Focus on: Responding to Risk Assessment: Evidence Accumulation and Evaluation—Module 4
SUFFICIENT APPROPRIATE AUDIT EVIDENCE
Auditors must obtain sufficient appropriate audit evidence as a basis for their opinion.
Sufficient audit evidence—Relates to the quantity of evidence necessary to support the opinion
- Auditors obtain persuasive audit evidence, not totally convincing audit evidence.
- Cost of obtaining evidence should not exceed expected benefit.
- The ultimate decision on sufficient audit evidence is a matter of the auditor’s judgment.
Appropriate audit evidence—Evidence that is relevant and reliable.
While generalizations are difficult and subject to exceptions, audit evidence is ordinarily more reliable when it is
- Obtained from knowledgeable independent sources outside the client company rather than nonindependent sources
- Generated internally through a system of effective controls rather than ineffective controls
- Obtained directly by the auditor rather than indirectly or by inference (e.g., observation of application of a control is more reliable than an inquiry to the client concerning the control)
- Documentary in form (paper, electronic, or other) rather than an oral representation
- Provided by original documents rather than copies or facsimiles
Nature, Timing, and Extent of Audit Evidence
Audit risk model used to determine acceptable level of detection risk
- Understanding of design of internal control used to assess level of control risk
- Assessed level of control ...