Scribd Logo
Upload

Welcome to Scribd!

  • 32 views

    5.34 Background Theory

    Uploaded by

    Duc Bui
    This document discusses evidence used in auditing and the types of evidence Susan has gathered for an audit. It also discusses the roles of component auditors and internal auditors in group audits and how their work can be used. Specifically, it discusses that: - Susan has gathered verbal, computational, and physical evidence for the audit. - The work of an internal auditor cannot be treated as a component auditor under ASA 600 due to lack of independence, but some of their work can be used under ASA 610, including testing controls, limited procedures, and regulatory compliance. - ASA 610 provides requirements for external auditors using the work of internal auditors, including evaluating independence and applying work systematically.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    5.34 Background Theory

    Uploaded by

    Duc Bui
    32 views7 pages
    This document discusses evidence used in auditing and the types of evidence Susan has gathered for an audit. It also discusses the roles of component auditors and internal auditors in group audits and how their work can be used. Specifically, it discusses that: - Susan has gathered verbal, computational, and physical evidence for the audit. - The work of an internal auditor cannot be treated as a component auditor under ASA 600 due to lack of independence, but some of their work can be used under ASA 610, including testing controls, limited procedures, and regulatory compliance. - ASA 610 provides requirements for external auditors using the work of internal auditors, including evaluating independence and applying work systematically.

    Original Description:

    Presentation

    Original Title

    5.35

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document discusses evidence used in auditing and the types of evidence Susan has gathered for an audit. It also discusses the roles of component auditors and internal auditors in group audits and how their work can be used. Specifically, it discusses that: - Susan has gathered verbal, computational, and physical evidence for the audit. - The work of an internal auditor cannot be treated as a component auditor under ASA 600 due to lack of independence, but some of their work can be used under ASA 610, including testing controls, limited procedures, and regulatory compliance. - ASA 610 provides requirements for external auditors using the work of internal auditors, including evaluating independence and applying work systematically.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    32 views7 pages

    5.34 Background Theory

    Uploaded by

    Duc Bui
    This document discusses evidence used in auditing and the types of evidence Susan has gathered for an audit. It also discusses the roles of component auditors and internal auditors in group audits and how their work can be used. Specifically, it discusses that: - Susan has gathered verbal, computational, and physical evidence for the audit. - The work of an internal auditor cannot be treated as a component auditor under ASA 600 due to lack of independence, but some of their work can be used under ASA 610, including testing controls, limited procedures, and regulatory compliance. - ASA 610 provides requirements for external auditors using the work of internal auditors, including evaluating independence and applying work systematically.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 7

    5.

    34
    Background theory
    Evidence is the information that an auditor uses when
    arriving at their opinion on the truth and fairness of the
    clients financial report (ASA 500).
    There are many types of evidence including :
    1. External confirmation
    2. Documentary evidence
    3. Representation
    4. Verbal evidence
    5. Computational evidence
    6. Physical evidence
    7. Electronic evidence

    Susan has been gathering the


    following types of evidence :
    Verbal evidence: discussing with staff
    to examine the duties they perform
    and
    Computational evidence : ratio
    computation and trial reviewing.
    Physical evidence: inspection of
    physical evidence during tours

    The spreadsheets are reviewed to identify


    problem areas for further investigation.
    It is also used to calculate ratios, trends which
    are used to perform analytical procedures.
    For construction business, Susan will use the
    information to :
    Comparing profitability between periods or
    between companies
    Analysing physical material movement and
    compare with financial data.

    5.35
    Back ground theory
    ASA 600 requires group engagement partner to consider
    the work of component partner. A component partner is
    an auditor who, at the request of the group engagement
    partner, performs work on financial information related
    to a component for the group audit (ASA 600 . Para 9b)
    The component auditor must meet the same
    independence requirement as the engagement partner
    (ASA 600. Para A37).
    According to ASA 610, external auditor can use the work
    of internal auditor as long as it dose not compromise the
    objectivity and competence of the internal audit function
    and it must be applied in a systematic and discipline
    approach (ASA 610. Para 15-16)

    Therefore, in this case Rydell Creek


    heads the internal audit at
    Securimax thus it dose not meet the
    independence requirement for
    external audit
    As a result, ASA 600 would not allow
    their work to be treated as though it
    is done by a component auditor.

    However, ASA 610 govern the use of internal audit departments


    work at Securimax by external auditor.
    Therefore, some function that internal auditor can be used by
    external auditor in this case include :
    - Testing the operating effectiveness of internal control
    - Substantive procedures involving limited judgement
    - Tracing transactions though the information system relevant
    to financial reporting
    - Testing of compliance with regulatory requirements. (ASA 610.
    Para A16)
    The external auditor also has to include in the audit
    documentation an evaluation of the requirement set out in ASA
    610 (ASA 610. Para 36)

    5.36
    Background theory

    You might also like