Audit evidence needs to be evaluated and validated before it can be relied upon by an independent auditor
Required:
a An auditor makes enquiries from clients, Directors and employees during an audit
i State the factors to be considered by an auditor in relation to evidence
provided orally by employers and officers of the organisation.
ii Briefly assess the sufficiency, appropriateness and limitation of oral evidence.
b One of the tools employed by an auditor is ratio analysis in carrying out an audit
assignment. This includes recomputation of various accounting ratios which is
then compared with prior years and industry averages.
Discuss the sufficiency, appropriateness and limitation of ratio analysis as audit
evidence.
c The finished goods of a manufacturing company consists of expensive complex
equipment which was observed by an auditor during physical inventory count.
Discuss the sufficiency, appropriateness and limitation of the audit evidence
provided by such observation.
