Audit evidence are financial and other information which auditor use to support his conclusion (opinion) on the audited financial statements.
There are a number of general principles set out in ISA 500 to assist the auditor in assessing the reliability of audit evidence. These can be summarized as follows:
- Internally generated audit evidence is more reliable when related control is effective
- Audit evidence is more reliable when it is obtained from an independent source outside the entity under audit. For example, later of confirmation of bank balance obtained from the bank by the auditor.
- Audit evidence provided by original documents is more reliable than audit evidence provided by photocopies or documents that have been filmed or otherwise transformed into electronic form. This is because the reliability of those other forms may depend on controls over their preparation and maintenance.
- Audit evidence is more reliable when it exists in the documentary form. This could be paper, electronic or other media. For example, writing a record of the meeting is more reliable than the subsequent representation of the matters discussed
- Audit evidence obtained directly by the auditor is more reliable than audit evidence obtained indirectly or by inference. For example, observation of the operation of controls by the auditor is more reliable than an inquiry about the operation of that control, such as attendance at inventory count.