И.Р.)Requirements for an effective audit and evaluation of evidence (Не полностью описал)

Requirement for an effective audit: 1.understanding of the company and its industry(complex transactions, lease, legal actions of creditors stockholders).2. Comprehensive knowledge of GAAP. 3. Solid grasp of consepts of internal structure(careful review and evaluation).4. necessity to be knowledgeable in the earea of evidence gathering and evaluating.

Evid is an info that is collected & used to provide a factual basis for developing observations & concluding against audit objectives. Evid provides grounds for believing that a particular thing is true or not by providing persuasive support for a fact or a point in question. As such, it is Evid that must support the contents of an audit report, including any descriptive material &, more importantly, all observations & conclusions leading to recommendations.

Audit observations, conclusions & recommendations included in the report must be able to withstand critical examination. They must, therefore, be supported by sufficient appropriate Evid. In determining whether Evid of sufficient quantity & appropriate quality has been gathered, the auditor needs to be satisfied that in their professional judgment there is no risk of making erroneous observations, faulty conclusions, or inappropriate recommendations.

For Evid to be appropriate( measure of quality ), the info must be relevant (info bears a clear & logical relationship to the audit criteria & objectives), reliable (in order to make it more reliable – 1.documentary Evid is better than testimonial Evid;2. auditor obtains consistent Evid from difference sources or of a different nature 3.original documents are better than photocopies;4.Evid from credible third parties;5. infogenerated by system of effective controls t); 6. Evid generated through the auditor's direct observation) & valid( content, origin & timing ).

The term sufficient relates to quantity of Evid. the needed level is affected by risk of misstatements & reliability.

In order to prove the Evid that the observations & conclusions are valid, & that the recommendations are appropriate. Important factors to consider in making these judgments include:

· the quality of the Evid (its relevance, reliability & validity);

· the level of materiality (in dollar terms) or the significance of the observation or conclusion (in general, the higher the level of significance or materiality, the higher the standard that Evid will have to meet);

· whether an audit level of assurance (high) or a review level of assurance (moderate) is required (for example, a higher level of assurance is required for Evid to support observations than is required to support contextual infoincluded in the report);

· the risk involved in making an incorrect observation or reaching an invalid conclusion (as an example, if any risk of legal action against the auditee results from reporting an observation, the st&ard of Evid dem&ed will be high);

· the cost of obtaining additional Evid relative to likely benefits in terms of supporting observations & conclusions (as in most things, diminishing returns apply in gathering audit Evid -- at some point, incurring the cost of obtaining more Evid will not be justified by changes in the persuasiveness of the total body of Evid).

Types of evidence: physical; obtained through third party confirmation of existence, ownership,valuation; documentary (ledgers.minutes of meeting, sales orders,tax returns ); mathematical - calculations; analytical – comparing among d ata; hearsay (основанный на слухах)

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