Auditing Standards: Relevant Audit Standards

1.2. Relevant audit standards

This section of the paper summarizes the relevant International Standards on Auditing (ISAs) that reflect the interrelation between the audit procedures and audit evidence. The aim of this chapter is to emphasize the importance of the evidence gathered by the auditor and the impact it might have on the audit opinion.

As per International Standard on Auditing (ISA) 500, the auditor’s objective is to issue an opinion based on the conclusions drawn from the evidence gathered. The auditor designs and performs audit procedures in order to obtain appropriate and sufficient audit evidence.

The International Standard on Auditing (ISA) 315 suggests that, in order to be able to identify and to assess the risk of material

Sufficiency measures the quantity of audit evidence, whereas appropriateness refers to its quality.

Appropriate audit evidence offers support for the conclusions drawn by the auditor and encompasses two important qualities: reliability and relevance

The reliability of audit evidence is enhanced when it is obtained from sources outside the entity, when the related controls implemented by the entity prove to be effective, when it is obtained directly by the auditor contrary to being obtained indirectly or by inference, or when it is gathered in a documentary form, as compared to evidence obtained orally. Also, audit evidence provided by original documents is more reliable than audit evidence provided by photocopies, or documents that have been converted into electronic form.

As mentioned above, sufficiency measures the quantity of audit evidence. The quantity of the audit evidence needed to be obtained is influenced by the assessment the auditor makes in respect with the risks of material misstatement as well as by the quality of such audit

Specific items selected may comprise of high value or key items, all items over a certain amount, or items tested in order to obtain information about specific matters, such as the nature of the entity or the nature of transactions.

• Audit sampling: in a nutshell, audit sampling enables conclusions to be drawn about an entire population, based on testing only a sample from it.

As mentioned earlier, the auditor performs audit procedures in order to obtain sufficient and appropriate audit evidence based on which the audit opinion will be issued. Therefore, between the 3 elements: audit procedures, audit evidence and audit opinion is a tight correlation.

The International Standard on Auditing (ISA) 330 offers some details regarding the purpose of the audit procedures.

According to ISA 330, the nature of an audit procedure refers to its purpose and type and when responding to the assessed risks, the nature of the audit procedure is of most importance

Taking into account their purpose, the audit procedures consist of substantive procedures and tests of