Definition: Physical verification is the procedure the auditor normally performs to confirm the existence of certain physical assets that are recorded in the client’s financial statements. Most of the assets that auditors verified are fixed assets and inventories. The auditor might also use this procedure to confirm the condition of those assets. The physical verification […]
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Definition: Negative confirmation is an audit procedure that use to confirm the balance between the client’s records and third-party records. Third-party here could be the client’s customers, suppliers, or banks. This confirmation requires a response only if the difference between both parties’ records is found. If there is no difference found, responding to the auditor
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Overview: Auditors generally observe the inventory count performed by the client at the end of the year or accounting period. Most of the accounting book is closing at the end of the calendar year, and normally entity performs a full inventory count to assess the actual quantity and calculate the exact amount of inventory closing
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Definition: Risks based audit approach is one of the well-known audit approaches used by the auditor to perform an audit of financial statements and also used by the internal auditors for their internal audit purpose. The principle of this approach requires the auditor to put their effort into the high risks areas rather than spend
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Definition: Permanent audit files are the files that keep the information used by auditors continuously. That information includes engagement later, client’s M&A, long-term contract or agreement, and board meeting minutes. The auditor must keep the documents or events based on nature and classification. And make sure that all information and documents they obtain from their
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Definition: The Balance sheet audit approach is a kind of audit approach that executes by the auditor in the situation that auditors perform most of their testing on the items in the balance sheet rather than items or transactions in the income statement. An auditor applies the balance sheet audit approach based on the concept
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Definition: Audit working papers refer to the documents prepared by or use by auditors as part of their works. Those documents include summarizing the client’s nature of the business, business process flow, audit program or procedure, documents or information obtained from the client, and audit testing documents. Audit working papers are sometimes referred to as
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Definition: Audit documentation refers to the records or documentation of procedures that auditors performed, the audit evidence that they obtained and the conclusion that makes by them based on the evidence obtained. Audit documentation is sometimes called audit working paper or working paper. Internal control documents that auditor prepare in Ms words, Ms excel or
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What is the analytical review? Analytical review is one of audit technique that used to assess the reasonableness of accounts balance, amounts, and transactions that report in the financial statements. This procedure is not used to confirm the correctness as well as the accuracy of the amount or balance of the account, but it is
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Before making a conclusion and express an audit opinion on the financial statements, the auditor needs to assess whether the audit evidence that they obtain are sufficient and appropriate for them to make a decision or not. Sufficient audit evidence here mainly refers to the number of audit evidence. And the appropriate here refers to
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