Further Procedures Evidence

Further Procedures & Audit Evidence Exam: CPA — Certified Public Accountant Chapter: Chapter 5 — AUD Further Procedures and Evidence Standards: AU-C 330 (Further Procedures); AU-C 500 (Audit Evidence); AU-C 505 (Confirmations) Last Updated: 2026-06-26 --- ## Key Takeaways - Further audit procedures = tests of controls + substantive procedures - Substantive procedures = substantive analytical procedures + tests of details - Evidence must be both sufficient (enough of it) and appropriate (relevant and reliable) - Reliability hierarchy: external > external-internal > internal; original > copy; direct > indirect - Confirmations and physical examination are among the most reliable forms of evidence --- ## Tests of Controls vs. Substantive Procedures | Feature | Tests of Controls | Substantive Procedures | |---|---|---| | Purpose | Evaluate whether controls are operating effectively | Detect material misstatements in account balances, transactions, disclosures | | When required | When auditor intends to rely on controls OR when substantive procedures alone cannot provide sufficient evidence | Always required for each significant account and disclosure | | Addresses | Control risk | Detection risk | | Examples | Inspect authorization signatures, re-perform approval process, observe segregation of duties | Confirm receivables, recalculate depreciation, inspect inventory | Key rule: Tests of controls only reduce substantive procedures — they never eliminate the need for them entirely on significant accounts. --- ## Substantive Analytical Procedures vs. Tests of Details Both are substantive procedures, but they differ in application: Substantive analytical procedures: - Compare recorded amounts to the auditor's independent expectation (developed from prior periods, industry data, or relationships among data) - Most effective when the auditor can develop a precise expectation - Best for high-volume, predictable transactions (payroll,…