Matthew and Son Limited has recently been appointed the auditors of Morris Co. Ltd, which is a medical supplies company with 16 employees. A stock count was recently executed, and the auditors were present observing the operations. It was later ascertained that the company had a material amount of work in progress. Matthew and Son Limited have taken the steps needed to execute a detailed audit work on Morriss Financial Statements for the period ending June 30, 2022. Three junior members of the audit team approached you and asked you to explain the process of obtaining audit evidence. The executive management of the company is aware that an audit is based on evidence obtained. However, they want to know the factors that will influence your firms judgment in deciding what will be considered sufficient appropriate evidence when auditing their financial statements. Morris Co. Ltd is also unsure about the specific procedures that your firm will be using to obtain your audit evidence.

Required:

a. State three (3) of the factors that an audit can use to assist their judgment in deciding what will be sufficient appropriate evidence, commenting on their relevance to your firms audit of Morris Co. Ltd.

(b. The procedures listed below can be used to gather audit evidence. For each, give two (2) examples of when this procedure can be used during the auditing of the financial statements of Morris Co. Ltd.

(i) Observation

(ii) Inquiry

(iii) Confirmation

(iv) Reperformance