TopicE-1 TheUseofAssertionsbyAuditors
發布時間：2014-02-26 共1頁
ISA500 Audit evidence requires that auditors obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the audit opinion.
Sufficient relates to the quantity of evidence, appropriate relates to the quality or reliability and relevance of evidence.
Evidence will normally be sought from a variety of different sources because evidence is persuasive rather than conclusive, which is why auditors seek reasonable, not absolute assurance.
The auditor’s judgment as to what constitutes sufficient appropriate evidence is influenced by such factors as the following:
（1）The assessment of risk at the financial statement level and the individual balance or class of transaction level
（2）The nature of the accounting and internal control systems
（3）The materiality of the item
（4）The auditor’s knowledge and experience of the business
（5）The findings of audit procedures
（6）The source and reliability of the information
The assessment of risk affects the amount of evidence required
Risk may be in a specific area, it also may be a risk running through the financial statements as a whole.
ISA315 requires that auditors obtain and document an understanding of the accounting system and control environment sufficient to determine their audit approach. The audit approach will broadly comprise either:
（1）System-based approach （test of control supplemented by reduced substantive testing）
（2）A wholly substantive approach
（The auditor should make a preliminary assessment of control risk and then plan and perform tests of control to support that assessment.）
To form an opinion on the financial statements, the auditors need to obtain evidence supporting the financial statement assertions.
The evidence should be relevant
Assertions about transactions and events for the period
Occurrence
A transaction or event pertaining to the entity occurred during the relevant accounting period （i.e. the transactions are not overstated）
Completeness
There are no unrecorded transactions or events （i.e. the transactions are not understated）
Accuracy
Transactions and events have been measured and recorded accurately
Cut-off
Transactions and events have been recorded in the correct accounting period
Classification
Transactions and events have been recorded in the correct accounts
Assertions about account balances at the period end
Existence
Assets and liabilities exist
Rights and obligations
An asset or liability pertains （i.e. belongs） to the entity （i.e. the entity has legal or other rights or obligations relating to the asset or liability）
The auditor must ensure that it is the business which owns the asset at the balance sheet date. There are many situations where an asset could be on the business premises but belong to someone else. （for example, inventory; in a small business, some of the assets may belong to the major shareholder）
Completeness
There are no unrecorded assets or liabilities
Valuation and allocation
Assets and liabilities have been measured at appropriate amounts, and any resulting valuation or allocation adjustments have been appropriately recorded
Assertions about presentation and disclosure
Occurrence and rights and obligations
All disclosed events, transactions and other matters have occurred and pertain to the entity
Completeness
There are no unrecorded disclosures
Classification and understandability
Financial information has been appropriately presented, and disclosures are clearly expressed
Accuracy and valuation
All information has been disclosed fairly and at appropriate amounts
N.B.
Completeness and occurrence/existence
Two of the most important assertion tests are for completeness and occurrence/existence. There are tests going in the ‘opposite direction’ to each other.
企業都有虛增資產和低報負債的傾向.針對此,審計的順序也是要有針對性的調整.
資產（收入）從財務報表到實物;
負債（費用）從實物到財務報表
Substantive tests may be incorporated with other procedures such tests of control.
Types of substantive procedures
ISA500 sets out the types of substantive procedures that an auditor will carry out.
（1）Inspection of records and documents
（2）Inspection of tangible assets
（3）Observation （looking at processes and procedures being performed）
（4）Inquiry （seeking information from knowledgeable persons）
（5）Confirmation （a specific type of enquiry, the process of obtaining a representation from a third party）
（6）Recalculation （checking the mathematical accuracy of documents or records）
（7）Re performance （the auditor’s independence execution of procedures previously performed by entity staff）
（8）Analytical procedures
History Exam Question Analysis
（B6/J2005）
6 You are the auditor of Bears World, a limited liability company which manufactures and sells small cuddly toys by mail order. The company is managed by Mr Kyto and two assistants. Mr Kyto authorizes important transactions such as wages and large orders, one assistant maintains the payables ledger and orders inventory and pays supplers, and the other assistant receives customer orders and despatches cuddly toys. Due to other business commitments Mr Kyto only visits the office once per week.
At any time, about 100different typers of cuddly toys are available for sale. All sales are made cash with order-there are no receivables. Customers pay using credit cards and occasionally by sending cash. Turnover is over $5-2million.
