GATHERING OF

AUDIT EVIDENCE
GROUP 1 (AT4B)
FISCAL, Cristel Marie
PUSAG, John Isaiah Marco
REYES, Alexa Jane
ROXAS, Abigail Faye
SIANQUITA, Robie Ann Dave
VINAS, Raymund Miguel
 AUDIT
EVIDENCE

Raymund Miguel Vinas

Definition
■ Information that enables the drawing of conclusions
with respect to engagement objectives.

■ Meaning:

Evidence is necessary to provide proper advice

regarding decision making. There must be supporting
facts for a decision or strategy to be effective.
Nature
■ Evidence must be obtained on a cost-effective basis
and must be persuasive rather than conclusive.

■ Evidence cannot be conclusive because it is not feasible

to obtain evidence that supports every assertion.
Rather, it is more feasible to obtain evidence from
different sources to support the same assertion.
ATTRIBUTES
OF
EVIDENCE

Alexa Jane Reyes

1. Sufficiency
■ Sufficiency is the measure of the quantity of evidence.

■ When considering the adequacy of evidence, the internal

auditor should keep in mind:
 The audit is seeking reasonable, but not absolute,
conclusions
 Incomplete data may result in the inability to reach
reasonable conclusions
 Examination of extensive evidence may be
uneconomical, inefficient and ineffective
 Evidence shall be reasonably representative of the
population being reviewed or addressed.
2. Reliability
■ Reliability is the measure of the appropriateness and
trustworthiness of sources and techniques.

■ Evidence is more reliable if from a credible independent

source than from the auditee
3. Relevance
■ Relevance is the measure of the pertinence of the evidence.

■ The appropriateness and sufficiency of evidence are a matter

of judgment and are influenced by the following factors:

 Materiality

 Inherent risk and control risk considerations

 Experience from prior audits

 The persuasiveness of the evidence

 Error or fraud found during the audit

TYPES OF AUDIT
EVIDENCE

SIANQUITA, Robie Ann Dave

Types of Audit Evidence
■ Physical
- Consists of direct observation and inspection of
people, property and events

■ Testimonial
- Provided in statements of auditee personnel and
others
- Should be supported by documentary evidence
Example: evidence include letters in response to
audit enquires and interview notes
Types of Audit Evidence
■ Documentary

- Exists in some permanent form

o Records

o Purchase orders

o Invoices

o Memoranda

o Procedure manuals
Types of Audit Evidence
■ Analytical

- Stems from analysis, verification, and assessment of

compliance-non-compliance, consistency-inconsistency, or cause-
effect relationships

Sources of evidence:
- Computations
- Comparisons with prescribed standards
- Past operations
- Similar operations
- Laws or regulations
- Reasoning
 Types of Audit Evidence
■ Factors that maybe taken into consideration when deciding whether or
not to seek additional evidence
- Is there a high degree of consistency among the evidence
already collected? If so, the need for additional evidence is
decreased; if not, the need is increased.
- Is there a high degree of risk, significance or sensitivity
associated with the matter to be reported? If so, additional
evidence may reinforce the internal auditor’s conclusion; if not,
existing evidence may be sufficient to gain acceptance of the
conclusion
- Is the cost obtaining additional evidence worth the benefits to
be obtained in terms of supporting the findings? If not, don’t
bother; if so, proceed.
AUDIT TESTS/
GATHERING OF
EVIDENCE

Cristel Marie L. Fiscal

 Testing
 Implies placing selected activities or transactions “on
trial” to reveal inherent qualities or characteristics.
Audit Tests
 Are developed and conducted for either
compliance or substantive verification purposes.
Audit Tests
 Compliance Oriented Tests

 Substantive Test Procedures

 Dual Purpose Test

Audit Tests
 Compliance Oriented Test

- are designed to assess the adequacy and effectiveness

of controls

- also known as Test of Controls

Example: If a transaction exceeding a set limit is submitted into a

system or process, will it be pulled out for special consideration?
Audit Tests
 Substantive Test Procedures

- include the detailed examination of selected

transactions

Example:

A sample of pay transactions could be reviewed

against collective agreements to ensure correct
processing.
Audit Tests
 Dual Purpose Test

In practice, many tests fall into the category of “dual

purpose” tests.

