What is audit evidence?

Audit evidence refers to the information used by auditors to arrive at the conclusions on which the audit opinion is based. It includes both information contained in the accounting records underlying the financial statements and other information. Audit evidence is crucial as it provides a reasonable basis for an opinion regarding the financial statements.

Audit evidence can be obtained through various sources such as:

• Physical examination: Inspection of tangible assets.
• Confirmation: Responses from third parties.
• Documentation: Invoices, contracts, and other records.
• Analytical procedures: Evaluating financial information by comparing recorded amounts to expectations.
• Inquiry: Discussions with management and employees.
• Recalculation: Checking the mathematical accuracy of documents.
• Reperformance: Independent execution of procedures or controls.

Audit evidence should be sufficient (quantity) and appropriate (quality) to support the audit opinion. It must be relevant, reliable, and obtained through competent evidence-gathering procedures.