Auditing 1
AUDITING EVIDENCE COLLECTION AND INDEPENDENCE
(Name)
(Course)
(Professor)
(University)
(Location)
(Date)
, Auditing 2
Part a)
Auditing evidence comprises all the information that an auditor uses to come up
with the conclusion of the position of the accounts as analyzed (Calota & Vinatoru,
2015) Audit evidence can be undertaken through various methods that include
inspection, observation, recalculation, external confirmation, documentation, analytical
procedures and inquiry. Four of these methods are analyzed as follows
Recalculation
Recalculation involves calculating again the amounts as seen in the financial
statements by using the primary sources of different components of the data. For
example, if a metric such as return on equity (ROE) as recorded is 30%, the auditor will
separately collect the raw data of net profit and equity and recalculate the ROE so as to
confirm if the recalculated figure is the same as the recorded figure. Recalculation is
powerful technique because it can be able to detect mistakes/errors using the separate
original amounts passed on to the final metric. A disadvantage however is that it can be
cumbersome as getting to have all the primary original documents for the recalculating
procedure is not a straightforward task. Also, the complexity of accounting and the
emergence of various standards and procedures may mean that differences in
outcomes will almost always be evident in recalculation, of which some differences will
not always mean that either party who calculated erred or did anything wrong (Power,
2003).
External confirmation
AUDITING EVIDENCE COLLECTION AND INDEPENDENCE
(Name)
(Course)
(Professor)
(University)
(Location)
(Date)
, Auditing 2
Part a)
Auditing evidence comprises all the information that an auditor uses to come up
with the conclusion of the position of the accounts as analyzed (Calota & Vinatoru,
2015) Audit evidence can be undertaken through various methods that include
inspection, observation, recalculation, external confirmation, documentation, analytical
procedures and inquiry. Four of these methods are analyzed as follows
Recalculation
Recalculation involves calculating again the amounts as seen in the financial
statements by using the primary sources of different components of the data. For
example, if a metric such as return on equity (ROE) as recorded is 30%, the auditor will
separately collect the raw data of net profit and equity and recalculate the ROE so as to
confirm if the recalculated figure is the same as the recorded figure. Recalculation is
powerful technique because it can be able to detect mistakes/errors using the separate
original amounts passed on to the final metric. A disadvantage however is that it can be
cumbersome as getting to have all the primary original documents for the recalculating
procedure is not a straightforward task. Also, the complexity of accounting and the
emergence of various standards and procedures may mean that differences in
outcomes will almost always be evident in recalculation, of which some differences will
not always mean that either party who calculated erred or did anything wrong (Power,
2003).
External confirmation
