ASA 500 Summary Audit Evidence

ASA 500 definitions

Accounting records – definition

The records of initial accounting entries and supporting records, such as checks and records of electronic fund transfers; invoices; contracts; the general and subsidiary ledgers, journal entries and other adjustments to the financial statements that are not reflected in journal entries; and records such as work sheets and spreadsheets supporting cost allocations, computations, reconciliation and disclosures.

Appropriateness (of audit evidence) – definition

The measure of the quality of audit evidence; that is, its relevance and its reliability in providing support for the conclusions on which the auditor’s opinion is based.

Audit evidence – definition

Information used by the auditor in arriving at the conclusions on which the auditor’s opinion is Audit evidence includes both information contained in the accounting records underlying the financial statements and other information.

Management’s expert – definition

An individual or organization possessing expertise in a field other than accounting or auditing, whose work in that field is used by the entity to assist the entity in preparing the financial statements.

Sufficiency (of audit evidence) – definition

The measure of the quantity of audit The quantity of the audit evidence needed is affected by the auditor’s assessment of the risks of material misstatement and also by the quality of such audit evidence.

ASA 500 Application

ASA 500 applies for;

• Audit of a financial report for a financial year,or a half-year, in accordance with the Corporations Act 2001; and
• Audit of a financial report, or a complete set of financial statements, for any other purpose.

ASA 500 Scope

ASA 500 explains what constitutes audit evidence in an audit of financial statements, and deals with the auditor’s responsibility to design and perform audit procedures to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor’s opinion.

ASA 500 Objective

The objective of the auditor is to design and perform audit procedures in such a way as to enable the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor’s opinion.

ASA 500 Requirements

• ASA 500 require auditor to Design and perform audit procedures that are appropriate in the circumstances;
• When designing audit evidence consider the relevance and reliability of the information;
• ASA 500 require auditor for management expert work;
  • Evaluate the competence, capabilities and objectivity of that expert;
  • Obtain an understanding of the work of that expert; and
  • Evaluate the appropriateness of that expert’s work as audit evidence for the relevant assertion.
• ASA 500 require auditor for using information produced by the entity;
  • Obtaining audit evidence about the accuracy and completeness of the information; and
  • Evaluating whether the information is sufficiently precise and detailed for the auditor’s purposes.
• Select the items for test of controls or test of details that are effective for meeting purpose;

Inconsistency in audit evidence, or Doubts over Reliability of information

Consider additional or other audit procedure and impact of inconsistency or doubt on other aspect of audit.