What is audit evidence of financial statements? (2024)

What is audit evidence of financial statements?

02 Audit evidence is all the information used by the auditor in arriving at the conclusions on which the audit opinion is based and includes the informa- tion contained in the accounting records underlying the financial statements and other information.

What is considered audit evidence?

What Is Auditing Evidence? Auditing evidence is the information collected for review of a company's financial transactions, internal control practices, and other items necessary for the certification of financial statements by an auditor or certified public accountant (CPA).

What do you mean by audit of financial statements?

A financial audit is an objective examination and evaluation of the financial statements of an organization to make sure that the financial records are a fair and accurate representation of the transactions they claim to represent.

What are the 3 main sources of audit evidence?

What are the 4 types of audit evidence?

What are the types of audit evidence? There are eight different types of audit evidence. They are physical examinations, confirmations, documentation, analytical procedures, observations, inquiries, reperformance, and recalculation.

What is the most reliable audit evidence?

Audit evidence obtained directly by the auditor (for example, observation of the application of a control) is more reliable than audit evidence obtained indirectly or by inference (for example, inquiry about the application of a control).

What are the 4 audited financial statements?

Financial statements are often audited by government agencies and accountants to ensure accuracy and for tax, financing, or investing purposes. For-profit primary financial statements include the balance sheet, income statement, statement of cash flow, and statement of changes in equity.

Why do financial statements need to be audited?

The benefit of an audit is that it provides assurance that management has presented a 'true and fair' view of a company's financial performance and position.

Do financial statements need to be audited?

Any financial institution will likely require a financial statement audit to make sure that granting the loan would not constitute a major risk.

Which type of audit evidence is the most reliable and why?

Physical Evidence

This type of evidence is tangible and as a result, it is the most reliable and persuasive form of evidence that can be used in any internal and external audit. Such evidence can be: Counted. Inspected.

What is an example of audit documentation?

Examples of audit documentation include memoranda, confirmations, correspondence, schedules, audit programs, and letters of representation. Audit documentation may be in the form of paper, electronic files, or other media.

What type of audit evidence would most likely be used to?

Instant Answer. To verify the existence of fixed assets, the most reliable type of audit evidence would be physical examination. This involves physically inspecting the assets to ensure they are present and in the stated condition. This provides direct and tangible evidence of their existence.

How much audit evidence is enough?

The quantity of audit evidence needed is affected by the risk of misstatement (the greater the risk, the more audit evidence is likely to be required) and also by the quality of such audit evidence (the higher the quality, the less the audit evidence that may be required).

Is it hard to get audited?

Shockingly low for most people. The number of IRS audits has been declining for years. Today, an American's overall chances of being audited are about 1 in 200.

What makes audit evidence sufficient?

Appropriateness is the measure of the quality of audit evidence, i.e., its relevance and reliability. To be appropriate, audit evidence must be both relevant and reliable in providing support for the conclusions on which the auditor's opinion is based.

What should an auditor do before auditing the balance sheet?

What should an auditor do before auditing the balance sheet? Confirm whether probable legal action is disclosed to the auditor. Investigate whether liens on assets are committed as collateral. Determine the client's planned and imminent purchase commitments.

What type of audit evidence would be considered the weakest type?

Testimonial evidence is usually the weakest form of evidence and generally not used to support key audit findings. Testimonial representations may be included in report, but must be attributed. Whenever possible, important information from interviews is corroborated with additional evidence.

What are the seven major types of audit evidence?

What are the two most expensive types of audit evidence?

7.4. 10 (Cost of Types of Evidence) Most expensive types of evidence are: 1- physical examination (inspection of tangible assets) a. costly because it normally requires the auditor's presence when the client is counting the assets. 2- confirmation a.

What is the most common audit report?

Unqualified opinion – clean report

This is the type of report that auditors give most often. It is also the type of report that most companies expect to receive. An unqualified opinion doesn't have any adverse comments, and it doesn't include any disclaimers about any clauses or the audit process.

Who are not required to file audited financial statements?

Do I need an Audited Financial Statement (AFS)? Do I need an Audited Financial Statement (AFS)? You read that right -- AFS is now only required for entities earning more than Php 3 Million/year.

What does an audited P&L look like?

An audited profit and loss statement shows a summary of the revenue, expenses and total income or losses of a company for a certain period as reviewed by an independent certified public accountant.

How do you validate financial statements?

Verifying financial reports is effectively done by scrutinizing their sources to ensure credibility and reliability. This includes examining audited financial statements and cross-referencing information from various sources for a comprehensive assessment.

How long does a financial audit take?

On average, a complete audit can take anywhere from a few weeks to several months. This timeline is divided into several key stages that must be followed to ensure a thorough and accurate examination of the company's financial statements. The first stage of the audit process is the planning phase.

Can I do my own financial statements?

You can create your own personal financial statements to help with budget planning and to set goals for increasing your net worth. Two types of personal financial statements are the personal cash flow statement and the personal balance sheet.