1. EVIDENCE, DOCUMENTATION, AND AUDIT PROGRAMS
CPA JUAN M. GARCIA MERCED
EVIDENCE, DOCUMENTATION, AND AUDIT PROGRAMS
JUAN M. GARCIA MERCED
7/23/2019
CPA JUAN M. GARCIA MERCED

2. 3RD STANDARD OF FIELD WORK
Sufficient competent evidential matter is to be obtained trough inspection, observation, inquiries, and confirmations to afford a reasonable basis for an opinion regarding the financial statements under audit.
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CPA JUAN M. GARCIA MERCED

3. CPA JUAN M. GARCIA MERCED
AUDIT EVIDENCE
Any information that corroborates or refutes an assertion. Must be:
Competent – relevant and valid (Quality)
Sufficient – Quantity
There is an inverse relationship between competent and sufficiency.
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CPA JUAN M. GARCIA MERCED

4. CPA JUAN M. GARCIA MERCED
TYPES OF EVIDENCE
Physical evidence- provides evidence about existence but needs to be supplemented by other types of evidence.
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CPA JUAN M. GARCIA MERCED

5. CPA JUAN M. GARCIA MERCED
TYPES OF EVIDENCE
2. Third party representations
Confirmations – effective at providing evidence about existence.
Lawyers’ Letters – primary source of evidence regarding lawsuits and litigation.
Reports of specialists
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CPA JUAN M. GARCIA MERCED

6. CPA JUAN M. GARCIA MERCED
TYPES OF EVIDENCE
Documents
Created outside the client and transmitted directly to the auditors
Created outside the client and held by the client
Created and held within the client
4. Computations
5. Analytical reviews
6. Oral and written client representation
7. Accounting records
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CPA JUAN M. GARCIA MERCED

7. CPA JUAN M. GARCIA MERCED
AUDIT PROCEDURES
Timing
Nature
Extent
Cost
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CPA JUAN M. GARCIA MERCED

8. CPA JUAN M. GARCIA MERCED
WORKING PAPERS
Functions:
Assignment and coordinating audit work
Supervising and reviewing the work of assistants
Supporting the report
Complying with the stds of field work
Planning and conducting the next audit
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CPA JUAN M. GARCIA MERCED

9. CPA JUAN M. GARCIA MERCED
OTHER CONSIDERATIONS
Confidential nature
Ownership of working papers
Auditors’ liability
Differences of opinion
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CPA JUAN M. GARCIA MERCED

10. TYPES OF WORKING PAPERS
Administrative working papers
Audit plan
Audit program
Time budget
Internal control documentation
Working trial balance
Lead schedules
Adjusting journal entries
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CPA JUAN M. GARCIA MERCED

11. Types of Working Papers
Supporting schedules
Analysis of a ledger account
Corroborating documents
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CPA JUAN M. GARCIA MERCED

12. CPA JUAN M. GARCIA MERCED
ORGANIZATION
Current files – one file per year
Permanent file – preserves working papers that show relatively few or no changes
Articles of incorporation
Bylaws
Leases
Pension plans, labor contracts
Tax returns
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CPA JUAN M. GARCIA MERCED

13. AUDIT PLAN (AUDIT PROGRAM)
Detailed listing of the audit procedures to be performed in the course of the audit (nature, timing, and extent).
Objectives:
Design to accomplish audit objectives with respect to each major account in the financial statements. These objectives are:
Existence or occurrence
Completeness
Rights and obligations
Valuation or allocation
Presentation and disclosure
Accuracy
Cutoff
Classification
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CPA JUAN M. GARCIA MERCED

14. CPA JUAN M. GARCIA MERCED
EXISTENCE
Existence of assets usually may be verified by physical observation or inspection.
If assets are in custody of others, the auditor should confirm the existence
For items without physical substance, the existence may be verified by confirming with outsiders
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CPA JUAN M. GARCIA MERCED

15. RIGHTS AND OBLIGATIONS
To verify the client’s rights, the auditors must inspect documentary evidence
To verify obligations, the auditors must inspect contracts, confirmations, and communications with debtors to account for contingencies and commitments
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CPA JUAN M. GARCIA MERCED

16. CPA JUAN M. GARCIA MERCED
Completeness
Total amount
Trace total to general ledger
Foot and crossfoot as necessary
“Window dressing”
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CPA JUAN M. GARCIA MERCED

17. CPA JUAN M. GARCIA MERCED
Valuation
Valuation is appropriate in the circumstances.
Vouch to source documents and other documentary evidence.
Evaluate the reasonableness of the cost allocation program and verify the computation of the remaining unallocated cost.
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CPA JUAN M. GARCIA MERCED

18. CPA JUAN M. GARCIA MERCED
Accuracy
Financial and other information are disclosed fairly and at appropriate amounts
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CPA JUAN M. GARCIA MERCED

19. Classification and understandability
Financial information is appropriately presented, described, and clearly expressed
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CPA JUAN M. GARCIA MERCED

20. CPA JUAN M. GARCIA MERCED
Cutoff
Transactions and events have been recorded in the correct accounting period
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CPA JUAN M. GARCIA MERCED

21. CPA JUAN M. GARCIA MERCED
Questions?!?!?!?!?!?!?!?
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CPA JUAN M. GARCIA MERCED