You are planning the audit of BearsWorld and are considering using some of the procedures for gathering audit evidence recommended by ISA500 as follows:
（ⅰ） Analytical Procedures
（ⅱ） Inquiry
（ⅲ） Inspection
（ⅳ） Observation
（ⅴ） Re-calculation
Required:
（a）For EACH of the above procedures:
（ⅰ）Explain its use in gathering audit evidence. （5marks）
（ⅱ）Describe one example for the audit of BearsWorld. （5marks）
（b）Discuss the suitability of each procedure for Bears World, explaining the limitations of each. （10marks）
（20marks）
答案：（a）（ⅰ）Analytical Procedures consist of evaluations of financial information made by a study of plausible relationships among both financial and non-financial data.
Inquiry means to seek relevant information form sources, both financial and non-financial, either inside or outside the company being audited. Evidence may be obtained orally or in writing.
Inspection is the physical review or examination of records, documents and tangible assets. It may include examination of records for evidence of controls in the form of a compliance test.
Observation involves looking at a process of procedure as it is being performed to ensure that the process actually works as documented.
Re-calculation means the checking of the mathematical accuracy of documents or records.
（ⅱ）Analytical Procedures.
Review of sales income year on year to try to identify whether income has been under-stated, possibly by cash being taken prior to banking. There is no control over the opening of post so cash could be withdrawn by one assistant, and the deficit made up by a fraud on customers.
Inquiry
Obtain statements from suppliers to check the completeness of liabilities at the end of the year. As there is no control over purchases. Invoices could have been mis-placed resulting in a lower purchases and suppliers figure.
Inspection
The assets of the company, namely cuddly toys in inventory at the edn of the year, can be inspected to ensure all inventory is recorded and that the toys are saleable in their current condition.
Observation
Procedures such as the opening of cash and recording of customer orders be observed to snsure that the administrator is recording all orders in the sales day book and cash books.
Re-calculation
Checking additions in the book to confirm that the total amount of cash recorded is accurate and can be included in the sales figure （cash receipts normally equal sales because there are no receivables）.
（b）Analytical procedures
This method of collecting evidence will be useful in BearsWorld because it will help to identify unusual changes in income and expenditure. As BearsWorld is a relatively small company, monitoring gross profit will show relatively small changes in sales margin or purchasing costs. Decisions by Mr Kyto to amend margins can therefore be traced into the actual sales made.
However, the technique may be limited in its application because it will not detect errors or omissions made consistently year on year. If either assistants is defrauding the company （for example by removing cash）each year, then analytical procedures will not detect this.
Inquiry
Inquiry evidence will be very useful in the audit of BearsWorld, especially where this derived from third parties. Third party evidence is generally more reliable than client originated evidence as there is a decreased likelihood of bias. Suppliers can therefore be verified using supplier statement reconciliations. A review of any customer complaints file（if these letters are kept） will also help to indentify any orders that have not been dispatched.
External inquiry evidence will be less useful in the audit of sales and receivables because goods are paid for prior to dispatch –there are no receivables. Internal evidence will be available from Mr Kyto and the assistant; however the lack of segregation of duties means that this will not be so reliable.
Inspection
Inspection of documents within BearsWorld will be useful, particularly regarding checking whether expenses are bona fide. All purchase invoices, for example, should be addressed to BearsWorld and relate to purchases expected from that company e.g cuddly toys for resale, office expenses etc.
Inspection of documents can take a long time; however, given the poor internal control system within BearsWorld, the auditor may have no choice but to use this method of gathering evidence.
The fact that an invoice is addressed to the company dies not confirm completeness of recording so inspection of the cash book for unusual payments verified by checking the purchase invoice will also be required. Additional substantive testing would also be required due to poor controls.
Observation
Observation may be useful because ti will show how the assistants check documents. However. No information is provided on any internal controls within BearsWorld so simply viewing how documents are checked without any evidence of checking has limited benefit.
Observation tests will be of limited usefulness because the assistants may cat differently when an auditor is present. The same problem will apply to any observation checking carried out by Mr Kyto.
Re-calculation
Re-calculation evidence is very useful for checking additions on invoice, balancing of control accounts etc. this means that the arithmetical accuracy of the books and records in BearsWorld can be confirmed.
