Information used by the auditor in arriving at the
conclusions on which the auditor’s opinion is based An effective audit combines relevant and persuasive audit evidence to provide reasonable assurance that the financial statements are free of material misstatement when the auditor renders an opinion on the financial statements.
After the planned audit procedures have been
performed an evaluation of the results will take place.
The auditor should be satisfied that
sufficient appropriate audit evidence has been obtained . EVALUATING THE SUFFICIENCY & APPROPRIATENESS OF AUDIT EVIDENCE Sufficient and Appropriate Evidence
Sufficiency is the measure of quantity of audit
evidence ● Affected by the auditor’s assessment of risks of misstatements
● Affected by the quality of such evidence
RMM Quantity Quality Quantity
Appropriateness is the measure of quality of audit
evidence. The strength of an audit depends on the relevance and reliability of the evidence gathered.
Relevance is determined by the assertions
tested; that is, some evidence will be relevant to an existence assertion but only tangentially relevant to a valuation assertion.
Reliability relates to the quality of the
evidence gathered and is affected by the independence of the evidence from the influence of the-client or by the quality of the client's overall control structure. The auditor's judgment as to what constitutes sufficient appropriate audit evidence is influenced by such factors as the following:
★ Significance of the potential misstatement in the
assertion and the likelihood of its having a material effect, individually or aggregated with other potential misstatements, on the financial statements.
★ Effectiveness of management's responses and controls to
address the risks.
★ Experience gained during previous audits with respect to
similar potential misstatements. ★ Results of audit procedures performed, including whether such audit procedures identified specific instances of fraud or error.
★ Source and reliability of the available information.
★ Persuasiveness of the audit evidence.
★ Understanding of the entity and its
environment, including the entity's internal control. Materiality
Risks The evaluation of the audit evidence Misstatements
obtained would Fraud address the following matters. Evidence
Analytical Procedures FACTORS TO CONSIDER Materiality of misstatements
Management responses
Quality of information
Persuasiveness
Previous experience
Understanding the entity
Results of performed audit
procedures FINAL ANALYTICAL PROCEDURES Auditing standards require the use of analytical procedures in both the planning phase and the final review phase of the audit to assist in Identifying account relationships that are unusual
Analytical procedures are carried out to:
★ identify a previously unrecognized risk of material
misstatement; ★ Ensure that the conclusions formed during the audit on individual components or elements of the financial statements can be corroborated: and ★ Assist in arriving at the overall conclusion to the reasonableness of the financial statements. DOCUMENTATION PSA 260, Communication with Those Charged with Governance" requires that the auditor shall communicate on a timely basis with those charged with governance the responsibilities of the auditor in relation to the financial statement audit, including that: ★ The auditor is responsible for forming and expressing an opinion of the financial statements that have been prepared by management with the oversight of those charged with governance; and ★ The audit of the financial statements does not relieve management or those charged with governance of their responsibilities. March 1 Valdez 5. 20X3 Ayala A & Co., C venue, PAs Mr. Ces Makati ar City Metro E Manalo, Mana xpress, ging Dir Tandan Inc. ector g Sora, (02) 87 Quezon 5-0316 C ity Dear M r. Mana lo: The ma tte matters rs raised In th that we is repor comple believe t arise f ted our need to ro profess audit of be brou m our financia Metro E ght to y l ional st andard xpress fi our atte statement aud s. nancial ntion. W it We exp stateme e have s and relate to ect to re nts in a ubstant signed le ccordan ially letter o ase our audit r ce with r repres eport d entatio ated Ma Our aud n. rch 20, it perfo 20X3 as are free rmed to soon as from m obtain r we obta inheren aterial m e asonable in the t limita isstatem assuran risk tha tions of e n ts. Abso c e whethe t some an audit lute ass r the fin materia a l missta nd of internal urance is not p ancial s tatemen tement control, ossible ts s may n r e sulting in due to t ot be de the una he tected. voidable In plann in determin g our audit, we e the na conside stateme ture, ex r nt audit tent, an internal contro control does no d timing l over fi at Metr t o na in inter o Expre provide assura f audit procedu ncial reporting nal contr s s, Inc. H n ce on th res. How to owever, e e ol that c ome to in the co effective opera ver a financial Because o ur atten u rse of o tion of in fr tion wil ur audit ternal and oth aud is delibera l be repo r te , certain deficien er illega te, there d to you cies l acts m . stateme nts. ay eXist are always risk and not s that m be detec aterial m The foll ted by o isstatem ur audit oWing is a summ of the fi ents, fraud, 1. We did a nancial not iden ry of findings misstate ti fy any m re sulting ments a a from th need to lready d terial matters ep 2. b e broug is cussed (other th erformance o We rece ht to yo with yo an the id f the au ur atten u and h dit audit. T ived goo d coope tion. ave now entified o the be ration fr b e en corre st of ou o cted) th accounti ng reco r knowle m manageme at our aud rds and o d g e, we als n t a n d e it. We d th e o h m p lo y e id r d ocumen ad c e s during resolve d all aud not have any d ts that w omplete acces our iting, ac isagree e neede s to the countin m ents wit d in order g disclo to carry sure Iss h management out ues to o and we ur satis h a ve faction We wou 1. ld also li Change k 2. s during e to draw the fo Other m the perio llo atters id d in pro wing matters t entified fession o your a that ma al tt Please n y be of in pronouncemen ention: design p ote that terest to t s. rocedur the Phil manage commu es for th ippine A ment. nic e purpo uditing would n ate with those se o Stand ot usuall charged f identifying su ards do not req y identif With go p uire us t y all suc vernanc plementary m o h matte e. Accor atters to This co rs. dingly, manage mm an audit ment an unication is pr respons d is not epared ibility t in solely f o a third tended for an or the in formatio party w y other h o uses t p ur no Yours tr uly his com pose. We accep f munica t no tion. Alvin M on Valdez& ico Co., CPA s
