What Are the Types of Audit Evidence?

01Overview

International Standards on Auditing (ISA) 500 – audit evidence is a procedure to enable the auditor to obtain sufficient appropriate audit evidence to draw a reasonable conclusion on the auditor’s opinion.

Audit evidence consists of the documents you use during an audit to substantiate your audit opinion. While working on an audit, you encounter many different types of evidence (written, oral, and so on).

02Key takeaway

You will understand:

(a) Sources of audit evidence

(b) Audit evidence procedure

(c) Quality of the audit evidence

(d) The four concepts of audit evidence

Summary of learning

1. Sources of audit evidence

• Testing the accounting records

• Different sources/natures or independent parties in the entity

• 3rd party’s information/ confirmation

2. Audit evidence procedure:

• Inspection

Internal/external, paper/electronic form, physical examination

• Observation

Looking at a process or procedure being performed such as inventory counting

• External Confirmation

A direct written response to the auditor from a third (confirming) party

• Recalculation

Checking the mathematical accuracy of documents or records

• Reperformance

Auditor’s independent execution of procedures or controls

• Analytical procedures

Evaluations of financial information through analysis among financial and non-financial data

• Inquiry

Seeking information of the knowledgeable person, both financial and non-financial, within or outside entity.

3. The quality of audit evidence is affected by:

• Relevance; and

• Reliability of the information based

4. The four concepts of audit evidence

• NatureThe form of the evidence — for example, oral, visual, or written.
• AppropriatenessThe quality, relevancy, and reliability of the evidence.
• SufficiencyThe quantity of audit evidence — enough evidence to evaluate the audit client’s management assertions.
• Evaluation A decision on whether the evidence is compelling enough to allow you to form an opinion.

Sources

https://www.mia.org.my/v2/downloads/handbook/standards/ISA/2020/01/ISA_500.pdf

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