Definition
Audit evidence is all the information the auditor uses to support the opinion. It has two sources: the accounting records that sit under the financial statements (ledgers, journals, supporting documents) and other information the auditor gathers, such as confirmations, inspection of assets, inquiry responses and observation. Records alone are not enough, because they come from management's own system.
Why it matters in an audit or review
The opinion is only as good as the evidence behind it. AU-C 500 asks the auditor to design procedures that produce evidence that is relevant and reliable for the purpose. Reliability varies by source: evidence from an independent outside party, obtained directly by the auditor, in original documentary form, is generally stronger than a spreadsheet or an oral answer from the client. Evidence that conflicts, or whose reliability is in doubt, calls for more work.
Example
To support a $480,000 receivable (illustrative), the auditor can read the customer's signed confirmation reply (external, direct), inspect the shipping record and invoice (internal, documentary), and ask the controller why the balance grew (inquiry). The confirmation carries the most weight; the inquiry alone would carry the least.
Common mistakes
- Treating a client-prepared schedule as evidence of its own accuracy without testing its completeness and accuracy.
- Filing a document without recording what it was used to prove.
FAQ
Is audit evidence the same as a working paper?
No. A working paper documents the work and the conclusion. The evidence is the underlying information, copied or referenced in the file.
Sources
- AICPA, AU-C Section 500, Audit Evidence (as amended by SAS No. 142)
- AICPA, AU-C Section 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error