question archive Define the three major sources of documentary evidence
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Define the three major sources of documentary evidence. Discuss them in the order of their reliability. Briefly discuss how a "Sufficient and Appropriate Audit Evidence" affect the work of an auditor?
Three Major Sources of Documentary Evidence
1. Official documents
These are things like, official receipts, purchase invoices from the requisition department, grants of probate, land certificates and contracts. They have legal authority and are highly reliable (provided they're not fake). Evidence contained in or on documents can be a form of official document evidence. For example, a contract offered to prove the terms it contains is both documentary and real evidence. When a party offers a document into evidence, the party must authenticate it the same way as any other real evidence, either by a witness who can identify the document or by witnesses who can establish a chain of custody for the document. These adds up to the value of the evidence collected by the auditor.
2. Witness statements
Witness statements from witnesses who can confirm all or a part of what you're alleging are very important. Related party transactions is the most rampant of all regarding this witness statements and misappropriation of assets by management.
A witness statement is a document laid out in a specified way, setting out the evidence of the person writing the statement and ending with a statement of truth. By signing the document the author confirms it is true. A witness statement should be factual and state what was seen or heard by the person writing the statement. These statements need to be shared with all of the people involved in the court hearing as well as the court. This helps the auditor to assess whether something really happened or a fraud really occurred.
3. Notes of meetings
Notes of meetings is one of the three major documents in audit. This helps the auditor in obtaining a relevant evidence and will give the auditor with the walkthrough process. Write notes during, or as soon as possible after, all the meetings with the people involved in your case (stating who was present and when and where it happened). Send all attendees a copy and ask them to agree and sign the notes. These notes should include what was agreed and, if a course of action was agreed, what the action is and the time by which it's expected to be done. If there's been a note taker provided at the meeting, make sure you get a copy and then read the notes carefully. If you disagree with them, put your corrections in a letter or email and be clear you don't accept what's been provided. If you do agree them say so. If you don't get the notes provided to you although you know they were taken, chase them up and make sure it's clear you weren't given them. Save all letters and emails between you and your opponent and any others such as a Local Authority department or a regulator together with their replies. As an addition It is important that the date of all photos or videos evidence is clear and available. ON RECORD precisely records the date and time of any uploaded evidence. The time and location of photos or videos you make using your mobile device can be proved from its Exchangeable Image File (EXIF) as long as you have allowed your camera to save locations.
Sufficient and Appropriate Audit Evidence Helps the Work of an Auditor
The auditor should obtain sufficient and appropriate evidence which enables the auditor to arrive at a conclusion and supports his opinion. Audit evidence forms the basis for forming an opinion whether the financial statements of an entity state true and fair view or not.
Evidence collected by the auditor should support the contents of its audit report. Sufficiency of audit evidence is the measure of the quantity of audit evidence. Appropriateness of evidence is the quality of the evidence, i.e., its relevance and reliability to support the auditor's opinion.
Audit evidence includes information provided in books of accounts as well as information from other sources. For Example - Purchase invoice and material received note prepared by the store's department are evidence to support the purchase.
Essentials of good audit evidence
An auditor applies various audit procedure to obtain audit evidence which enables him to form an opinion whether the financial statements of an entity are free from material misstatement and state a true and fair view or not. Audit Evidence is the information that the auditor uses in arriving at a conclusion on the basis of which he forms his opinion.