The appropriateness of audit evidence is the measure of the quality of audit evidence; that is, its relevance and its reliability in providing support for the conclusions on which the auditor's opinion is based. The sufficiency of audit evidence is the measure of the quantity of audit evidence. The quantity of audit evidence needed is affected by the auditor's assessment of the risks of material misstatement and also by the quality of such audit evidence. 3
Audit evidence Reliability of audit evidence External Auditor Entity Written Originals Audit evidence from external sources is more reliable than that obtained from the entity's records because it is from an independent source. Evidence obtained directly by auditors is more reliable than that obtained indirectly or by inference. Evidence obtained from the entity's records is more reliable when the related control system operates effectively. Evidence in the form of documents (paper or electronic) or written representations are more reliable than oral representations, since oral representations can be retracted. Original documents are more reliable than photocopies or facsimiles, which can easily be altered by the client. 4
Financial statement assertions are the representations by management, explicit or otherwise, that are embodied in the financial statements, as used by the auditor to consider the different types of potential misstatements that may occur. 审计认定是审计分析中的一种 概念工具 5
Assertions about classes of transactions and events and related disclosures for the period under audit Occurrence: Transactions and events that have been recorded or disclosed have occurred, and such transactions and events pertain to the entity. Completeness: All transactions and events that should have been recorded have been recorded, and all related disclosures that should have been included in the financial statements have been included. Accuracy: Amounts and other data relating to recorded transactions and events have been recorded appropriately, and related disclosures have been appropriately measured and described. 6
Assertions about classes of transactions and events and related disclosures for the period under audit Cut-off: Transactions and events have been recorded in the correct reporting period. Classification: Transactions and events have been recorded in the proper accounts. Presentation: Transactions and events are appropriately aggregated or disaggregated and are clearly described, and related disclosures are relevant and understandable in the context of the requirements of the applicable financial reporting framework. 7
Assertions about account balances and related disclosures at the period end Existence: Assets, liabilities and equity interests exist. Rights and obligations: The entity holds or controls the rights to assets, and liabilities are the obligations of the entity. Completeness: All assets, liabilities and equity interests that should have been recorded have been recorded, and all related disclosures that should have been included in the financial statements have been included. 8
Assertions about account balances and related disclosures at the period end Accuracy, valuation and allocation: Assets, liabilities and equity interests have been included in the financial statements at appropriate amounts and any resulting valuation or allocation adjustments have been appropriately recorded, and related disclosures have been appropriately measured and described. Classification: Assets, liabilities and equity interests have been recorded in the proper accounts. Presentation: Assets, liabilities and equity interests are appropriately aggregated or disaggregated and clearly described, and related disclosures are relevant and understandable in the context of the requirements of the applicable financial reporting framework. 9
CEAVOP Completeness( 完整性 ) Existence( 存在性 ) Accuracy( 准确性 ) Valuation( 估值 ) Ownership and obligation( 权属 ) Presentation( 表达与披露 ) 10
Audit procedures to obtain audit evidence The auditor obtains audit evidence by undertaking audit procedures to do the following: Risk assessment procedures: Obtain an understanding of the entity and its environment to assess the risks of material misstatement at the financial statement and assertion levels Tests of controls: Test the operating effectiveness of controls in preventing, or detecting and correcting, material misstatements at the assertion level Substantive procedures: Detect material misstatements at the assertion level 11
Substantive procedures are audit procedures designed to detect material misstatements at the assertion level, substantive procedures comprise: (a) Tests of details (of classes of transactions, account balances, and disclosures); and (b) Substantive analytical procedures Tests of controls are an audit procedure designed to evaluate the operating effectiveness of controls in preventing, or detecting and correcting, material misstatements at the assertion level. 12
The auditor must always perform risk assessment procedures to provide a satisfactory assessment of risks. The auditor must always perform substantive procedures to detect material misstatements at the assertion level. Tests of controls are necessary to test the controls to support the risk assessment, and also when substantive procedures alone do not provide sufficient appropriate audit evidence. 控制测试并不是在任何情况下都需要实施 当存在下列情形之一时, 审计师应当实施控制测试 : (1) 在评估认定层次重大错报风险时, 预期控制的运行是有效的 (2) 仅实施实质性程序并不能够提供认定层次充分 适当的审计证据 13
Audit procedures Inspection of tangible assets Inspection of documentation or records Observation Enquiry Confirmation Recalculation Reperformance Analytical procedures 14
Syllabus Status D1 Financial statement assertions and audit evidence (a) Explain the assertions contained in the financial statements about: classes of transactions and events and related disclosures; account balances and related disclosures at the period end.[2] (b) Describe audit procedures to obtain audit evidence, including inspection, observation, external confirmation, recalculation, reperformance, analytical procedures and enquiry.[2] (c) Discuss the quality and quantity of audit evidence.[2] (d) Discuss the relevance and reliability of audit evidence.[2] 15
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