audit evidence

I presume that, in the process of collecting the audit evidence, it became apparent that the entity had wrongly accounted for the lease so in that respect, some of the evidence has already been collected

I would like to know the precise wording of the question in respect of this matter

And I’m just going out for the day! If you had written out the requirement, I would have read it and responded.

As it is, you’ll have to wait until I get back home this evening 🙁

This is the requirement … just under where it says “Required”

‘Required: In respect of the issues described above:
Comment on the matters to be considered, and explain the audit evidence you should expect to find in your review of the audit working papers.’

How can that have made it more complicated?

The question requirement is to “… explain the audit evidence you should expect to find …”

OK, you’re the manager reviewing the file … the question states that ‘You have recently been assigned to act as audit manager …’ and now the partner has asked you ‘to review the audit working papers in relation to two audit issues which have been highlighted by the audit senior.’

Now, go back to your original post at the start of this thread, read it again and come back to me if this doubt of yours still exists …’so my doubt is that when obtaining audit evidence …will we do the procedure of obtaining audit evidence after they will correct the wrong accounting treatment or before that ?’

Yes, but that’s an answer to an entirely different question

Whenever management change the draft financial statements the auditor must audit the changes

“…this means that when the manager will review the working paper he expects to find the discussion with managemnt about this wrong treatment ryt ?”
This depends upon the timing of the review

It is MOST unlikely that the audit senior has raised the matter with management and “requested the amendment of the financial statements”

So I really doubt whether (not ‘wether’ – look ‘wether’ up in a dictionary!) there would be copies of the board minutes recording the request from the audit senior

“b) in most of the similiar questions like this there will be some wrong accounting treatments done by the management so when the audit manager will review the working paper he expects to find the minutes of discussion with management by the auditor regarding the wrong accounting treatment ryt sir ?”

As explained above, no, I don’t believe that this is correct

The audit senior would, throughout the course of the audit, have been maintaining a schedule titles ‘Points for manager’ and, possibly, another one ‘Points for partner’

On either or both of those schedules would be the detail of the wrong accounting

The evidence that WOULD be expected is

a copy of the lease,
a schedule of the calculations involved in the determination that the lease is a finance lease,
a copy of any correspondence between the client and the lessor (if any exists),
a schedule showing the recalculation of the lease interest,
a schedule showing the appropriate adjustment believed to be necessary by the audit senior,
maybe a schedule showing the recalculation of materiality and threshold materiality
a schedule to clarify whether there are any other instances of incorrect accounting treatment of leases by the entity, both for this year and previous years

That should do for starters

The heading of this thread is “Audit evidence”

In this most recent post of yours you continue to appear to be confusing “evidence” with “procedures”

These are two completely different audit questions

If you were to read the examiner’s comments after one exam (about 4 years ago) she pointed out a common error frequently made by students …

This is what she wrote:

“The questions asked what evidence you (an audit manager) would expect to find on the audit file in respect of the above matters (there were 3 ‘interesting’ matters). A number of students wrote points such as “Discuss with management what they intended to …” or “Telephone the lessor to enquire about …”

These are PROCEDURES and will score NO marks in an answer to a question asking about “What evidence would you expect to find on the audit file?”

Are you any clearer? This is important!