Volume 04 Issue 06-2024
14
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
04
ISSUE
06
P
AGES
:
14-21
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
ABSTRACT
There is presented in the article the findings, sugestions and recommendations for obtaining audit evidence, the
quality of the organization’s data and the financial condition of the audited entity, as well as their documentation
based on international standards.
KEYWORDS
Joint-stock company, organizations of audit, audit activity, auditor evidence, analytical activities, selection of audit.
INTRODUCTION
Currently, our republic pays great attention to
improving auditing activities. In particular, the next
important step in improving audit activities in our
country was the adoption of Resolution of the
President of the Republic of Uzbekistan No. 3946
dated September 19, 2018 “On measures for the
further development of audit activities in the Republic
of Uzbekistan”. Creating a favorable investment
climate in our country largely depends on the quality
organization of audits. When ensuring the quality of
audits and the reliability of audit reports, great
attention is paid to the sufficiency and adequacy of the
collected evidence collected during audits. Therefore,
in practice, auditors place great emphasis on the
Research Article
THE EVIDENCE OF AUDITING AND IMPORTANT ASPECTS OF THE
DOCUMENTATION PROCESS
Submission Date:
May 31, 2024,
Accepted Date:
June 05, 2024,
Published Date:
June 10, 2024
Crossref doi:
https://doi.org/10.37547/ijmef/Volume04Issue06-02
Ganiev Zafar Usanovich
PhD, Professor of the Department of Accounting and Reporting, Tashkent state University of Economics,
Uzbekistan
Journal
Website:
https://theusajournals.
com/index.php/ijmef
Copyright:
Original
content from this work
may be used under the
terms of the creative
commons
attributes
4.0 licence.
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International Journal Of Management And Economics Fundamental
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Publisher:
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process of collecting evidence. Requires auditors to
document evidence collected in a timely, complete and
accurate manner. In the practice of auditing, issues
related to the structure, quantity and form of working
documents have always been relevant, since external
verification of the quality of services provided by
auditing entities is aimed at the completeness and
sufficiency of disclosure of information in these
documents. At the same time, the application of
international auditing standards from the point of view
of legal regulation and implementation has facilitated
the documentation process and made it more
transparent in internal and external quality control.
International auditing standards clearly and in detail
reveal the features of collecting data and reflecting
audit documentation in various situations, correlating
it with the clauses of other standards, which is their
obvious advantage.
ANALYSIS OF LITERATURE ON THE TOPIC
In the Republic of Uzbekistan, in the context of
economic modernization, the issue of conducting an
external audit of the financial statements of joint-stock
companies is relevant. Therefore, there is a need to
formalize the results of the work of the external audit
service in our country and compile it in accordance with
international standards.
Bringing audits into compliance with international
standards and improving the quality of audit reports
and conclusions directly depends on audit evidence.
Adequacy of audit evidence and compliance with
requirements improves the quality of control.
In modern literature, there are different approaches to
the concept of “audit evidence”.
The first approach - S.M. Bychkova believes that audit
evidence is considered as “facts” and “processes”.
Evidence means that it can serve to confirm or refute
the existence of another fact, or the process of
obtaining information about a specific fact that allows
the auditor to formulate an opinion on the reliability of
the financial
statements
1
.
The second approach is that audit evidence represents
sources of information. According to V.B. Ivashkevich,
“evidence in an audit consists of documented sources
of data obtained as a result of an audit of the reliability
of the organization’s financial
statements»
2
.
The third approach - J. Robertson gives the following
definition: “audit evidence is information that
determines the actions of the auditor, influences the
opinion of auditors and determines their
decisions»
3
.
International Standard on Auditing 500 “Audit
Evidence” defines audit evidence as follows: “audit
evidence is information used by the auditor in forming
conclusions on which the audit opinion is based. Audit
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International Journal Of Management And Economics Fundamental
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VOLUME
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ISSUE
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OCLC
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1121105677
Publisher:
Oscar Publishing Services
Servi
evidence includes both information contained in the
accounting records on which the financial statements
are based and other
information»
4
.
According to the scientist-
economist I. Kuziev, “audit
evidence is accounting data, balances of analytical
accounts, primary documents and consolidated
registers, information collected by the audit
organization during the audit and substantiating the
audit
report»
5
.
S.M. Bychkova and E.Yu. Itygilova expressed the
following opinion: “It is important that the audit
evidence is sufficient and appropriate. Because the
degree of accumulation of these indicators also affects
the audit plan and the number of audits. Because the
sufficiency of audit evidence directly depends on what
the audit report should
be»
6
.
Thus, in our opinion, audit facts are information about
the organization of accounting, primary accounting
and generalizing information that is the basis for
expressing the auditor’s opinion. Information and
account balances that are the basis for drawing up
financial statements, information from a business plan,
information from external information sources and
information not related to accounting.
ANALYSIS AND RESULTS
Audit evidence is discussed in detail in international
standards. As an object of standardization in the
international
auditing
standards
(International
Standards of Auditing - ISAS), a special section B -
“500
-
5
99 Audit evidence” is allocated. This section includes
9 standards.
In the Republic of Uzbekistan, out of the national
auditing standards adopted so far, 6 standards have
been developed.
When obtaining audit evidence, primary documents
and accounting records that form the basis of financial
statements are used, as well as supporting information
obtained from other sources. Audit evidence must be
sufficient and adequate.
We believe that the audit organization should focus on
the following factors in the process of collecting audit
evidence:
• assessment of the accounting process, financial
reporting of the joint-stock company and the nature of
the internal audit and internal control system created
in the company, as well as the independence of internal
audit and assessment of control risk;
• the volume of audit activities and audit work
performed by the audit organization;
• the source of information about audit evidence
collected by auditors and evidence of its reliability.
In accordance with the rule set out in paragraph 4 of
the National Auditing Standard entitled “Audit
Evidence”: primary documents and accounting records
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Publisher:
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that are the basis for financial statements, as well as
other supporting information obtained from other
sources, are used to obtain audit evidence.
Audit activities are the activities that the auditing
organization performs to obtain audit evidence to
determine the presence or absence of errors or defects
in the financial statements.
We believe that when carrying out audit activities in
joint-stock companies, special attention should be paid
to the following issues:
• control of the presence of liabilities and assets at the
end of the reporting period in the audited financial
statements;
• consideration of the completeness of reflection of
assets, liabilities, business transactions and events in
the financial statements of the joint-stock company on
the basis of international financial reporting standards;
• reflection of assets and equity capital, liabilities in
appropriate values in the financial condition of the
joint-stock company;
• organizing control over the reflection in the form of
financial statements of business transactions
performed by the joint-stock company during the
reporting period, and accurate reflection of the
amounts of business transactions and events in the
financial statements;
• in accordance with International Financial Reporting
Standards, reflection of income and expenses for the
relevant periods.
The sufficiency of audit evidence is the quantitative
measure (threshold) of audit evidence required by the
audit firm to express an opinion.
The adequacy of audit evidence is a qualitative
measure of audit evidence, which means the
significance and reliability of audit evidence in
expressing an opinion by the audit organization. Audit
evidence is considered reliable if it is supported by
documents and the actual state of assets, equity and
liabilities.
International Standard on Auditing 230, Audit
Documentation, defines audit documentation as
follows: Audit documentation is the written record of
the audit procedures performed, relevant audit
evidence obtained, and conclusions reached by the
auditor .
1. Working documentation is used in the following
cases:
• when planning and directly conducting an audit;
• in the process of ongoing monitoring of work
performed;
• when recording facts confirming the auditor's
opinion.
Working papers for a specific audit engagement may
be compiled into an
“audit file”.
An audit file is “a storage medium, electronic or
otherwise, consisting of one or more written data
folders
containing
data
constituting
audit
documentation relevant to a specific engagement».
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The workpaper requirements should be expressed in
sufficiently complete and detailed form to ensure a
complete understanding of the audit.
At the same time, working documentation resolves
issues related to:
• maintaining documentation of matters of continuing
significance for future audits;
• assistance
in effective audit planning;
• ensuring the accountability of audit team members;
• creating the possibility of conducting internal and
external quality control of auditors' work.
The requirements for working documentation for
automated control systems are systematized and
reflected in Figure 1.
Picture 1. Requirements for working documentation in accordance with the international auditing standard
The International Standard on Auditing specifies the
need to document:
• main characteristics of the articles and issues under
consideration;
• significant matters examined during the audit and
conclusions reached by the auditor;
• deviation from the principles of the standards
adopted during the audit;
• information about th
e persons preparing and
checking audit documentation.
In addition, paragraph 3 of the International Standard
on Auditing ISA 230 states that the auditor may provide
extracts or copies of records of a business entity (for
example, significant and specific contracts and
agreements) as part of the audit documentation. In
this case, working documentation does not replace the
accounting records of a business entity. For example,
there is no point in including in working papers copies
of source documents that do not contain errors. In
order to increase the efficiency of preparation and
verification of business documentation, it is
recommended that the audit organization develop
standard forms of documents (for example, working
documentation is a standard structure of an audit file
Business documentation
requirements
Timeliness
Sufficiency and completeness
Registration procedure
Hierarchy
Compliance with a specific audit
engagement
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(folder), forms, questionnaires, sample letters and
appeals, etc.).
It should be noted that unified forms of working
documentation are not provided in foreign countries,
and therefore the list of documents of each audit
company is determined independently, but at the same
time, compliance with international standards makes it
possible to unify the approach to conducting an audit,
and, accordingly, the approach to the composition and
structure of working documentation.
Having examined in more detail the procedure for
generating an ISA audit file, it is necessary to note a
number of advantages. In particular, many standards
consist of a separate clause “audit documentation”,
which describes in detail what working documents the
auditor needs to produce on a specific issue.
