pexels photo 4386373

Factors which determine sufficiency of audit evidence

Audit evidence are information collected by auditor through performance of both substantive procedures and test of control to support his opinion on whether financial statement show true and fair view. sufficient of audit evidence is the measure of quantity of audit evidence needed to support audit opinion.

The factors that will influence auditor’s judgement regarding sufficiency of audit evidence obtained includes;

  • Materiality – Material items will require more evidence to support them than immaterial items, which might be tested by comparative analytical review only
  • Risk – The efficiency of audit evidence required is affected by the level of risk in the area being tested.
  •  Source and quality of evidence– If audit evidence is of higher quality, then less may be required than if it were of poor quality. In general audit evidence from external third parties is more reliable than that from the client’s record because it is independent. Similarly evidence generated by the auditor is more reliable than that from the client. Also original documents are more reliable than copies which can be tempered with.  
  • Internal control system – audit evidence obtained from the client records is more reliable when the related control system is operating effectively (as tested by auditor). therefore if the internal control system is operating effectively less evidence will be obtained as compared to when internal control system is less effective

We hope that you have found this article useful. If you have any additional point you would like to share with us on factors to consider when determining sufficiency of audit evidence, please add them to the comment below.

1 thought on “Factors which determine sufficiency of audit evidence”

  1. Pingback: 3 qualities of good audit evidence. - ACCOUNTING CLASS

Leave a Comment

Your email address will not be published. Required fields are marked *

%d bloggers like this: