Please enable JavaScript.
Coggle requires JavaScript to display documents.
ISA 501 Audit Evidence- Specific Considerations for Selected Items…
ISA 501
Audit Evidence- Specific Considerations for Selected Items
Scope
deals with specific considerations by the auditor in obtaining sufficient appropriate audit evidence wit respect to certain aspects of
inventory, litigation & claims, and segment information
Auditor's Objective
To obtain sufficient appropriate audit evidence regarding the:
Existence and condition of inventory
Completeness of litigation & claims involving the entity
Presentation and disclosure of segment information in accordance with the applicable financial reporting framework
INVENTORY
Obtaining sufficient appropriate audit evidence on the existence and condition of inventory
Attendance at physical inventory counting, unless impracticable
Perform test counts
Evaluate management's instructions and procedures for recording and controlling the results of physical inventory count
Inspect the inventory
Observe performance of management's count procedures
Performing audit procedures over the entity's final inventory records
Physical inventory count conducted at a date other than the date of financial statements
Perform audit procedures to obtain audit evidence on the accuracy of records between the count date and the date of financial statements
Failure to attend inventory counting due to unforeseen circumstances
Make or observe some physical counts on an alternative date
Perform audit procedures on intervening transactions
Attendance at physical inventory counting impracticable
Perform alternative audit procedures and if not possible,
auditor shall modify the opinion on auditor's report in accordance with ISA 705
Material inventories under control of third parties
Request confirmation from the third party as to the quantities and condition of inventory
Perform inspection or other audit procedures
LITIGATION AND CLAIMS
Design and perform audit procedures to identify litigation and claims which may give rise to risk of material misstatement
Inquiry of management and others within the entity
Reviewing minutes of meetings of those charged with governance and correspondence between the entity and its external legal counsel
Reviewing legal expense accounts
When audit procedures performed indicate that other material litigation or claims may exist
seek direct communication with entity's legal counsel through a letter of inquiry
If management refuses to give permission to communicate or meet the entity's legal counsel OR when the auditor fails to obtain sufficient appropriate evidence
modify the opinion in the auditor's report in accordance with ISA 705
SEGMENT INFORMATION
Obtaining an understanding of the methods used by management in determining segment information
Evaluating whether such methods are likely to result in disclosures
testing the application of such methods
Performing analytical procedures or other audit procedures