| The result of a company’s daily transaction of | | | | the auditor in performing the activity, the Auditing |
| business is summarized in the financial statements. In | | | | Standards and Practices Council (ASPC) issued |
| these statements, we can see how established the | | | | Statement of Auditing Standards of the Philippines |
| company is, if it is earning or not, and if it is using its | | | | (SASP) No. 7 – Audit Evidence and |
| resources well. As such, the preparation of the | | | | Documentation. In this statement, the third standard |
| financial statements is a complete managerial | | | | of fieldwork is laid: “Sufficient competent |
| responsibility. Just because the management has | | | | evidential matter is to be obtained through inspection, |
| absolute control on the data presented in the financial | | | | observation, inquiries, and confirmations to afford a |
| statements, the users, such as creditors and | | | | reasonable basis for an opinion regarding the financial |
| government regulatory bodies, cannot put a high | | | | statements under examination.” |
| reliance on it. This is the reason why CPA’s are | | | | It could be noted that the evidential matter should be |
| hired to conduct audits. | | | | “sufficient” and “competent.” What |
| The auditor’s responsibility is to express an | | | | constitute sufficiency and competence of evidence is |
| opinion as to whether the financial statements are | | | | a question that constantly perplexes the auditor in |
| presented in accordance with certain criteria, usually | | | | planning and performing the audit. Different situations |
| generally accepted accounting principles. As part of | | | | call for different approach; unfortunately, there are |
| the process, the auditor has the primary objective of | | | | no fast rules that can be readily applied to all |
| detecting material understatements or | | | | situations. However, there are some generalizations |
| overstatements embodied in the financial statements. | | | | made to guide the auditor in obtaining evidence, and |
| In order to do so, the auditor gathers evidence to | | | | these principles affect both the competence and |
| provide an adequate basis for his opinion. To guide | | | | sufficiency of evidence. |