SA 500 — Audit Evidence

Issued by ICAI AASB · Audit Evidence

The relevance and reliability of audit evidence — the bedrock standard for substantive testing.

Objective

To design and perform audit procedures in such a way as to enable the auditor to obtain sufficient appropriate audit evidence to draw reasonable conclusions.

Key requirements

Sufficient (quantity) and appropriate (relevance + reliability) evidence
Reliability hierarchy: external > internal generated with strong controls > internal
Procedures: inspection, observation, external confirmation, recalculation, reperformance, analytical, inquiry
Use of management's expert — evaluate competence, capabilities, objectivity
Consideration of relevance and reliability of information from external sources

Typical procedures

Vouching to supporting documents at the assertion level
External confirmations for cash, debt, related-party balances (SA 505)
Re-performance of significant calculations

Common pitfalls

Over-reliance on inquiry alone for material assertions
Photocopies / scanned documents accepted without independent verification
No documented evaluation of expert's competence when relying on management's expert

SA 500 in practice

SA 500 sits in the Audit Evidence phase of the audit. The Standards on Auditing are issued by the ICAI Auditing and Assurance Standards Board (AASB) and deemed to be prescribed by the Central Government under Section 143(10) of the Companies Act 2013. Compliance with SAs is mandatory for every audit conducted by a Chartered Accountant in India.

For authoritative text, refer to the ICAI AASB Compendium of Standards on Auditing at icai.org.

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SA 505 — External Confirmations