The main weakness of re-calculation checking is that calculations can only be carried out on figures that have been recorded. If there are any omissions then checks cannot be carried out.
Sufficient relates to the quantity of evidence, appropriate relates to the quality or reliability and relevance of evidence.
Evidence will normally be sought from a variety of different sources because evidence is persuasive rather than conclusive, which is why auditors seek reasonable, not absolute assurance.
The auditor’s judgment as to what constitutes sufficient appropriate evidence is influenced by such factors as the following:
（1）The assessment of risk at the financial statement level and the individual balance or class of transaction level
（2）The nature of the accounting and internal control systems
（3）The materiality of the item
（4）The auditor’s knowledge and experience of the business
（5）The findings of audit procedures
（6）The source and reliability of the information
The assessment of risk affects the amount of evidence required
Risk may be in a specific area, it also may be a risk running through the financial statements as a whole.
ISA315 requires that auditors obtain and document an understanding of the accounting system and control environment sufficient to determine their audit approach. The audit approach will broadly comprise either:
（1）System-based approach （test of control supplemented by reduced substantive testing）
（2）A wholly substantive approach
（The auditor should make a preliminary assessment of control risk and then plan and perform tests of control to support that assessment.）
To form an opinion on the financial statements, the auditors need to obtain evidence supporting the financial statement assertions.
The evidence should be relevant
Assertions about transactions and events for the period
Occurrence
A transaction or event pertaining to the entity occurred during the relevant accounting period （i.e. the transactions are not overstated）
Completeness
There are no unrecorded transactions or events （i.e. the transactions are not understated）
Accuracy
Transactions and events have been measured and recorded accurately
Cut-off
Transactions and events have been recorded in the correct accounting period
Classification
Transactions and events have been recorded in the correct accounts
Assertions about account balances at the period end
Existence
Assets and liabilities exist
Rights and obligations
An asset or liability pertains （i.e. belongs） to the entity （i.e. the entity has legal or other rights or obligations relating to the asset or liability）
The auditor must ensure that it is the business which owns the asset at the balance sheet date. There are many situations where an asset could be on the business premises but belong to someone else. （for example, inventory; in a small business, some of the assets may belong to the major shareholder）
Completeness
There are no unrecorded assets or liabilities
Valuation and allocation
Assets and liabilities have been measured at appropriate amounts, and any resulting valuation or allocation adjustments have been appropriately recorded
Assertions about presentation and disclosure
Occurrence and rights and obligations
All disclosed events, transactions and other matters have occurred and pertain to the entity
Completeness
There are no unrecorded disclosures
Classification and understandability
Financial information has been appropriately presented, and disclosures are clearly expressed
Accuracy and valuation
All information has been disclosed fairly and at appropriate amounts
N.B.
Completeness and occurrence/existence
Two of the most important assertion tests are for completeness and occurrence/existence. There are tests going in the ‘opposite direction’ to each other.
企業都有虛增資產和低報負債的傾向.針對此,審計的順序也是要有針對性的調整.
資產（收入）從財務報表到實物;
負債（費用）從實物到財務報表
Substantive tests may be incorporated with other procedures such tests of control.
Types of substantive procedures
ISA500 sets out the types of substantive procedures that an auditor will carry out.
（1）Inspection of records and documents
（2）Inspection of tangible assets
（3）Observation （looking at processes and procedures being performed）
（4）Inquiry （seeking information from knowledgeable persons）
（5）Confirmation （a specific type of enquiry, the process of obtaining a representation from a third party）
（6）Recalculation （checking the mathematical accuracy of documents or records）
（7）Re performance （the auditor’s independence execution of procedures previously performed by entity staff）
（8）Analytical procedures
History Exam Question Analysis
（B6/J2005）
6 You are the auditor of Bears World, a limited liability company which manufactures and sells small cuddly toys by mail order. The company is managed by Mr Kyto and two assistants. Mr Kyto authorizes important transactions such as wages and large orders, one assistant maintains the payables ledger and orders inventory and pays supplers, and the other assistant receives customer orders and despatches cuddly toys. Due to other business commitments Mr Kyto only visits the office once per week.
At any time, about 100different typers of cuddly toys are available for sale. All sales are made cash with order-there are no receivables. Customers pay using credit cards and occasionally by sending cash. Turnover is over $5-2million.
