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Auditing Evidence

Auditing Evidence

What Is Auditing Evidence?

Auditing evidence is the data collected for survey of a company's financial transactions, internal control practices, and different things important for the certification of financial statements by an auditor or certified public accountant (CPA). The amount and type of auditing evidence considered differ extensively founded on the type of firm being audited as well as the required scope of the audit.

Understanding Auditing Evidence

The goal of any audit is to determine whether a company's financial statements follow generally accepted accounting principles (GAAP), international financial reporting standards (IFRS), or one more set of accounting standards applicable to a substance's jurisdiction. Publicly traded companies are generally required to introduce completely audited financial statements to shareholders intermittently, and consequently the assemblage and organization of auditing evidence are essential for auditors and accountants to go about their responsibilities. In short, auditing evidence is intended to furnish auditors with the data for them to make the judgment on whether financial statements are accurate and true.

Auditing evidence is defined as a term to safeguard investors by advancing transparent, accurate, and independent audit reports. The Public Company Accounting Oversight Board (PCAOB), made by the Sarbanes-Oxley Act of 2002, characterizes auditing evidence as all the data that can be utilized by auditors to pursue their choice on the quality and precision of a company's financial statements. The auditing evidence supports and checks the last data given by management in the financial statements. It can likewise go against it on the off chance that there are errors or fraud.

Instances of auditing evidence incorporate bank accounts, management accounts, payrolls, bank statements, solicitations, and receipts.

Characteristics of Auditing Evidence

Great auditing evidence can be estimated by the degree of the accompanying characteristics:

Sufficiency: Sufficiency considers whether the material gave is of an adequate quantity that would permit auditors to make an accurate judgment. In the event that an auditor was given just one bank statement of a company, it wouldn't be sufficient to make any determinations on the financial standing of that company.

Reliability: Reliability looks to determine whether the material can be relied upon and depended on for shaping an assessment. Dependability commonly factors from the source of the data.

Source: The source of accounting evidence can be gotten straightforwardly from the company or remotely. Remotely sourced data is generally viewed as more dependable and is consequently preferred.

Nature: Nature alludes to the type of data that is received. For instance, the data can be given through legal records, introductions, orally from employees, or through a physical confirmation.

Relevance: Depending on the type of audit being directed, how appropriate the data received in its connection to the overall analysis is a directing factor.

By and large, auditors favor data that is written rather than gave orally; data that is from a third-party source as gone against from inside the company; original records instead of duplicates of those reports; a strong understanding of the firm by the auditor to request fitting auditing evidence; firsthand perceptions by the auditor instead of documentation gave by means of another source.

Instance of Auditing Evidence

Company ABC has enrolled the auditing services of the accounting firm, Anderson Brothers, to have their financial statements from the fiscal year 2020 audited. The auditor starts working on the audit and requests data with respect to reported incomes and bank balances. To get accurate and solid data, in regards to incomes, the auditor requests sales receipts and solicitations and a physical examination of inventory. As to balances, the auditor requests all of the bank statements of the company straightforwardly from ABC's bank. The entirety of this data; the receipts, solicitations, physical perceptions, and bank statements are viewed as auditing evidence.


  • Great auditing evidence ought to be adequate, dependable, gave from a proper source, and pertinent to the current audit.
  • Instances of auditing evidence incorporate bank accounts, management accounts, payrolls, bank statements, solicitations, and receipts.
  • The auditing evidence is intended to support the company's claims offered in the financial expressions and their adherence to the accounting laws of their legal jurisdiction.
  • Auditing evidence is the data collected by an auditor to determine the precision and compliance of a company's financial statements.