1. Audit Evidence 1 Presented by Mr John Chung, FCA Partner KPMG Member of Audit Practice Review Panel at the Financial Reporting Council 12 September 2012

2. Remember the Overall Objectives of an Auditor… What does the auditor obtain in order to express an opinion on the financial statements? 2

3. The Auditor’s Objective 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. 3

4. What is Audit Evidence?  Information used by the auditor in arriving at the conclusions on which the auditor’s opinion is based.  Includes both information contained in the accounting records underlying the financial statements and other information. 4

5. Question  You are asked to audit the significant account revenue for a client with a December year end.  You perform audit work up to the end of September but perform no further work that provides evidence over the revenue significant account after September. Do you think the above audit work will provide sufficient audit evidence, for the significant account revenue, in order to conclude on the year end balance at December? 5

6. Audit Evidence  Audit evidence is cumulative and comprises both information that supports and corroborates management’s assertions, and any information that contradicts such assertions. 6

7. Obtaining and evaluating Audit Evidence  Inspection  Observation  Confirmation  Recalculation  Reperformance  Analytical Procedures  Inquiry...often in combination 7

8. Appropriate audit evidence 8 Relevance Objectives Reliability Accounts

9. Reliance on Management’s Expert  Evaluate competence, capability and objectivity  Obtain understanding of their work  Evaluate appropriateness of their work 9

10. Question  You are asked to audit the significant account operating expenses made up of 1500 amounts.  You select the 5 largest amounts and agree these to supporting documentation. Do you think the audit work above will provide sufficient audit evidence over the significant account operating expenses? 10

11. Sufficiency of audit evidence  100% selection  Selecting specific items  Audit sampling (ISA530) 11

12. Inconsistency/Doubts: What to do?  Modifications/Additions to audit procedures  Consider effect  Document (ISA230) 12

13. 13 Thank You