Definition
Information produced by the entity (IPE) is information, usually from the client's systems, that the auditor uses to perform procedures. Examples: an accounts receivable aging, a fixed asset listing, a payroll register, an inventory count listing, or a population used for sampling. AU-C 500 requires the auditor to evaluate whether the information is sufficiently reliable for the auditor's purposes, including obtaining evidence about its accuracy and completeness where needed and evaluating whether it is precise and detailed enough.
Why it matters in an audit or review
A sample drawn from an incomplete population leaves gaps no test can cover, and a report with wrong ageing buckets can hide an allowance problem. The auditor evaluates completeness (does the report include every item) and accuracy (are the data and calculations right). Ways to do it include reconciling totals to the general ledger, re-running the report with the auditor present, testing report logic, and relying on tested ITGCs for system-generated reports.
Example
For the receivable confirmation population, the auditor takes the client's aging report. Total ties to the general ledger at $3.2 million (illustrative). The auditor recomputes the aging for 20 invoices to check the buckets, checks that the report parameters included all customers and the right cutoff date, and notes the report was run by the auditor's staff, not the client's.
Common mistakes
Agreeing the total to the general ledger and stopping, without testing whether the detail or the ageing logic is right.
Sources
- AICPA, AU-C Section 500, Audit Evidence (reliability of information used as audit evidence)
- PCAOB, AS 1105, Audit Evidence (information produced by the company, for issuer audits)
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error