According to Bulletin 1010, through the Audit procedures, the auditor must obtain sufficient and competent supporting evidence to the extent required to provide an objective basis that allows his opinion. ”
Evidence must be understood as the elements that verify the authenticity of the facts, the evaluation of the accounting procedures used, the reasonableness of the judgments made, hence the accounting documentation alone does not represent all the evidence that the auditor requires to support your professional opinion.
Normative pronouncements.
In order to obtain the supporting evidence supporting management's assertions in the financial statements, the auditor should establish specific audit objectives that confirm the reasonableness of such assertions.
The assertions made in the financial statements, which are related to the audit objectives, are statements of the management that are included as an integral part of them and that by their nature, can be explicit or implicit and refer to the following:
Existence or occurrence.
It means that the assets and liabilities of the entity exist at a specific date and that the recorded transactions have occurred during a certain period.
Integrity.
It means that all the transactions and balances that must be presented in the financial statements have been included.
Rights and obligations.
It means that the assets represent the rights of the entity and the liabilities the obligations of the same, at a certain date.
Valuation.
It means that the concepts of assets, liabilities, capital, income and expenses have been included in the financial statements for the appropriate amounts.
Presentation and disclosure.
It means that the particular items of the financial statements are adequately classified, described and disclosed.
To obtain the evidence supporting the assertions made in the financial statements, the auditor sets specific audit objectives in light of those assertions. The supporting evidence must be sufficient and competent for the auditor to base his conclusions on the validity of the management's assertions, contained in each item of the financial statements.
Most of the auditor's job, in formulating his opinion on the financial statements, is to obtain and evaluate the evidence regarding the assertions made in those statements. The measure of validity of such evidence rests on the judgment of the auditor, it should be emphasized that the evidence in the audit differs from the legal evidence, which is limited to rigid rules.
The quality, its objectivity and its opportunity support the competition of the supporting evidence. It will be sufficient and competent when it refers to facts, circumstances or criteria that really have qualitative relevance within the examined and the tests carried out, either by the results of only one or by the concurrence of several, are valid and appropriate for the auditor. he comes to acquire the moral certainty (degree of security and confidence to express his opinion on the financial statements) that the facts that he is trying to prove the criteria whose correction he is judging have been satisfactorily verified.
The reliability of the supporting evidence is influenced by its source, internal or external, and by its visual, oral, or documentary nature.
Evidence obtained from independent sources outside the entity provides greater security than that obtained in the entity.
Accounting and financial statements prepared under satisfactory conditions of internal control are more reliable than those prepared under unsatisfactory conditions.
The direct knowledge of the auditor obtained through physical examinations, observation, calculations and inspection is more convenient than the information obtained indirectly.
Evidence in the form of documents and written confirmations is more reliable than verbal confirmations.
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