Audit Evidence Process

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Presentation transcript:

Audit Evidence Process

Audit Evidence Process Evidence gathering techniques Compliance vs substantive testing Sampling Computer Assisted Audit Techniques (CAATS) Analysis Review

Evidence Independence of the provider of the evidence Qualifications of the individual providing the information/evidence Objective of the evidence Timing of the evidence

Evidence Gathering Techniques Review information system organization structures Reviewing IS Policies and procedures Reviewing information system standards

Evidence Gathering Techniques Reviewing information system documentations System development initiating document (eg. Feasibility study) Functional requirements and design specifications Test plans and reports Program and operations documents Program change logs and histories User manuals Operations manuals Security related documents Quality assurance reports

Evidence Gathering Techniques Interviewing appropriate personnel Observing processes and employee performance

Sampling Audit samples Approaches Statistical sampling Non statistical sampling IS auditor should design and select an audit sample Perform audit procedures Evaluate sample results Sufficient Reliable Relevant Useful audit evidence

Sampling Method Attribute sampling Variable sampling Stop or go sampling Discovery sampling Variable sampling Stratified mean per unit Unstratified mean per unit Difference estimation

Sampling Key steps Determining the objectives of the test Defining the population to be sampled Determining the sampling method, such as attribute vs variable sampling Calculation the sample size Selecting the sample Evaluating the sample from an audit perspective

Compliance vs Substantive Testing If controls are being applied in a manner that complies with management policies and procedures To provide IS auditor with reasonable assurance that the particular on which the IS auditor plans to rely is operating as the IS auditor perceived in the preliminary evaluation Can be used to test the existence and effectiveness of a defined process, which may include a trail of documentary and/or automated evidence

Compliance vs Substantive Testing Substantiates the integrity of actual processing Provides evidence of the validity and integrity of the balances in the financial statements and the transactions that support these balances To test for monetary errors directly affecting financial statement balances

Computer Assisted Audit Techniques (CAATS) Types of tools and techniques Generalized audit software (GAS) Utility software Test data Expert System

Documentation Minimum Record The planning and preparation of the audit scope and objectives The information systems environment The audit program The audit steps performed and audit evidence gathered The audit findings, conclusions and recommendations Any report issued as a result of audit work Supervisory review comments if any

Documentation Audit Documentations (G8) Background Planning Linkage to Standards Need for Guideline Planning Documentation Contents Documentation Custody, Retention, and Retrieval