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Audit Evidence – ISA 500

OCH Blog Audit Evidence – ISA 500

Este contenido es producido por OCH Group, Independent Member de GGI en Colombia.

The International Standard on Auditing (ISA) 500 establishes the framework for the auditor to carry out an effective and thorough audit of the financial statements of an entity. The main objective of ISA 500 is to enable the auditor to identify possible material misstatements in the financial statements, arising from non-compliance with applicable laws or regulations. The importance of ISA 500 lies in guiding the auditor in performing appropriate audit procedures that allow them to obtain sufficient and appropriate evidence regarding the understanding and correct compliance with the laws and regulations to which the entity is subject. This ensures the reliability and transparency of the financial information presented, safeguarding the interests of the users of the financial statements.

Autor: Yovan Alfredo Saavedra Cabrejo

 

“This International Standard on Auditing (ISA) explains what constitutes audit evidence in an audit of financial statements, and deals with the auditor’s responsibility to design and perform audit procedures to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor’s opinion; This ISA is applicable to all the audit evidence obtained during the course of the audit. Other ISAs deal with specific aspects of the audit (for example, ISA 315), the audit evidence to be obtained in relation to a particular topic (for

example, ISA 570), specific procedures to obtain audit evidence (for example, ISA 520), and the evaluation of whether sufficient appropriate audit evidence has been obtained (ISA 200 and ISA 330).

 

(…) The objective of the auditor is to design and perform audit procedures in such a way as to enable the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor’s opinion.

 

(…) Audit evidence is necessary to support the auditor’s opinion and report. It is cumulative in nature and is primarily obtained from audit procedures performed during the course of the audit. It may, however, also include information obtained from other sources such as previous audits (provided the auditor has determined whether changes have occurred since the previous audit that may affect its relevance to the current audit) or a firm’s quality control procedures for client acceptance and continuance. In addition to other sources inside and outside the entity, the entity’s accounting records are an important source of audit evidence. Also, information that may be used as audit evidence may have been prepared using the work of a management’s expert. Audit evidence comprises both information that supports and corroborates management’s assertions, and any information that contradicts such assertions. In addition, in some cases the absence of information (for example, management’s refusal to provide a requested representation) is used by the auditor, and therefore, also constitutes audit evidence”.

 

The International Standard on Auditing (ISA) 500 plays a fundamental role in the auditor’s work by establishing guidelines to identify possible significant errors in the financial statements resulting from non-compliance with applicable standards and laws. By following the guidelines of ISA 500, the auditor can perform a comprehensive and effective audit, ensuring the integrity and reliability of the financial information presented by the audited entity. This not only protects the interests of investors and stakeholders but also strengthens the credibility of the auditing process as a whole.

 

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