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Auditing and Attestation/Blueprint/3.E

Audit evidence evaluation

Area 3: Performing Further Procedures and Obtaining Evidence (30-40%)

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Topics

  • Sufficiency and appropriateness
  • External confirmations
  • Accounting estimates evaluation

Lessons

  • Audit Evidence

Study Frameworks

Audit Evidence

Audit Evidence
Nature of Procedures
Inspection of records/documents
Inspection of tangible assets
Observation
Inquiry
Confirmation
Recalculation
Reperformance
Analytical procedures
Sufficiency (quantity)
Risk level drives sample size
Quality of evidence affects quantity
Appropriateness (quality)
Relevance to assertion
Reliability of source

Management Assertions by Category

CategoryAssertionDescription
TransactionsOccurrenceTransactions actually occurred
TransactionsCompletenessAll transactions are recorded
TransactionsAccuracyAmounts and data are correctly recorded
TransactionsCutoffTransactions recorded in correct period
TransactionsClassificationTransactions recorded in proper accounts
BalancesExistenceAssets, liabilities, and equity exist
BalancesRights & ObligationsEntity holds rights to assets; liabilities are obligations
BalancesCompletenessAll balances are recorded
BalancesValuation & AllocationRecorded at appropriate amounts
DisclosuresOccurrence / RightsDisclosed events occurred and pertain to entity
DisclosuresCompletenessAll required disclosures are included
DisclosuresClassification / UnderstandabilityInformation is clearly presented
DisclosuresAccuracy / ValuationDisclosed information is accurate
PERCVPresentation, Existence, Rights, Completeness, Valuation

The five categories of financial statement assertions (balance sheet). Think: 'I PERCV the balance sheet.'

COCOACutoff, Occurrence, Completeness, cOrrect amount (Accuracy), Account classification

Transaction-level assertions. Think: drink COCOA while reviewing transactions.

AEIOUAnalytical procedures, Enquiry/inquiry, Inspection, Observation, Underlying documentation (reperformance/recalculation)

The types of audit evidence procedures — like vowels, they are fundamental to every engagement.

Practice These Topics(64 questions)