Auditing is one of the most important activities that highlight the transparency of any organization’s business operations. It is a systematic review of the financial record, statement, and proofs of the organization to prove that it is working within the legal and financial boundaries set by the state authorities.
An audit is of two types. One is internal, and the other is external. The auditors have to collect the evidence, formulate the report, and share it with the authorities to comment on the effectiveness of the report. Audit evidence is the proof and records to show the transparency of the organization. Multinational firms in developed countries like the United Arab Emirates rely on external auditors to collect the audit evidence and get a clean chit from the authorities.
This article will provide you a brief guide about collecting audit evidence.
Top 8 Essentials of Audit Evidence
The results of an auditing inspection significantly depend on the quality of audit evidence. At times, the internal auditors conspire with the competitors of any organization and satisfy the firm through fake records, which are exposed in final inspection and cause loss to the organization. Therefore, most firms rely on external auditors to get an honest opinion and gather evidence.
Here are the top essentials of audit evidence, which you should take care of in order to get clearance from the top authorities.
The very first essential of an auditing report is sufficiency. It means that the evidence should be collected by utilizing the right tools and techniques. It can be the test checking or any other relevant tool which helps the auditors to form their opinion about the financial conditions. Most organizations acquire the service of top audit firms in Dubai to ensure that their audit evidence is sufficient for the concerned authorities.
The second essential of audit evidence is its reliability. It means that the evidence has been collected by a reliable source and can be trusted. The audit evidence cannot be authentic for up to a hundred percent. It can only be reliable according to the channel through which it has been gathered. Audit evidence collected by internal auditors has a little margin of suspicion, while that of external auditors can be considered reliable upon checking and verification.
The third essential of audit evidence is the source of evidence. In other words, it means the authority that has collected the audit evidence. Generally, there are two types of sources of audit evidence.
One is the internal auditor, which is internally employed by any organization and has the responsibility of taking care of its confidentiality. The second is the external auditor, which is hired as an external party to give an overview of the operations. Audit evidence collected through an external source is considered more reliable.
The nature of the evidence is another essential of audit evidence. It can be in terms of documents like bills and vouchers, or physical like the proof of assets. The nature of audit evidence can also be oral in the way the employees or internal or external auditors share the details of the transparency and authenticity of auditing operation.
The next essential of auditing evidence is the relevancy of the report. It means that it has been collected by utilizing the right tools and techniques. After that, sufficient physical proof of evidence is attached to the report to show its relevance. Only then will it be acceptable and considerable for further treatment.
One of the most crucial essentials of audit evidence is that it should be principle-based. There are no hard and fast rules or checklists to perform the audit. There are just auditing standards that need to acknowledge and followed while conducting the audit. So, you have to ensure the audit evidence is principle-based so that it is not disregarded.
7. Focused on Framework
Another important essential of audit evidence is that it should be focused on the framework. You cannot just randomly collect the evidence and attach documentary or visual proofs with it. To increase its credibility, you have to focus it is collected by following the set frameworks.
8. Future Proof
The last essential of audit evidence is that it should be future proof. It means that it should be reliable, relevant, and credible even in the future and should not become useless with time. If you want to collect audit evidence that is reliable and future proof, you can hire top audit firms in Dubai and ensure to get a clean chit from the authorities with the help of trained auditors.
Do not compromise your audit evidence, and consult experts!
The market reputation of any business is at stake while going through the auditing process. You are only earning negative points by compromising your audit evidence. Do not stick to such practices as they can cause huge losses. Consult the experts and professionals to fulfill the essentials of audit evidence and ensure the profitability of your organization.