Components of the Audit Definition An audit is a systematic approach. The audit follows a structured, documented plan (audit plan). In the process of the audit, accounting records are analyzed by the auditors using a variety of generally accepted techniques. The audit must be planned and structured in such a way that those carrying out the audit can fully examine and analyze all important evidence. An audit is conducted objectively. An audit is an independent, objective and expert examination and evaluation of evidence. Auditors are fair and do not allow prejudice or bias to override their objectivity. They maintain an impartial attitude. The auditor obtains and evaluates evidence. The auditor assesses the reliability and sufficiency of the information contained in the underlying accounting records and other source data by: (i) studying and evaluating accounting systems and internal controls on which he wishes to rely and testing those internal controls to determine the nature, extent and timing of other auditing procedures, and (ii) carrying out such other tests, inquiries and other verification procedure appropriate in the particular circumstances. vidence obtained and evaluated by the auditor concerns assertions about economic actions and events. The basis of evidence-gathering objectives, what the evidence must prove, are the assertions of management. Assertions are representations by management, explicit or otherwise, that are embodied in the financial statements. One assertion of management about economic actions is that all the assets reported on the balance sheet actually exist at the balance sheet date. The assets are real, not fictitious. This is the existence assertion. Furthermore, management asserts that the company owns all these assets. They do not belong to anyone else. This is the rights and obligations assertion The auditor ascertains the degree of correspondence between assertions and established criteria. The audit program tests most assertions by examining the physical evidence of documents, confirmation, inquiry, and observation. The auditor examines the evidence for the assertion presentation and disclosure to determine if the accounts are described in accordance with the applicable financial reporting framework, such as IFRS, local standards or regulations and laws. Required: Answer the questions below using information from the passage for each answer 1. Which management assertion means "the company owns all assets and they do not belong to anyone else"? 2. Why does auditor examine the evidence for the assertion presentation and disclosure?