Understanding Audit Evidence: Sufficiency, Substantive Procedures, And Assertions Essay.

• ISA 500 pertains to ‘Audit Evidence’.
• The standard defines ‘audit evidence’ as any information which the auditor can make use for framing a conclusion which forms the basis of the auditor’s opinion.
• Audit evidences include information which pertains to the accounting records of the financial statements and any other information.
• This standard elucidates that the objective of the auditor should be to perform audit procedures so as to obtain sufficient and appropriate audit evidences on the basis of which the auditor’s opinion can be framed.

1.Sufficiency:  The sufficiency of an audit evidence pertains to the quantity of an audit. The quantity of audit evidences required is affected by the auditor assessing the risks caused due to material misstatements and also by the quality of audit evidences that are obtained.

2. Appropriateness: The appropriateness of audit evidences pertain to the quality of an audit evidence which is the reliability and relevance in validating the support it provides for an auditor to conclude and basis his audit opinion.

Test of Controls: These tests are conducted by the auditor either before or during the planning stage of any audit. These are tests performed by the auditor in order to obtain audit evidence pertaining to design suitability and operational effectiveness of accounting systems and internal control systems.

2.Substantive Procedures: These tests are performed by the auditor in order to obtain   audit evidences pertaining to any potential material misstatements in the financial statements of the client. These tests are categorized into two types which are analytical procedures and test of details.

1.Inquiry: The auditor asks clients in order to seek explanation of transactions/processes related to financial statements.

2.Confirmation: The auditor confirms transactions and balances from a third party instead of the client.

3.Inspection of Records: The process of vouching/tracing transactions records to supporting documents or vice versa.

4.Inspection of Tangibles: The physical examination conducted by the auditor to confirm the existence of the asset.

5.Observation: The auditor observes the procedures which are practiced or performed by the client.

6.Recalculation: The process of recomputing the client’s work to check for any discrepancies and  deviations.

7.Re-performance: The independent performance of control procedures of the client by the auditor.

8.Analytical Procedures: Evaluation of financial and non financial information with the help of ratios and trends.

ASSERTIONS TO TEST
Class of transactions	Account balances	Presentation and disclosure
Occurrence	Existence	Occurrence
Completeness	Rights and obligations	Completeness
Accuracy	Completeness	Classification and understandability
Cutoff	Valuation and allocation	Accuracy and valuation
Classification

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Malakovska, M., Dicevska, S., Mircheska, K., Nikolovski, P. and Blazheva, S., 2020. ?udit ?vidence. International Journal of Sciences: Basic and Applied Research (IJSBAR), 54(2), pp.201-212.

Niktaba, A. and Aslani, A., 2015. The Effect Of Audit Evidence On The Auditor’s Report. International Journal of Accounting Research. Publisher: ZARSMI, UAE, and Regent Business School, South Africa, 2(6).