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Audit evidence: Validity of sources of evidence

6-20
(Audit evidence) The third GAAS of field work requires that the auditor obtain sufficient competent audit evidence to afford a reasonable basis for an opinion regarding the financial statements under audit. In considering what constitutes sufficient competent evidential matter, a distinction should be made between underlying accounting records and other information available to the auditor.

Required
a) Discuss the nature of audit evidence to be considered by the auditor in terms of the underlying accounting records, other corroborating information available to the auditor, and the methods by which the auditor tests or gathers competent evidence.
b) State the presumptions that can be made about the validity of audit evidence with respect to (1) other information and (2) underlying accounting records.
AICPA (adapted)

Solution Preview

a) Discuss the nature of audit evidence to be considered by the auditor in terms of the underlying accounting records, other corroborating information available to the auditor, and the methods by which the auditor tests or gathers competent evidence.

Audit evidence ranging in quality and source. Typical evidence includes:

- Knowledgeable outside parties (bank, lawyer, customers, vendors)
- Documents provided by a good internal control system
- Auditor's direct personal ...

Solution Summary

Your discussion is 243 words and explains sources of evidence and the "pecking order" of quality of evidence so you can see how the least persuasive to the most persuasive is determined.

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