You are planning the audit of BearsWorld and are considering using some of the procedures for gathering audit evidence recommended by ISA500 as follows:
（ⅰ） Analytical Procedures
（ⅱ） Inquiry
（ⅲ） Inspection
（ⅳ） Observation
（ⅴ） Re-calculation
Required:
（a）For EACH of the above procedures:
（ⅰ）Explain its use in gathering audit evidence. （5marks）
（ⅱ）Describe one example for the audit of BearsWorld. （5marks）
（b）Discuss the suitability of each procedure for Bears World, explaining the limitations of each. （10marks）
（20marks）
答案：（a）（ⅰ）Analytical Procedures consist of evaluations of financial information made by a study of plausible relationships among both financial and non-financial data.
Inquiry means to seek relevant information form sources, both financial and non-financial, either inside or outside the company being audited. Evidence may be obtained orally or in writing.
Inspection is the physical review or examination of records, documents and tangible assets. It may include examination of records for evidence of controls in the form of a compliance test.
Observation involves looking at a process of procedure as it is being performed to ensure that the process actually works as documented.
Re-calculation means the checking of the mathematical accuracy of documents or records.
（ⅱ）Analytical Procedures.
Review of sales income year on year to try to identify whether income has been under-stated, possibly by cash being taken prior to banking. There is no control over the opening of post so cash could be withdrawn by one assistant, and the deficit made up by a fraud on customers.
Inquiry
Obtain statements from suppliers to check the completeness of liabilities at the end of the year. As there is no control over purchases. Invoices could have been mis-placed resulting in a lower purchases and suppliers figure.
Inspection
The assets of the company, namely cuddly toys in inventory at the edn of the year, can be inspected to ensure all inventory is recorded and that the toys are saleable in their current condition.
Observation
Procedures such as the opening of cash and recording of customer orders be observed to snsure that the administrator is recording all orders in the sales day book and cash books.
Re-calculation
Checking additions in the book to confirm that the total amount of cash recorded is accurate and can be included in the sales figure （cash receipts normally equal sales because there are no receivables）.
（b）Analytical procedures
This method of collecting evidence will be useful in BearsWorld because it will help to identify unusual changes in income and expenditure. As BearsWorld is a relatively small company, monitoring gross profit will show relatively small changes in sales margin or purchasing costs. Decisions by Mr Kyto to amend margins can therefore be traced into the actual sales made.
However, the technique may be limited in its application because it will not detect errors or omissions made consistently year on year. If either assistants is defrauding the company （for example by removing cash）each year, then analytical procedures will not detect this.
Inquiry
Inquiry evidence will be very useful in the audit of BearsWorld, especially where this derived from third parties. Third party evidence is generally more reliable than client originated evidence as there is a decreased likelihood of bias. Suppliers can therefore be verified using supplier statement reconciliations. A review of any customer complaints file（if these letters are kept） will also help to indentify any orders that have not been dispatched.
External inquiry evidence will be less useful in the audit of sales and receivables because goods are paid for prior to dispatch –there are no receivables. Internal evidence will be available from Mr Kyto and the assistant; however the lack of segregation of duties means that this will not be so reliable.
Inspection
Inspection of documents within BearsWorld will be useful, particularly regarding checking whether expenses are bona fide. All purchase invoices, for example, should be addressed to BearsWorld and relate to purchases expected from that company e.g cuddly toys for resale, office expenses etc.
Inspection of documents can take a long time; however, given the poor internal control system within BearsWorld, the auditor may have no choice but to use this method of gathering evidence.
The fact that an invoice is addressed to the company dies not confirm completeness of recording so inspection of the cash book for unusual payments verified by checking the purchase invoice will also be required. Additional substantive testing would also be required due to poor controls.
Observation
Observation may be useful because ti will show how the assistants check documents. However. No information is provided on any internal controls within BearsWorld so simply viewing how documents are checked without any evidence of checking has limited benefit.
Observation tests will be of limited usefulness because the assistants may cat differently when an auditor is present. The same problem will apply to any observation checking carried out by Mr Kyto.
Re-calculation
Re-calculation evidence is very useful for checking additions on invoice, balancing of control accounts etc. this means that the arithmetical accuracy of the books and records in BearsWorld can be confirmed.
The main weakness of re-calculation checking is that calculations can only be carried out on figures that have been recorded. If there are any omissions then checks cannot be carried out.
