This chapter is an introductory chapter to the next 10 chapters where we can consider about audit evidence is and the methods the audit uses to gather that evidence. We will look at the type and quantity of evidence that we need to gather to support opinions we make. We want to ensure that we have enough, in other words, sufficient, evidence and the right type of evidence, in other words appropriate evidence. So, we will consider what exactly is meant by sufficient, appropriate evidence in a bit more detail.
We will then learn about the financial statement assertions. These are the statements that management can make about the financial statements that we are auditing, for example, when management include an amount for property, plants and equipments in the statement of financial position they are asserting that, amongst other things, the assets exist. As auditors, we need to make sure that this is really the case and so will need to gather evidence relating to the existence of property, plant and equipment. Similarly, auditors need to get the evidence over several other assertions, so it is essentially we understand what these actually are.
We will also discuss the procedures auditors can use to gather audit evidence. There are five main types of procedure which can be remembered with the mnemonic AEIOU: analytical procedures, enquiry (both internal and external), inspection, observation and recalculation (including re-performance).
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