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Occurrence (Transaction assertion)

Recorded sales really happened and relate to the company (e.g., invoices reflect real shipments to real customers).

Completeness (Transaction assertion)

All sales that should be recorded are recorded (e.g., no shipped orders missing from the books).

Accuracy (Transaction assertion)

Amounts and data are recorded correctly (e.g., prices and quantities are right).

Cutoff (Transaction assertion)

Transactions are recorded in the proper period (e.g., year-end sales aren't pulled into December early).

Classification (Transaction assertion)

Transactions are posted to the right accounts (e.g., repairs vs. capital assets).

Existence (Balance assertion)

Recorded assets and liabilities actually exist (e.g., the inventory on the shelf is real).

Rights & Obligations (Balance assertion)

The company owns the rights to assets and owes the liabilities (e.g., inventory isn't consigned by someone else).

Completeness (Balance assertion)

All liabilities and assets that should be recorded are included (e.g., no unrecorded payables).

Valuation & Allocation (Balance assertion)

Balances are recorded at proper amounts, including adjustments (e.g., inventory lower-of-cost-or-market).

Occurrence and Rights & Obligations (P&D)

Disclosed events happened and relate to the company.

Completeness (P&D)

All required disclosures are included.

Accuracy & Valuation (P&D)

Disclosed info is stated fairly and at appropriate amounts.

Classification & Understandability (P&D)

Disclosures are properly presented, described, and easy to follow.

Audit evidence (definition)

Information the auditor uses to reach conclusions for the opinion; it can support or contradict the financial statements.

Nature of evidence (forms)

Evidence can be oral, visual, paper, or electronic (e.g., a signed contract PDF or a warehouse observation).

Sufficiency

The quantity of evidence needed; higher risk → more evidence.

Appropriateness

The quality of evidence; it must be both relevant and reliable.

Relevance (of evidence)

How well evidence relates to what is being tested (e.g., shipping docs are relevant to occurrence of sales).

Reliability (of evidence)

How trustworthy the evidence is (e.g., direct confirmations from banks are highly reliable).

Persuasiveness (overall)

Whether the evidence is sufficient and appropriate to support a reasonable conclusion.

Evaluation of evidence

Auditors must evaluate all relevant evidence—supporting or contradicting—and judge if it's enough and appropriate.

Inspection of records & documents

Examining internal or external documents; includes vouching and tracing.

Vouching

Test from the books back to source documents to test occurrence (e.g., sales journal → signed bill of lading).

Tracing

Test from source documents forward to the books to test completeness (e.g., shipping docs → sales journal).

Inspection of tangible assets

Physically examining assets to support existence and sometimes valuation (e.g., counting inventory).

Observation

Watching a process performed by others (e.g., observing credit approvals); people may act differently when watched.

Inquiry

Asking questions of knowledgeable people inside/outside the entity; should be corroborated.

Confirmation

Getting a third party to verify information (e.g., A/R balances from customers).

Recalculation

Checking the math accuracy of documents/records.

Reperformance

Independently executing procedures or controls to see if results match the client's.

Analytical procedures

Evaluating relationships among financial and nonfinancial data (e.g., margins vs. budget/industry).

Scanning

Scanning accounting data to spot unusual items; powerful with data analytics.

Audit documentation (working papers)

The record of procedures performed, evidence obtained, and conclusions reached; supports the opinion and enables supervision/review.

Main functions (why we document)

(1) Support the auditor's report/opinion; (2) Help plan, supervise, and review the audit.

Permanent file

Ongoing info kept year-to-year (e.g., debt agreements, long-term contracts).

Current file

Current-year work (e.g., risk assessments, programs, working trial balance).

AS 1215 — Significant findings/issues

Documentation must capture significant findings or issues and the related professional judgments and conclusions.

AS 1215 — Archiving & retention

Public-company audit files must be archived within 45 days of report release and retained 7 years; include items supporting and contradicting conclusions.

Ownership & confidentiality

The audit firm owns the working papers, subject to client confidentiality and legal/regulatory requests.