Audit procedures for obtaining audit evidence (CMA-May -2023)
Ans:
The auditor should obtain audit evidence to draw a reasonable conclusion on which bases on the audit opinion by performing audit procedures to-
01.understanding the entities environments
Obtain and understanding of the entity and its environment, including its internal control, to assessed the risk of material misstatement at the financial statement and assertion level.
02.Review Financial Statements :
Analyzing and reviewing the financial statements to gain an overall understanding of the entity's financial position and performance.
03.Review of Analytical Procedures:
By Performing analytical procedures, such as ratio analysis, to identify unusual trends, outliers, or inconsistencies that may require further investigation.
04. Inspection of records or documents:
Physically inspecting relevant documentation, contracts, invoices, and agreements to validate their existence and authenticity.
05.Confirmation Requests:
Sending confirmation requests to external parties, such as banks or customers, to independently verify the accuracy of reported balances or transactions.
06.Inquiry and Discussion:
Conducting inquiries and discussions with management and relevant personnel to gain insights into business processes, internal controls, and any potential issues.
07.Observation of Inventories:
Observing physical inventories to confirm their existence and assess the valuation of inventory items.
08.Review of Subsequent Events :
Reviewing subsequent events occurring after the balance sheet date to ensure that they are appropriately reflected in the financial statements.
09.Review of Internal Controls:
Evaluating the design and effectiveness of internal controls to assess the reliability of the internal control environment.
10.Testing of Account Balances:
Testing account balances, including substantive procedures on key accounts, to ensure their accuracy and existence.