Question

Briefly discuss the two types of audit strategies that auditors may perform when gathering evidence to support the audit opinion.

Answer 1

Two audit strategies that auditors may perform when gathering evidence to support the audit opinion are as follows:

External parties: The auditors should try to obtain evidence from external parties to the organization. For example, the organization may try to disclose less payables to strengthen its financial position. Thus payables report should be obtained from the supplier to support the accounts payable. The bank statement provide by the organization may be send to the respective bank for their confirmation. External parties generally do not have any benefit in misrepresenting the data thus they will provide true information.

Professional Skepticism : The auditor should be of questioning mind. He should not trust the information given by the client easily. He must ask as many question to cross examine every fact. This will improve the degree of reliance on the audit report.

Answer 2

An audit strategy sets the heading, timing, and extent of a review. The procedure is then utilized as a rule when building up a review plan. The procedure report typically incorporates an announcement of the key choices expected to appropriately design the review. The review procedure depends on the accompanying contemplations:

The attributes of the commitment

Detailing goals

Timing of the review

Nature of correspondences

Noteworthy factors in coordinating commitment collaborations

The consequences of fundamental commitment exercises

The information picked up on the different commitment

The nature, timing, and degree of assets accessible for the commitment

The review methodology could be generally short for the review of a little substance, maybe as a concise reminder. On the off chance that there are startling changes in conditions or the result of review methods, it might be important to modify the review procedure. On the off chance that there is an adjustment, the purposes behind the change ought to be expressed in the going with documentation.

SA 500 Audit Evidence recognizes eight kinds of proof social affair methodology that the examiner can receive to acquire review proof.

Investigation of reports and records

May give proof of possession (rights and commitments), for example, title deeds

May give proof that control is working, for example, solicitations stepped paid or approved for installment by a proper mark.

May give proof about cut-off, for example, the dates on solicitations, despatch notes, and so on.

Affirms deals esteems and buys costs (for example by investigating the receipt)

Assessment of substantial resources

Will, for the most part, give entirely indisputable proof of presence!

May give proof of valuation, for example, evident proof of hindrance of stock or non-current resources.

Perception

Includes taking a gander at a procedure or technique.

May well give proof that control is being worked, for example, twofold staffing or a check signatory.

You have to recollect this is just proof that the control was working appropriately at the hour of the perception, and the evaluator's essence may have had an effect on the customer's staff's conduct.

Perception of a coincidental occasion, for example, a stock check, may well give great proof that the method was completed adequately.

Inquiry

While a significant wellspring of proof, the consequences of inquiries will, for the most part, be substantiated here and there through other review methods. This is because reactions produced by the review customer are viewed as of low quality because of their inborn predisposition.

The responses to inquiries may themselves be authenticating proof. Specifically, they might be utilized to verify the aftereffects of diagnostic methodology.

The executive's portrayals are a piece of general inquiries. These include getting composed reactions from the board to affirm oral inquiries. These are viewed as further in part on finish and survey.

Affirmation

This alludes to the inspector getting an immediate reaction (normally composed) from outside, the outsider.

Models include:

circularisation of receivables;

affirmation of bank adjusts in a bank letter;

affirmation of genuine/potential punishments from lawful guides; and

affirmation of inventories held by outsiders.

May give great proof of the presence of equalizations, for example, receivables affirmation.

May not give solid proof of valuation, for example, clients may affirm receivable sums be that as it may, eventually, be not able compensation later on.

Recalculation

This includes checking the arithmetical precision of the customer's figurings, for example, deterioration sums.

Reperformance

This includes reperforming customer strategies, for example, test checking stock tallies.

Systematic methods

These include the correlations of sets of information to recognize drifts and comprehend the connections between the arrangements of information.