6.0 Materiality & Audit Evidence Flashcards Preview

AYB301 Audit & Assurance > 6.0 Materiality & Audit Evidence > Flashcards

Flashcards in 6.0 Materiality & Audit Evidence Deck (8)
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1
Q

What are the relationships between materiality and audit evidence?

A

Lower the materiality level, the greater the amount of evidence needed (inverse relationship)

Larger or more significant an account balance is, the greater the amount of evidence needed (direct relationship)

2
Q

What type of audit evidence must the auditor acquire?

A

The auditor is required to gather sufficient appropriate evidence to support their conclusions.
> Sufficiency is the quantity
> Appropriateness is the quality

3
Q

What is the occurrence & existence assertion and what audit evidence is required?

A

Evidence that the client records are genuine (only real transactions & balances are recorded) e.g. external confirmation

4
Q

What is the completeness assertion and what audit evidence is required?

A

Evidence that all transactions & balances are recorded by the client (no omissions in the client’s records) e.g. unrecorded creditor testing.

5
Q

What is the accuracy, valuation & allocation assertion and what audit evidence is required?

A

Evidence about the amount recorded (calculations, adjustments) e.g. expert valuations, reasonableness checks.

6
Q

What is the rights & obligations assertion and what audit evidence is required?

A

Evidence that the client has the right to record the asset and is obliged to discharge the responsibility (don’t belong to another entity) e.g. check registered owner for vehicles & land.

7
Q

What is the classification assertion and what audit evidence is required?

A

Evidence that transactions are recorded at the correct accounts e.g. compare invoice details to the accounting entries to verify appropriate classification of an expense.

8
Q

What are the main types of audit evidence?

A
  1. Analytical (comparisons)
  2. Documentary (confirmations or written representations)
  3. Mathematical evidence (calculations by the auditor compared to client)
  4. Oral (discussions with key employees & management)
  5. Physical (inspection of tangible assets e.g. stocktakes)
  6. Electronic