What is audit evidence?
ISA 500.6 requires the auditor to design and perform audit procedures that are appropriate in the circumstances to obtain sufficient appropriate audit evidence. Evidence is not limited to documents — it includes everything the auditor observes, confirms, recalculates, and analyses during the engagement.
ISA 500.A5 through A12 establish a reliability spectrum rather than binary rules. Evidence obtained directly by the auditor (physical inspection, observation) is more reliable than evidence obtained indirectly (inquiry responses). External evidence (bank confirmations, supplier statements) is more reliable than internal evidence (management calculations). Documentary evidence is more reliable than oral representations.
ISA 500.7 recognises that audit evidence is cumulative — the auditor builds a conclusion from a combination of different types of evidence, not from a single source. When evidence from different sources is inconsistent, ISA 500.11 requires the auditor to determine what additional work is needed. The contradiction must be resolved and the resolution documented, not ignored.
Key Points
- Audit evidence includes accounting records, confirmations, observations, and anything else the auditor uses to form the opinion — not just documents in the file.
- The value of evidence depends on its relevance and reliability. ISA 500.A5-A12 rank sources on a spectrum: direct over indirect, external over internal, documentary over oral.
- Inspection findings most often cite insufficient evidence, not the wrong type. The issue is typically that teams ran a procedure but did not obtain enough from it to conclude.
- Contradictory evidence requires a documented response. ISA 500.11 does not allow the auditor to select the more favourable piece and discard the other.
Why it matters in practice
The direction of evidence matters more than teams often realise. A bank confirmation is strong evidence for the existence of a cash balance, but it tells you nothing about the valuation of a foreign currency account. A management representation letter is weak evidence for almost any assertion on its own. Teams that default to one evidence type per assertion — without considering whether it actually addresses the assertion at risk — leave gaps that inspectors find.
Running a procedure does not automatically produce evidence. An unanswered confirmation request produces no evidence at all — ISA 505.12 requires the auditor to perform alternative procedures. An analytical procedure where the expectation is built from the same data being tested produces circular evidence. The distinction between "we did the work" and "we obtained evidence" (ISA 500.A4) is where most file deficiencies sit.
Key standard references
- ISA 500.5(c): Definition of audit evidence as information used by the auditor in arriving at the conclusions on which the audit opinion is based.
- ISA 500.6: Requirement to design and perform audit procedures to obtain sufficient appropriate audit evidence.
- ISA 500.A5-A12: Reliability factors — direct vs indirect, external vs internal, documentary vs oral.
- ISA 500.11: Requirement to resolve inconsistencies in evidence from different sources.
- ISA 500.A1: Categories of audit procedures — inspection, observation, inquiry, confirmation, recalculation, reperformance, analytical procedures.
Related terms
Related reading
Frequently asked questions
What makes audit evidence reliable?
ISA 500.A5 through A12 establish the factors: evidence obtained directly by the auditor is more reliable than evidence obtained indirectly, external evidence is more reliable than internal evidence, and documentary evidence is more reliable than oral representations. These are a spectrum, not binary rules.
What is the difference between audit evidence and audit procedures?
Audit evidence is the output — the information obtained. Audit procedures are the input — the methods used to obtain it. ISA 500.A1 lists the procedure categories (inspection, observation, inquiry, confirmation, recalculation, reperformance, analytical procedures), each producing evidence of different quality and relevance.
What happens when two pieces of evidence contradict each other?
ISA 500.11 requires the auditor to determine what additional work is needed when evidence from different sources is inconsistent. Ignoring contradictory evidence is a common inspection finding — the contradiction must be resolved and the resolution documented.