Audit Evidence

Audit evidence is any information, document and record used by the auditor to determine the degree of compliance of the audited information with the predetermined criteria.

Audit evidence in the international
standards on auditing is handled in group 5. These
standards are as follows:
• ISA 500: Audit Evidence
• ISA 501: Audit Evidence-Specific
Considerations for Selected Items
• ISA 505: External Confirmations
• ISA 510: Initial Audit EngagementsOpening Balances
• ISA 520: Analytical Procedures
• ISA 530: Audit Sampling
• ISA 540: Auditing Accounting Estimates
and Related Disclosures
• ISA 550: Related Parties
• ISA 560: Subsequent Events
• ISA 570: Going Concern
• ISA 580: Written Representations

The evidence to be collected by the auditor is
divided into two according to the source. These
are evidence from the accounting records and
supporting evidence

Physical Evidence: Evidence that auditors obtain by physically examining any asset. Physical evidence gives reliable information about the existence of the asset and the amount of the asset

Arithmetic Evidence: It is the confirmation
of the correctness of the calculations related to the
subject they are investigating. Arithmetic evidence
is obtained through the renewal of the process

Documented evidence can be listed according to their degree of reliability:
1. Documents issued outside the enterprise
and sent directly to the auditor,
2. Documents issued within the enterprise
and sent to third parties,
3. Documents issued and used within the
enterprise.

Third Party Statements: Statements that auditors obtain from any third party outside the enterprise on any subject. Third party statements are used as evidence in bank accounts, commercial receivables,
commercial debts, areas requiring expertise and legal cases. In practice, third parties’ statements are obtained through confirmation.

Traditional audit methods and audit procedures are used to
collect evidence from the accounting recording environment.
Audit methods can be grouped into four different groups: a)
form audit and material audit, b) continuous audit and audit
by sampling, c) forward audit and backward audit, and d)
direct audit and indirect audit

Continuous Audit - Audit by Sampling: Continuous audit is the review of the records and documents related to all transactions within a time section. The auditor, who performs continuous audits, thoroughly examines all records and documents during the activity period. Continuous audit is only a rarely used method for small audit scopes.

The ways followed to collect sufficient and quality audit evidence are called audit procedures. The main audit processes are; comparison process, control of amount transfers, arithmetic examination and document review

Audit of Amount Transfer: The process of auditing the amount transfer is a process that completes the comparison process. It is the audit process performed to prevent the transfer of an amount from one place to another incorrectly or to transfer the correct amount to the wrong account

In this context, the main audit procedures used to obtain supporting evidence, in other words, the main evidence collection techniques are:
• Physical Examination and Counting,
• Observation,
• Observation of Inventory Count,
• Recalculation,
• Investigation (Inquiries of the Client),
• Inspection,
• Re-Monitoring the Recording System (Re-Performance),
• Document Review,
• Analytical Procedures,
• Confirmation (External Confirmation).

The main analytical procedures are; comparative
tables analysis, ratio analysis, logicality analysis
(rationality tests) and trend analysis.

The reliability of the information in the
accounting record environment is directly dependent
on the effectiveness of the internal control system
in the customer enterprise. The reliability of
accounting information in an environment with an
effective internal control system is higher than in an
environment with a weak internal control system

The validity of the evidence is that a logical
relationship can be established between the
evidence to be collected and the purpose of the
audit. The auditor has to collect valid evidence.
Collecting invalid evidence leads to time loss and
increased costs, and this evidence may mislead the
auditor and lead to erroneous conclusions. In order
for evidence to be considered valid, that evidence
must have an impact on the auditor’s opinion

The main sampling types used in the auditing;
it can be divided into two groups as non-statistical
sampling (voluntary sampling) and statistical
sampling

Statistical sampling, contrary to non-statistical sampling, is that the
independent auditor chooses samples by scientific methods rather than from his own experience. In statistical sampling, statistical methods are used to select sampling units. In other words, statistical sampling is based on probability theory. Main statistical sampling methods; quality sampling,
monetary unit sampling and variables sampling.

In general, the benefits of working papers can be summarized as follows 
• Documenting the audit processes and the results obtained,
• To create evidence that the audit is conducted in accordance with the relevant legal regulations,
• To indicate compliance with generally accepted auditing standards and
international standards on auditing,
• To assist in the evaluation of the internal control system,
• To ensure that the audit is maintained properly,
• Helping the auditor to form an opinion,
• To constitute the basis for the preparation of the audit report,
• To document the content of the audit report,
• Assisting the independent audit company to conduct an internal quality control review and review completed work,
• To assist the external quality control review to be carried out by the Public Oversight Board,
• To be a defense tool for the auditor after the audit, if necessary,
• To help prepare the next audit plan and audit work.

The main assertions of business management
are realization, completeness, accuracy,
periodicity, classification, existence, rights and
obligations, understandability and valuation