Example:

The checking of calculations may show that an internal

control checking function is being properly executed
(compliance) and may provide assurance as to the
accuracy of the amount recorded in the system
(substantive).
 Many tests may include the re-performance or
mathematical checking of source documents and
other records. Once the appropriate test has been
selected, it is important to determine how it will be
applied, either as a:
 Specific Item Test

 Representative Item Test

 Specific Item Test

■ Also known as “Judgmental” Test

■ Where individual items are selected for

examination because of their size or other
characteristic and reliable conclusions can only be
drawn relative to the items selected
 Representative Item Test

■ Where the objective is to examine a random

selection of items, usually accomplished through
statistical sampling techniques, to support the
formulation of conclusions with respect to the
entire population based on the sample examined
Sampling
 Is the process of selecting part of a population to
determine parameters and characteristics of the whole
population.

 Objective: To gather data on a limited number of

observations (people, things, processes, documents,
etc.) that represent the larger group about which more
descriptive, normative, or cause-and-effect statements
need to be made.
Sampling
 May be random or purposeful
 Random Sampling

- is more confirmatory

 Purposeful Sampling

- is more exploratory
 AUDIT
PROCEDURES

Abigail Faye P. Roxas

Audit Procedures

• designed to gather information that corroborates

and documents evidence that specified risk
management, control and governance processes
are effective

• produces information or evidence about the

underlying activity
METHODS OF
OBTAINING
EVIDENCE
Abigail Faye P. Roxas
Interviews/ Inquiry
■ frequently used technique to gather evidence and
opinions

■ can help to define the issues and furnish the

evidence to support audit findings
Surveys
■ structured approaches to gathering information
from a large population

■ can be administered in person, by telephone, by

internet or by mail
Inspection
■ consists of confirming the existence or status of
records, documents or physical assets

■ 3 Principal Means of Inspection:

o Vouching
o Tracing
o Scanning
Flowcharting
■ graphic representation of a process or system

■ provides a means for analyzing complex operations

■ 2 Types of Flowchart:

o System Flowchart

o Document Flowchart
Modeling
■ makes use of mathematical and statistical models
designed to simulate real processes and help in
decision- making

■ Models are identified in terms of their intended

uses.
Observation
■ entails personally verifying or attesting to a process
or procedure
Confirmation
■ method of obtaining evidence from third parties
regarding specific balances, contractual terms, etc.
Analysis
■ consists of examining information obtained and
using it to corroborate other findings or compare
auditee performance against performance
indicators and policies
Control Self- Assessment
■ focused on having the members of a working group
identify and assess the controls that govern their
activities

■ can serve as a learning opportunity for the group

and can lead to the immediate response of the
management in addressing concerns or issues
Risk Self- Assessment
■ focused on having peer groups or knowledgeable
stakeholders identify the risks associated with one
or a group of programs, activities or initiatives
Methods of Documenting
Audit Evidence
 METHODS OF
DOCUMENTING
AUDIT EVIDENCE
John Isaiah Marco Pusag
Working Papers
■ are the supporting documentation for the entire
audit

■ provide a complete audit trail and demonstrate, in

detail, how the engagement was performed

■ provides a demonstrable link between reports

issued and the work performed
■ Working papers can also be used to:
o Justify and provide proof of work carried out

o Help auditors respond to questions about coverage

or results

o Facilitate supervisory quality assurance reviews

o Provide supporting evidence when external auditors

or other reviewers want to rely on the results
A complete set of working papers should be neat and
uniform in size and appearance and includes:

o Index to contents

o Legend of symbols and abbreviations used

o A statement of the purpose of the working papers

o Evidence of the application of the audit program

o Results of the audit (e. g. debriefings, reports,

action plans)
Within the set of working papers, each page should
include a descriptive heading (e. g. Interview
Summary, Test Result, Document Examined), the
auditor's name or initiate and dates of preparation,
appropriate cross references and evidence of
supervisory review and comments.
The following items should be cross referenced:

o Specific items in the audit report to the

pertinent audit observation worksheet

o Audit observation worksheets to the supporting

evidence

o Evidence that relates to other evidence

o Auditing program steps to the supporting

evidence
THANK YOU! 