Audit Evidence

(Ratliff)
General Definition:
The dictionary defines evidence as something that is
intended to prove or to provide support for some
belief.
Everything collected by an internal auditor is a piece
of evidence which by itself may have flaws in the
form of personal bias, potential error misstatement,
or less competency in its substance than is generally
desired.
However, by combining each piece of evidence into
an information pool, the internal auditor can build a
foundation a body of evidence, from which audit
inferences can be drawn
Standards of Audit Evidence
Auditors should collect information related to the
audit objectives and scope of work.
Audit evidence should be sufficient, competent,
relevant and useful to provide a sound basis for audit
findings and recommendation.
Procedures to collect and analyze audit evidence
should be determined in advance.
In order to maintain objectivity and to meet the
objectives of the audit, the collection, analysis,
interpretation, and documentation of audit evidence
should be supervised.
Working papers documenting audit evidence should
be prepared and reviewed.
Types of Audit Evidence:
Four Classification of Audit Evidence:
(1) Audit Evidence Classified by source
(2) AE classified by Audit Procedure
(3) Persuasiveness
(4) Legal Rules
Consideration Affecting the Selection
of Audit Evidence:
The desireablity of a mix of various types of
evidence
The importance of audit objectives in
directing the type of evidence to be gathered.
Risk factors.
Cost vs benefit
Materiality
Evaluating the Adequacy of Audit
Evidence
Sufficient Evidence:
Competent:
Relevant
Useful
Documenting Evidence in Working
Papers
Efficiency
Clarity
Evidence as a Determinant of
Professionalism
Due professional care
The consequence of unsubstantiated Claims
The scope of services
Supervision of audit work