1. Modern Auditing: Assurance Services and the Integrity of Financial Reporting, 8 th Edition Modern Auditing: Assurance Services and the Integrity of Financial Reporting, 8 th Edition William C. Boynton California Polytechnic State University at San Luis Obispo Raymond N. Johnson Portland State University Chapter 6 – Audit Evidence

2. Chapter 6 Overview

3. Audit Evidence Defined Audit Evidence – Accounting records – Corroborating information Accounting Records Other Information

4. Assertions and Specific Audit Objectives Five Management Assertions (GAAS) – Existence and Occurrence – Completeness – Rights and Obligations – Valuation or Allocation – Presentation and Disclosure

5. Assertions and Specific Audit Objectives Transaction Class Audit Objectives – Occurrence – Completeness – Accuracy – Cutoff – Classification

6. Assertions and Specific Audit Objectives Account Balance Audit Objectives – Existence – Completeness – Rights and Obligations – Valuation and Allocation

7. Assertions and Specific Audit Objectives Disclosure Audit Objectives – Occurrence and Rights and Obligations – Completeness – Understandability – Accuracy and Valuation

8. Sufficiency of Audit Evidence Materiality Risk of Material Misstatement Size of Population Characteristics of Population

9. Sufficiency of Audit Evidence

10. Competency of Evidence Relevance of Audit Evidence Reliability of Audit Evidence Professional Judgment

11. Reliability of Audit Evidence

12. Reliability of Documentary Evidence

13. Study Break 1.Which of the following is not a transaction class audit objective? A.Existence B.Occurrence C.Accuracy D.Cutoff A. Existence

14. Study Break 2. Which of the following is not an account balance audit objective? A.Existence B.Completeness C.Classification D.Rights and Obligations C. Classification

15. Study Break 3. All of the following affect the sufficiency of audit evidence except: A.Materiality B.Risk of Material Misstatement C.Relevance of Audit Evidence D.Size and Characteristics of the Population C. Relevance of Audit Evidence

16. Objectives of Audit Procedures Obtain an understanding of the entity and its environment Test operating effectiveness of controls Support assertion or detect material misstatements

17. Types of Audit Procedures Inspection of Documents or Records – Vouching – Tracing

18. Types of Audit Procedures Inspection of Tangible Assets Observation Inquiry Confirmation

19. Types of Audit Procedures Recalculation Reperformance Analytical Procedures Computer-Assisted Audit Techniques

20. Four Decisions About Audit Procedures Staffing and Supervising the Audit Nature of Audit Procedures Timing of Audit Procedures Extent of Audit Procedures

22. Documenting Audit Decisions and Audit Evidence Audit Program – Recommended by GAAS – Documents decisions Working Papers – Documents audit decisions – Documents audit evidence obtained

23. Types of Working Papers Working Trial Balance Schedules and Analyses Audit Memoranda and Corroborating Information Adjusting and Reclassifying Entries

24. Preparing Working Papers Heading Index Number Cross-Referencing Tick Marks Signatures and Dates

25. Working Paper Example

26. Reviewing Working Papers Scope of Work Performed Evidence and Findings Obtained Audit Judgment Exercised Conclusions Reached by the Auditor

27. Working Paper Files Permanent File Current File Ownership and Custody

28. Study Break 4. ________ involves selecting entries in the accounting records and inspecting the documentation that served as the basis for the entries. A.Vouching B.Tracing C.Observation D.Inquiry A. Vouching

29. Study Break 5. These decisions involve determining whether the procedures will be performed at an interim date or at fiscal year-end. A.Staffing and Supervision B.Nature of Audit Tests C.Timing of Audit Tests D.Extent of Audit Tests C. Timing of Audit Tests

30. Study Break 6. This working paper file contains data that are expected to be useful to the auditor in future engagements with the client. A.Permanent file B.Current file C.Daily file D.Annual file A. Permanent file