Subject: Audit

The Financial Statement for Cardwire Ltd was prepared and presented to the external auditors for auditing. However, as a part of the audit, the Auditors requested confirmation on the balances shown in the statement of financial position. The directors provided the auditors with an oral representation confirming the balances in the current assets in the balance sheet. Two junior members of the audit team have asked you to explain the process for obtaining audit evidence. They are aware of the relevant audit standard that covers the areas of Audit Evidence and want to know the factors that will influence your firms judgement in deciding what will be sufficient appropriate evidence when auditing the financial statements of Cardwire Ltd. They are also unsure about the specific procedures your firm will use to obtain audit evidence.

Describe each of the procedures listed below, used to obtain audit evidence, and for each procedure give TWO examples of when it may be used during the audit of the financial statements of Cardwire Ltd;

1. Confirmation

2. Inquiry