Bank Audit: Investment Verification (2024)

FAQs

How do you verify an investment in an audit? ›

The auditor can verify investments through various procedures, including transaction verification, physical inspection, examination of valuation and disclosure, and analytical review procedures. However, the nature, timing, and extent of audit procedures to be performed depend on the auditor's professional judgment.

Audit procedures to obtain audit evidence can include inspection, observation, confirmation, recalculation, reperformance and analytical procedures, often in some combination, in addition to inquiry.

Sufficient appropriate audit evidence must be obtained to provide a reasonable basis to support the conclusion(s) expressed in an assurance engagement report. the determination of the relevance and reliability of audit evidence.

The auditor should verify the existence of investments by personal inspection. At the same time, he should also ensure that the investments are registered in the name of the client and they are free from any charge. He should rely on the relevant vouchers and certificates to do so.

The ownership of assets, like land and buildings should be verified by examining title deeds. In case, the title deeds are held by other persons, such as solicitors or bankers, confirmation should be obtained directly by the auditors through a request signed by the client.

Write to-the-point answers. 2) Never quote wrong AS or SA numbers, clauses under professional ethics and sections of the Companies Act or any other law applicable. Quoting them wrong creates a wrong impression on the examiner. If you don't remember, then no need to write them.

Honesty, sincerity, and straightforwardness should be the touchstones of your responses. An auditor is looking for the truth. A guess, even if it is an educated guess, is not the truth.

For audit evidence to be reliable, you have to consider the nature and source of the evidence. There are a number of ways for an audit team to obtain evidence. The visual below illustrate the hierarchy of evidence, with direct and personal knowledge being the highest reliability and oral evidence being the lowest.

What are 4 ways to obtain audit evidence? ›

A2. Most of the auditor's work in forming the auditor's opinion consists of obtaining and evaluating audit evidence. Audit procedures to obtain audit evidence can include inspection, observation, confirmation, recalculation, reperformance, and analytical procedures, often in some combination, in addition to inquiry.

If the auditor is unable to obtain sufficient appropriate audit evidence, the auditor shall express a qualified opinion or disclaim an opinion on the financial statements.

Audit documentation must contain sufficient information to enable an experienced auditor, having no previous connection with the engagement: To understand the nature, timing, extent, and results of the procedures performed, evidence obtained, and conclusions reached, and.

The Auditor should obtain a letter of confirmation of bank balances directly from banks. The Auditor should compare the bank balance as per the bank book and the pass book. If payments are deposited in foreign banks under exchange control regulation it should be verified by the Auditor.

Substantive testing is an audit procedure that examines the financial statements and supporting documentation to see if they contain errors. These tests are needed as evidence to support the assertion that the financial records of an entity are complete, valid, and accurate.

Nature: - In verification of assets, an auditor verify not only the actual existence of the assets but also their proper valuation . But in the case of valuation of assets, an auditor has to merely ensure that the values of the assets as shown in the balance sheet is correct.