The american audit standard – this standard explains what constitutes audit evidence and determines the requirements in regard to planning and execution of the audit procedures to obtain audit evidence that is sufficiently appropriate.

audit evidence is all the information, whether it is received from audit processes or from other sources, which serve the auditor in reaching conclusions upon which the auditor’s expert opinion is based. audit evidence is comprised of evidence that supports and ratifies the declarations of the management in regard to the financial reports or internal control for financial reporting and information that contradicts such declarations.

The objective of the auditor is to plan and execute the audit in order to obtain audit evidence that is sufficient to support the auditor’s expert opinion. The quantity of the audit evidence required is influenced by the risk in a fundamentally misleading presentation or the risk entailed in control.

The more the risk increases, thus too the quantity increases of the evidence that the auditor is required to obtain. The more the quality of the evidence increases, the more the need for additional supporting evidence decreases.

Propriety is the quality index for audit evidence: that is their relevance and their reliability. Audit evidence must be both relevant and reliable when providing support for conclusions on the issues upon which the auditor’s expert opinion is based. The Auditor is not supposed to be an expert in verification of documents.

However, if the conditions indicate that a document could be inauthentic or the document has been changed however the changes have not been disclosed to the auditor, the auditor is required to change the planned audit procedures or carry out additional audit procedures in order to deal with these conditions and he is required to assess the influence, if there is such, on the rest of the aspects of the audit.

When using information that was produced by the company as audit evidence, the auditor is required to assess whether the information is sufficient and suitable for the objectives of the audit by execution of procedures to examine the accuracy of the information and its completeness, or to examine the controls as to the accuracy and completeness of the information. The financial reports are presented fairly pursuant to the framework of the financial reporting imposed, and the management determines implicitly or explicitly in regard to the recognition, measurement, presentation and exposure of the various elements in the financial reports and related disclosures. The auditor is permitted to base his work on determinations of different financial reports than those in regard to the standard if the determination is sufficient so that the auditor shall be able to identify the possible types of deception and respond appropriately to the risks of the fundamental deception in any fundamental account and disclosure that has a reasonable possibility of including errors that shall be cause the financial reports to be fundamentally misleading, individually or combined with other errors.

The audit procedures can be classified into the following categories:

1. risk assessment procedures;
2. additional audit procedures, comprised of examination of controls, substantive examinations, including examination of analytical details and procedures, planning of substantive examinations of control details and examinations including determination of means for selection of items for examination from the items included in the account or that appear in the control The auditor is required to determine the means for selection of the items to be examined in order to obtain evidence which when combined with other relevant evidence is sufficient to comply with the target of the audit process.

The electronic measures for selection of items for examination are: selection of all the items, selection of specific items and an audit sampling.

If the audit evidence that is obtained from one source is inconsistent with the evidence obtained from another source, of if the auditor has doubts about the reliability of the information that shall serve as audit evidence, the auditor is required to carry out necessary audit procedures in order to resolve the issue and he must determine the impact, if there is such, on the other aspects of the audit.

The audit procedure is very important for the American Securities and Exchange Commission (SEC) and it is the basic rule during an audit by an auditor with a PCAOB licence.

Our office – located in the heart of Tel Aviv, Israel, provides audit services to companies wishing to trade on OTC, while ensuring to adhere to the audit standards placed by the PCAOB.