part 5

After understanding the objectives for both internal control and financial statements, it is time now to get to know how to audit it.
First of all let get some phrase right. Many students are confused of the phrase audit test, audit work and audit procedure. Actually they are all the same meaning. It means the audit evaluation carry out by auditor.
So how do auditors carry out audit evaluation? It can be in many ways but it must meet its objectives which we have mentioned in the previous articles
However students find it hard to start with the question on audit evaluation. So let us start with some basic principles.
Auditor can carry out audit evaluation by using the principles of (but not limited to) AEIOU
A: Analytical review
E: Enquiries
I: Inspection of documents
O: observation
U: Calculation
(Remember the above is just a guide to help student to start off a question if you understand audit evaluation well you can do it your way)
Let have a simple explanation of the above
1. A: Analytical review: comparison of data to evaluate the differences. This become a lead to the start of audit evaluation.
2. E: Enquiries: means discussion or obtaining the audit evidence through oral form
3. I: Inspection of documents: checking of hard evidence or written evidence
4. O: observation: observed the situation in order to confirm certain evidence
5. U: Calculation: to ensure right valuation.
Oh definitely the above sound simple. When applying into the question, it never click as question will never be direct to it.
Now let crease some question on the question
A: Analytical review: What should we compare and why should be compare?
E: Enquiries: who should we discuss and what should we discuss
I: Inspection of documents: what documents should we inspect and why should we inspect?
O: observation: what should we observe and why should we observe?
U: Calculation: this sound simple but what are the area that we should set the valuation right?
Let think about it before we continue