Modern Auditing:
Assurance Services and the Integrity of Financial Reporting, 8th Edition
William C. Boynton
California Polytechnic State University at San Luis Obispo
Raymond N. Johnson
Portland State University
Audit Evidence Defined
• Audit Evidence
– Accounting records
– Corroborating information
• Accounting Records
Assertions and Specific Audit
Objectives
• Five Management Assertions (GAAS)
– Existence and Occurrence
– Completeness
– Rights and Obligations
– Valuation or Allocation
Assertions and Specific Audit
Objectives
• Transaction Class Audit Objectives
– Occurrence
– Completeness
– Accuracy
– Cutoff
Assertions and Specific Audit
Objectives
• Account Balance Audit Objectives
– Existence
– Completeness
– Rights and Obligations
Assertions and Specific Audit
Objectives
• Disclosure Audit Objectives
– Occurrence and Rights and Obligations
– Completeness
– Understandability
Sufficiency of Audit Evidence
• Materiality
• Risk of Material Misstatement
• Size of Population
Competency of Evidence
• Relevance of Audit Evidence
• Reliability of Audit Evidence
Study Break
1. Which of the following is not a
transaction class audit objective? A. Existence
B. Occurrence C. Accuracy
D. Cutoff
Study Break
2. Which of the following is not an
account balance audit objective? A. Existence
B. Completeness C. Classification
D. Rights and Obligations
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
Objectives of Audit Procedures
• Obtain an understanding of the entity and its environment
• Test operating effectiveness of controls
Types of Audit Procedures
• Inspection of Documents or Records
– Vouching
Types of Audit Procedures
• Inspection of Tangible Assets
• Observation
• Inquiry
Types of Audit Procedures
• Recalculation
• Reperformance
• Analytical Procedures
Four Decisions About Audit
Procedures
• Staffing and Supervising the Audit
• Nature of Audit Procedures
• Timing of Audit Procedures
Documenting Audit Decisions
and Audit Evidence
• Audit Program
– Recommended by GAAS
– Documents decisions
• Working Papers
– Documents audit decisions
Types of Working Papers
• Working Trial Balance
• Schedules and Analyses
• Audit Memoranda and Corroborating Information
Preparing Working Papers
• Heading
• Index Number
• Cross-Referencing
• Tick Marks
Reviewing Working Papers
• Scope of Work Performed
• Evidence and Findings Obtained
• Audit Judgment Exercised
Working Paper Files
• Permanent File
• Current File
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
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
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
