The evidence an auditor collects can be from many
different sources.
different sources.
1
Auditor-derived
evidence
Auditor-derived
evidence
The best evidence is evidence derived by the auditors as a result of
their own tests and produres. These can include:
their own tests and produres. These can include:
·
Compliance
tests of controls.
Compliance
tests of controls.
·
Substantive
tests of transactions and balances.
Substantive
tests of transactions and balances.
·
Observation
of company procedures, e.g. stocktakes.
Observation
of company procedures, e.g. stocktakes.
·
Inspection
of documents, assets, etc. these include:
Inspection
of documents, assets, etc. these include:
·
Authoritative
documents prepared outside the firm, e.g. title deeds, share and loan
certificates, leases, contracts, franchises, invoices.
Authoritative
documents prepared outside the firm, e.g. title deeds, share and loan
certificates, leases, contracts, franchises, invoices.
·
Authoritative
documents prepared inside the firm, e.g. minutes, copy invoices.
Authoritative
documents prepared inside the firm, e.g. minutes, copy invoices.
2
independent
third-party evidence
independent
third-party evidence
The next most reliable form of evidence
is that provided by independent third parties.
is that provided by independent third parties.
Examples
of this include:
of this include:
·
bank
letters;
bank
letters;
·
debtors
circularization
debtors
circularization
·
Suppliers
statements.
Suppliers
statements.
3
Representation
made by directors and officers of the company.
Representation
made by directors and officers of the company.
In many ways this is the least reliable form of
evidence. Auditors should not accept the unsupported testimony of directors or
staff without any other form of corroboration unless there is absolutely no
other evidence available. This type of evidence may be formal, for example, the
letter of representation, or informal, for example, in replies to ICQ
questions.
evidence. Auditors should not accept the unsupported testimony of directors or
staff without any other form of corroboration unless there is absolutely no
other evidence available. This type of evidence may be formal, for example, the
letter of representation, or informal, for example, in replies to ICQ
questions.
