Brink's Modern Internal Auditing

CHAPTER 10 Testing, Assessing, and Evaluating Audit Evidence

The internal audit process begins with first establishing audit objectives, then planning and preparing the internal audit, performing planned audit procedures including gathering and examining audit evidence, and finally assessing the audited results to determine if the audit objectives have been satisfied, if supporting internal controls are adequate, if the materials reviewed are sufficient to develop an audit conclusion, and if there is a need for corrective action–based internal audit recommendations. This process of testing, assessing, and then evaluating audit evidence is often a challenge and a source of concerns for many internal auditors. For example, an internal auditor may review a sample of 100 items and find one error/exception but no problems with 99 of them. Should that one remaining internal control problem item cause an internal auditor to highlight matters as an internal control problem or should the internal auditor give that single exception a pass and go forward? There often are no easy answers, but a knowledgeable internal auditor should be able to evaluate this audit evidence and make the appropriate decision.

While Chapter 8 outlined the steps for performing an internal audit and Chapter 9 described the IIA international professional standards necessary for performing internal audits, this chapter reviews processes to test, assess, and evaluate audit evidence. These are key common body of ...