Use Your Audit Program to Request the Right Evidence

By Kenneth Boyd, Lita Epstein, Mark P. Holtzman, Frimette Kass-Shraibman, Maire Loughran, Vijay S. Sampath, John A. Tracy, Tage C. Tracy, Jill Gilbert Welytok

An evidence-gathering roster is part of your audit program. Your audit program is a to-do list that documents what you need to accomplish in order to evaluate your particular area of responsibility during the audit.

Though the audit program is set at the senior auditor level, your field inquiry, observation, and review of client records, combined with your professional judgment, may cause modification of the original program. You should consult with your senior associate whenever you encounter client or written testimony that you have misgivings about.

As you work down this to-do list, you must request any necessary documents from the client to help you reach your conclusion. You also create your own documentation to show how you reached that conclusion.

Because audit work can be challenged or used as part of potential litigation, your work must completely support your conclusions. For example, say you’re auditing accounts receivable by doing a detailed test of customer invoices:

  • The first test is to identify any possible duplicate invoices. Maybe an invoice was inadvertently entered twice into the accounting system. In most cases, these situations result from inadvertent errors. But sometimes, businesses try to double-book revenue at year-end to increase net income, which is a fraudulent act.

    You may compare the shipping documents for the period to the invoices generated. If you find two invoices that were generated for a single shipping document, you have a duplicate invoice.

  • The second test is to verify that the amount shown as accounts receivable for the customers matches the original invoice(s). This step verifies whether dollar amounts are correct. In this situation, you request a complete list of all customer invoices and then select a sample of customer invoices to test.

    Next, you compare the accounts receivable list to the selected samples to find audit evidence that either supports or challenges management assertions as to the balance in accounts receivable. At the end, you document your work and conclusion in your workpaper.