Audit Evidence and Audit Risk

Assertions about if the client land asset reported in financial statement, exist or not

• Occurence

• Existence

• Cut-off

• Accuracy

Information requested from external third party (customer, bank)

• Computational

• Verbal

• Confirmation

• Vouching

Gathered inspection of tangible asset

• Verbal

• Confirmation

• Physical Evidence

• Documentary

Which one is most persuasive evidence?

• representation letter from client

• external send directly to auditor

• internal from client

• external held by client

To check mathematical accuracy

• re-performance

• enquiry

• confirmation

• Recalculations

expert from other field to help auditor understand client business

• internal auditor

• specialist

• lawyer

• investor

Risk auditor failed to detect material misstatement, material error in client financial statement

• Audit risk

• Detection risk

• Inherent risk

• Control risk

Risk that even there is already internal control but still unable to prevent fraud to occur

• detection risk

• control risk

• inherent risk

• audit risk