The 12 Audit Procedures - CPA Exam | Auditing Course
Updated: February 24, 2025
Summary
This video delves into audit procedures and evidence types essential for a thorough auditing process. It underscores the significance of detailed instructions for team members, using methods like inspection to validate information accuracy. The importance of tracking sources, comparing data, and employing techniques like physical examination, observation, and inquiries for evidence collection is emphasized to ensure comprehensive financial auditing. It also stresses authenticating documents through supporting evidence to validate transactions and strengthen the audit process.
TABLE OF CONTENTS
Audit Procedures Overview
Documented Instructions for Evidence Collection
Example of Inspection as Evidence Collection
Analytical Procedures for Evidence Collection
Recompute as Evidence Collection Method
Tracking Information Sources
Comparison and Cross-Reference as Evidence Collection
Physical Examination as Evidence Collection
Observation of Processes as Evidence Collection
Inquiries as Evidence Collection
Authentication of Documents for Evidence
Audit Procedures Overview
Discussing the audit procedures and the types of evidence, including physical examination, confirmation, inspection, analytical procedures, inquiries, and observation.
Documented Instructions for Evidence Collection
Explaining the steps required to collect audit evidence, highlighting the importance of clear instructions for all team members involved in the audit process.
Example of Inspection as Evidence Collection
Providing an example of using inspection as a method to collect evidence by examining documents or records to confirm accuracy and alignment with client's information.
Analytical Procedures for Evidence Collection
Detailing the process of conducting analytical procedures to detect unusual transactions or amounts by analyzing written information and financial data.
Recompute as Evidence Collection Method
Explaining the concept of recomputing as an audit evidence collection method to verify the accuracy of client calculations and ensure the correctness of financial information.
Tracking Information Sources
Discussing the importance of tracking information sources in auditing, such as tracing amounts from financial documents to confirm accuracy and ensure data integrity.
Comparison and Cross-Reference as Evidence Collection
Explaining the process of comparing data from different sources and cross-referencing information, highlighting the need for clear instructions and thorough examination of records.
Physical Examination as Evidence Collection
Explaining the concept of physical examination as an evidence collection method, involving the counting and examination of physical assets to verify their existence and condition.
Observation of Processes as Evidence Collection
Describing how observation of processes, such as inventory counting or cash handling, can serve as audit evidence to validate procedures and ensure compliance with standards.
Inquiries as Evidence Collection
Defining inquiries as a form of evidence collection by asking questions to verify balances or transactions, although not considered the strongest type of evidence in auditing practice.
Authentication of Documents for Evidence
Explaining the importance of authenticating documents as evidence by verifying the accuracy and legitimacy of transactions through the examination of supporting documents like vendor invoices and receiving reports.
FAQ
Q: What are some types of evidence used in audit procedures?
A: Some types of evidence used in audit procedures include physical examination, confirmation, inspection, analytical procedures, inquiries, and observation.
Q: Can you provide an example of using inspection as a method to collect audit evidence?
A: One example of using inspection as a method to collect audit evidence is examining documents or records to confirm accuracy and alignment with client's information.
Q: How can analytical procedures be utilized in auditing?
A: Analytical procedures can be utilized in auditing to detect unusual transactions or amounts by analyzing written information and financial data.
Q: What is recomputing as an audit evidence collection method?
A: Recomputing as an audit evidence collection method involves verifying the accuracy of client calculations and ensuring the correctness of financial information.
Q: Why is tracking information sources important in auditing?
A: Tracking information sources is important in auditing to confirm accuracy and ensure data integrity by tracing amounts from financial documents.
Q: How can physical examination serve as an evidence collection method in audits?
A: Physical examination in audits involves counting and examining physical assets to verify their existence and condition.
Q: What is the role of observation in the audit process?
A: Observation in the audit process validates procedures and ensures compliance with standards by observing processes like inventory counting or cash handling.
Q: What are inquiries in the context of evidence collection in auditing?
A: Inquiries in auditing involve asking questions to verify balances or transactions, although they are not considered the strongest type of evidence.
Q: Why is it important to authenticate documents in auditing?
A: Authenticating documents in auditing by verifying accuracy and legitimacy through supporting documents like vendor invoices is crucial to ensure the validity of transactions.
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