Financial Audit of CLC Limited: Gathering Audit Evidence Challenges

This report examines the challenges faced by auditors in gathering evidence for the financial audit of CLC Limited. It focuses on three types of audit evidence: documentary, verbal, and computational. The report highlights the potential issues with each type, such as missing documents, untruthful verbal accounts from management, and mathematical errors in computations. It also discusses how these challenges can impact the accuracy and reliability of the audit report. The report concludes by emphasizing the importance of training financial institution heads and using multiple sources to gather crucial audit evidence, ultimately aiming to reduce financial embezzlements and ensure accurate financial reporting. Desklib provides a platform for students to access similar solved assignments and past papers for their studies.

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AUDIT EVIDENCE
Student by (Name)
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AUDIT EVIDENCE
Case of CLC limited
Introduction
Audit evidence is the information used by auditors before they arrive at the truthful and
fairness of the CLC limited audit. When carrying out audit exercise, auditors rely on various
types of evidence in order come up with accurate reports. Sometimes it is very difficult to choose
the evidence to use during auditing. The identification of the evidence to use will depend on the
type of audit a firm and type of business operation.
Types of evidence
Based on the type of business operations of CLC limited, the audit team is likely to rely
on three types of audit evidences as discussed in chapter of the provided book. These types audit
evidence include;
 Documentary evidence
 Computational evidence
 Verbal evidence
Challenges associated with auditing
It is true that the auditors nowadays find it difficult when carry out the auditing report.
These challenges that they are facing include;

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There are some challenges when using documentary evidence, auditors may find some
challenges such as missing documents within CLC limited. This may be a challenge as
accountants and CLC limited staffs may be forced to come up with figures which are not in the
books of entry which is a disadvantage CLC limited investors and the general company
operations (Moroney 2015). This evidence may also consume a lot of time as auditors must go
through files are for scrutiny. There are many ways in which the documentary evidence can be
used in the auditing. For example the documents provided can be used to check whether the
amount recorded is the correct e.g. when checking the money paid to a suppliers, the documents
will give easy time when it comes to auditing the account of the institution since the records are
saved and preserved.
When using the verbal evidence the clients (CLC limited) management team and other
staff may not be in a condition to say the truth hence giving wrong information therefore
inaccurate, invalid audit truthful as well as unfair (Messier, Glover and Prawitt, 2015). This
evidence has a lot issues when the managers are aware of issues such as misquote within the
reports as they will provide information which will cover financial fraud existing within the
company. This is likely to happen since CLC limited has over past suffered from heavy taxation.
However, this type of evidence can give a clear information about CLC limited as well as saves
time where staff and client are saying the truth in relation to financial reports.
When using the computational evidence the mathematical calculations may not be
accurate due to errors and this may not provide accurate data during the audit. Calculation
always consumes a lot of time hence very disadvantageous to the clients and the auditors
(Moroney 2015). For example when dealing with interest accumulated on a given loan, as a

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financial reporter I would like to deal with the rates directly the way they appear in the list and
record rather than asking the clients on their calculations since those who are involved in fraud
activities may give some wrong calculation which will automatically affect the financial report
(Yoon, Hoogduin and Zhang 2015). Conducting this type of an audit requirement needs a lot of
time and keenness in the calculations because of the financial reports and are always accurate
and right thus limited audit risks.
Conclusion
In conclusion, auditing helps with monitoring of the financial accounts since it results
into counter checking of financial records thus reduced rate of financial embezzlements by
ensuring that every penny used in an organization is counted for and well recorded. The heads of
the financial institution should always be trained on how to lies with their clerks to keep the
records and provide them for auditing when needed. Moreover, auditors should use various
sources in order to gather evidence crucial during the audit.

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References
Mentz, M., Barac, K. and Odendaal, E., 2018. An audit evidence planning model for the public
sector. Journal of Economic and Financial Sciences, 11(1), p.14.
Messier, W.F., Glover, S.M. and Prawitt, D.F., 2015. Auditing & Assurance Services: A
Systematic Approach. Qing hua da xue chu ban she.
Moroney, R., 2015. Auditing: A Practical Approach. Wiley Global Education.
Yoon, K., Hoogduin, L. and Zhang, L., 2015. Big Data as complementary audit
evidence. Accounting Horizons, 29(2), pp.431-438.