Systematization of working documentation for the
main stages of inspections considered in international
standards is reflected in Table 1.
Table 1
Key information contained in the audit file (in accordance with ISAs)
Pre-contractual stage and audit planning
stage
Audit evidence collection stage
1. Audit Engagement Letter (ISA 210)
1. Material misstatements, general audit
procedures in response to assessed risks, and
the nature, timing and extent of additional
audit procedures performed (ISA 330)
2. Problems identified in connection with
compliance with relevant ethical requirements
and ways to solve them. Findings on
independence issues for a specific audit
engagement.
Conclusions
regarding
acceptance and continuation with clients. The
nature and extent of advice received during
the audit, as well as the conclusions drawn on
its basis
2. Changes to the audit strategy, plan and
program (ISA 300
3. Audit strategy, audit plan, audit programs
(ISA 300)
3. The auditor's conclusions on the most
significant
audit
matters,
including
information about errors and unusual
situations and information about the actions
taken by the auditor in connection with them
(ISA 540, 550, 600, 610, etc.)
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4. The key elements of understanding each
aspect of the organization and its environment
and each of the elements of its internal control
system. Risk assessment procedures, identified
and assessed risks of material misstatement
(ISA 315)
-
5. Calculation of the level of materiality and its
distribution (ISA 320)
-
It should be noted that the main stages of an audit are
conventionally identified, for example, planning of
audit processes in accordance with standards is carried
out throughout the entire audit.
Foreign scientists recommend audit companies and
auditors to compile current and permanent audit files.
A permanent file generated by the auditor is required
to store updated or original information related to the
ongoing audit. This file contains virtually unchanged
information and is a current source of information that
does not lose its relevance for a long time.
The following working documents may be included in
a regular file:
• documents characterizing the legality of the
activities of an economic entity (certificate of state
registration, charter and amendments to it, licenses for
the right to engage in certain types of activities, etc.);
•
information about the business entity (history of
financial and economic activities, general structure,
sources of initial capital, etc.);
• information on the process of organizing accounting
and internal control (general information on the
provisions of accounting policies, automation of
accounting and analysis, chart of accounts,
information on the organization of the internal control
system);
• auditor’s reports for the previous period.
Changes that may be made to the audit documentation
at the final stage may be purely administrative in
nature, for example, deletion or withdrawal of
outdated documentation, sorting, organizing and
referencing in the auditor's working papers, etc.
(Section A22 of ISA 230). The auditor collects working
documentation into a single file. The creation of the
final file is determined after the date of completion of
the administrative process. The deadline for the final
formation of the audit document is 60 days after the
date of the audit report (clause A54 MSKK1). It is
prohibited to remove any documentation from it after
the audit file has been fully generated and before the
expiration of its retention period.
CONCLUSIONS
To summarize, we can say that the work carried out in
the republic to improve auditing activities will help
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increase the confidence of foreign investors in the
economy of our country and provide information users
with reliable information.
Regarding the quality and documentation of evidence
collected by audit organizations during audits in the
republic, the following proposals can be made:
1.
The collected evidence must serve as a
sufficient basis for expressing the audit opinion. Of
course, along with collecting this evidence, it is
necessary to conduct analytical processing, analyze it
and draw appropriate conclusions. Therefore, it is
necessary to use modern methods and techniques of
economic analysis when conducting audits and
providing other types of audit services.
2.
Identification of errors made as a result of
unlawful actions of stakeholders when collecting audit
evidence.
3.
Determining
the
retention
period
for
documents after the date of the auditor's report, when
the retention period for documents in a particular case
of audit engagements is usually later than the date of
the auditor's report.
REFERENCES
1.
Постановление
Президента
Республики
Узбекистан № ПП
-
3946 от 19 сентября 2018 года
«О
мерах
по
дальнейшему
развитию
аудиторской
деятельности
в
Республике
Узбекистан».
2.
Международный
стандарт
аудита
500
«Аудиторские доказательства».
3.
Международный
стандарт
аудита
230
«Аудиторская документации».
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Бычкова, С.М. Доказательства в аудите / С.М.
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М.: Финансы и статистика, 1999. –
176
с.
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Бычкова С.М., Итыгилова Е.Ю. Международные
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-
во
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-
432с.
6.
Ивашкевич,
В.Б.
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стадия
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–
№11. –
С. 3–
7.
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Робертсон, Дж. Аудит / Дж. Робертсон. –
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КПМГ, Аудиторская фирма «Контакт», 1993. –
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Международный стандарт контроля качества
(МСКК)1 «Контроль качества в аудиторских
организациях, проводящих аудит и обзорные
проверки финансовой отчетности, а также
выполняющих
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задания,
обеспечивающие уверенность, и задани по
оказанию сопутствующих услуг».
9.
Кузиев И.Н. Составление аудиторских отчетов и
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