Evaluate Relevance, Sufficiency,

and Competence of Evidence

Adrian de Guzman

Qualities of evidence
Sufficient
Information is factual, adequate and convincing evidence to support
the auditors findings, conclusions, and any recommendations
Reliable
Information is the best attainable information through the use of appropriate
engagement techniques

Relevant
information supports engagement observations and recommendations
and is consistent with the objectives for the engagement
Useful
information is useful when it helps the organization meet its objectives

Nature of information
Legal evidence
Direct evidence establishes a particular fact or conclusion without having to
any make any assumptions
testimony by a witness to an event

Circumstantial evidence establishes a fact or conclusion that can then lead

by inference to another fact
The existence of a flat tire can lead to the conclusion that tire was sabotaged. Obviously, such
evidence must be used very carefully because the tire might have been damaged accidentally

Conclusive evidence is absolute proof, by itself

A watch in the desert. The mere fact of finding the watch proves that someone put it there. It did
not assemble itself spontaneously out of sand

Corroborative evidence serves to confirm a fact or conclusion that can be

inferred from other evidence
Employee who claims to have been working late . A member of the building custodial staff can
provide corroborating evidence that this employee was seen in the office

 Opinions are generally not considered

allowable testimony in court unless offered
by unbiased experts
Hearsay is secondhand evidence and is
generally ruled inadmissible in court

Audit evidence
Physical evidence consist of the internal
auditors direct observation and inspection
of people, property, or activities.
Photographs, maps, graphs and charts

Testimonial evidence consists of written or

spoken statements of client personnel and
others in response to inquiries or interview
questions.

 Documentary evidence exists in some

permanent form, such as checks, invoices,
shipping records, receiving reports, and
purchase order.
External information invoices from suppliers
Internal information purchase orders, receiving
report

Analytical evidence is drawn from the

consideration of the interrelationships
among data.

Degree of persuasiveness
Levels of persuasiveness of evidence
Auditors physical examination provides most
persuasiveness form of evidence
Direct observation by the auditor
Information originating from a third party
Information originating with the client

Gathering audit evidence

Procedure

description

example

inquiry

Asking questions of audit

client personnel or third
parties and obtaining the
oral or written responses

Circulate a questionnaire
among senior executives
asking them to identify
the top ten risks
threatening the
organization

observation

Watching people,
procedures or
processes.

Observe with care which

employees with care
which employees count
the year end physical
inventory

inspection

Studying documents and

records and physically
examining intangible
resources.

Inspect selected
inventory items to
determine their condition
and salability