Audit Evidence Concept

Audit Evidence Concept

Audit evidence has vital importance for the auditor conclusion & audit opinion. Audit evidence concept has been explained below in more details.

Nature of Audit Evidence

Audit evidence is information used by the auditor for reaching a conclusion. The primary source of information or audit evidence is accounting record. However, auditor may also obtain audit evidence from other sources. These sources may lie within or outside organization.

Importance of Audit Evidence

Audit evidence has fundamental importance for expressing audit opinion. Audit Opinion is based on the conclusion is derived from the audit evidence (i.e. information got during the audit), it means there is not audit evidence, there is not audit opinion (disclaim opinion).

 Sources of audit evidence

Sources of audit evidence include the accounting record and other sources. Accounting record includes vouchers, invoices, bills, etc.  Other sources include agreements with vendors and others, bank statements, confirmation from third parties, minutes of meetings of equity holders and directors.

Audit procedures for Audit Evidence

Audit evidence is obtained by applying various audit procedures that includes inquiries from the management, employees, internal auditors and other, inspection of document and physical assets and observation of difference process and function of organization, recalculation and performance of calculation, analytical procedures and other audit procedures suitable in the circumstances.

Quality of Audit Evidence

Quality of audit evidence is affected by relevance & reliability of audit evidence.

1.    Relevance

Relevance mainly depends on the purpose of audit evidence. One it is cleared that for what purpose of audit procedure is being obtained, and related assertion. Then relevance information can be collected easily.

2.    Reliability of audit evidence

Reliability of audit evidence depends on nature and source of information. Some sources are more reliable than other.