There are seven links in the audit process: 1. Inspection: review of documents and assets. 2. Observation: check the activities being engaged. 3. Inquiries: obtain information from informed persons orally and in writing. 4. Letter: obtain written evidence from a third party. 5. Recalculate: check the data calculation. 6. Re implementation: internal control of the audited entity, etc. 7. Analytical procedure: analyze financial data relationship.
(1) Check
The inspection of records or documents can provide audit evidence with different degrees of reliability. The reliability of audit evidence depends on the nature and source of the records or documents. When inspecting internal records or documents, its reliability depends on the effectiveness of the internal control that generated the records or documents.
The inspection of tangible assets can provide reliable audit evidence for their existence, but may not provide reliable audit evidence for the identification of rights and obligations or valuation.
(2) Observation
The audit evidence provided by the observation is limited to the time point of observation.
(3) Ask
The inquiry itself is not enough to discover the major misstatement at the identified level, nor to test the effectiveness of the operation of internal control.
(4) Correspondence
The reliability of evidence obtained by letter is high, so letter is an important procedure that is highly valued and often used.
(5) Recalculate
Recalculation means that certified public accountants check the accuracy of data calculation in records or documents manually or using computer assisted audit technology.
(6) Re execute
Re implementation refers to the re independent implementation of procedures or controls as part of the internal control of the audited entity by the certified public accountant, either manually or using computer-assisted audit technology.
(7) Analytical procedures
The analysis procedure refers to the evaluation of financial information by certified public accountants through analyzing the internal relationship between different financial data and between financial data and non-financial data. The analysis procedure also includes, when necessary, investigating the fluctuations or relationships identified, which are inconsistent with other relevant information or differ significantly from the expected values.