Companies need a continuous audit to determine the percentage of profits and expenses and ensure no embezzlement or fraud. Therefore, they need a professional auditor to evaluate their lists and books using many types of evidence.
Evidence is facts, information and documents used by the auditor to form an opinion or decision on the truthfulness of the values mentioned in the financial statements.
Getting an accurate opinion of a professional auditor can only be achieved by using types of evidence in the audit accurately for each point within the financial statements. Business owners will make many decisions depending on the auditor’s opinion.
Therefore, the auditor’s profession is complex and needs careful focus on each important financial statement during the auditing to obtain the types of evidence, which can be obtained by following several sequential steps
The concept and characteristics of the evidence and the technical methods of assembling them
Steps for getting types of evidence
Each entry recorded in the company’s books is called the statement, and the auditor needs to review all statements which affect the audit report. This is done by the following
The auditor determines the type of statement he wants to audit
Determines how important it is in the audit
The auditor collects all the information about the statement and possible evidence.
The auditor decides whether the types of evidence collected are sufficient or if there is a need for more? And the extent to which evidence relating to the subject are being audited.
The auditor issues a report and opinion on the subject of an audit to determine whether it is correct or manipulative
What are the characteristics of the types of evidence
Many features must be available in the types of evidence external audit which can be limited to two characteristics.
The first feature
The decisive argument to support the auditor’s decision and opinion on the validity of the financial statements
The second feature
Evidence should be valid and related to the subject of the audit
As we can see, types of evidence play a vital role in determining the auditor’s report. Of course, there are different types of evidence whose importance to the audit subject is determined according to the auditor’s opinion. These types can be limited to As we can see, types of evidence play a vital role in determining the auditor’s report. Different types of evidence have different levels of importance to the subject of an audit, determined by the auditor’s opinion.
Types of evidence
The actual presence of the audit topic
Internal and external books and documents related to the statement
Written or oral statements and certificates provided to the auditor from the company’s management
What auditor receive from third parties
internal system of supervision
Processes performed after submitting lists for audit
Interrelation between data and audit topic
The results of calculations that the auditor had conducted himself
What should be considered when getting types of evidence in the audit?
There are several considerations to keep in mind when collecting evidence for an audit. Such as the relative importance of the evidence and the degree of risk that surrounds whatever will be audited
The types of evidence an auditor tries to obtain are not hard to find. They are normal, and the strength of their argument varies according to their different types. For example, when examining assets, actual existence is considered solid proof, and its argument is greater than using documents proving its existence and so on.
The urgency of getting this complex guide depends on the estimation of the auditor, who determines whether the evidence is very important or irreplaceable. Some types of evidence are pretty challenging to obtain, such as getting documents or statements from third parties or inventing goods at company branches in distant places. Therefore, the auditor should consider the cost they will pay for obtaining evidence, whether it is the cost of time or effort.
The auditor issued his report and expressed his opinion based on the lists and documents he could obtain. The auditor does not guarantee that the financial statements are entirely free of errors when issuing the report. Sometimes the types of evidence he used are insufficient and adequate to make the decision and cannot obtain more substantial evidence and makes his decision based only on the available evidence