7-36 (Classification and Reliability of Audit Evidence) Following are examples of documentation typically obtained by auditors.
For each example:
a. Classify the documentation as internal or external evidence.
b. Classify the documentation as to its relative reliability (high, moderate, or low).
c. Identify an account balance and assertion for which the auditor might use the documentation.
Documentary Evidence Used in an Audit
1. Vendor invoices
2. Vendor monthly statements
3. Sales invoices
4. Shipping documents for sales
5. Bank statements
6. Employee payroll time cards
7. Receiving reports for goods received from vendors
8. Sales contracts
9. Purchase commitment contracts
10. Lease agreements
11. Estimated warranty schedules
12. Purchase order stored on client computer and received by EDI
13. Credit rating reports
14. Vendor invoice stored on client computer and received by EDI
Please see the attached document.
Also, here is some information for you regarding audit assertions that should act as a source of future reference for you.
SAS 31 states, "Assertions about existence or occurrence deal with whether assets or liabilities of the entity exist at a given date and whether recorded transactions have occurred during a given period." Where does the auditor begin to support this assertion? Answer: The books and the ledger gather evidence that a transaction has occurred because the accounting system "captured" the transaction by recording it.
In testing for existence, the auditor should seek evidence outside the books for that which has been recorded. The effort cannot stop with finding supporting debits and credits in a book of original entry. The effort must extend beyond the confines of the accounting records to persuasive evidence of the existence of the tangible or intangible asset or liability.
Substantive testing for the assertion of existence frequently involves some type of confirmation with an outside third party. For example, a long-standing auditing procedure to be used where practicable is the confirmation of receivables. Although the client may be involved in the generation of the confirmations, especially in the computer environment, the auditor is cautioned to retain control over the confirmation process and not to be influenced by a client's comments as to why a receivable should or should not be confirmed. The auditor should exercise due care to determine the legitimacy of the address of the person to whom receivable confirmation is being sent.
Confirmation of cash account balances is another example of a common test for existence. Recognizing the deficiencies in the confirmation process, the AICPA has recently changed the format of the standard confirmation form to restrict it to a request for balances of the cash accounts. Information regarding loans, lines of credit, or other financial arrangements must be sought by a separate communicator to the bank official that would be familiar with such matters.
SAS 31 states, "Assertions about completeness deal with whether all transactions and accounts that should be presented in the financial statements are so included." To support the completeness assertion, the auditor obtains sufficient, competent evidence that transactions that should be recorded ...