Audit Evidence
Audit evidence is all information used by the auditor to arrive at the conclusions on which the audit opinion is based, evaluated for sufficiency (quantity) and appropriateness (quality).
Explanation
Appropriateness is a measure of quality, encompassing relevance and reliability. Evidence obtained from independent external sources is generally more reliable than that from internal sources. Sufficiency is a measure of quantity, influenced by the assessed risk of material misstatement and the quality of the evidence. Common evidence-gathering procedures include inspection, observation, inquiry, confirmation, recalculation, reperformance, and analytical procedures.
Key Points
- •Sufficiency = quantity; appropriateness = quality (relevance + reliability)
- •External evidence is generally more reliable than internal evidence
- •Seven procedures: inspection, observation, inquiry, confirmation, recalculation, reperformance, analytical procedures
Exam Tip
Inquiry alone is never sufficient as audit evidence — it must be corroborated with other procedures.
Frequently Asked Questions
Related Topics
Substantive Procedures
Substantive procedures are audit procedures designed to detect material misstatements at the assertion level, including tests of details and substantive analytical procedures.
Audit Sampling
Audit sampling is the application of audit procedures to less than 100% of items within a population, allowing the auditor to draw conclusions about the entire population.
Test your knowledge
Practice scenario-based questions on this topic with detailed explanations.