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CA Intermediate · Auditing and Ethics · Audit Evidence

An auditor of Bharat Auto Components Ltd uses a spreadsheet prepared by the company's management to compute depreciation and relies on its totals as audit evidence. Under SA 500, which response is most appropriate?

The auditor should obtain evidence about the accuracy and completeness of the spreadsheet information before relying on it. SA 500 requires evaluating the reliability of entity-produced information. Mere consistency with the ledger, or a management representation alone, is not enough, though full manual recomputation is not necessarily required.

  1. AAccept the report since it is internally generated and consistent with the ledger
  2. BObtain evidence about the accuracy and completeness of the information in the spreadsheet before using it as audit evidenceCorrect
  3. CIgnore the spreadsheet entirely and recompute every asset's depreciation manually
  4. DAsk the management to certify the spreadsheet in the representation letter and rely on that alone

Explanation

SA 500 requires the auditor to evaluate whether information produced by the entity is sufficiently reliable, including obtaining evidence about its accuracy and completeness. Blind acceptance is wrong, full manual recomputation is not mandated, and a representation alone is not sufficient appropriate evidence.

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