We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Accounting

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Are the Different Types of Audit Evidence?

Mary McMahon
By
Updated: May 16, 2024
Views: 14,097
Share

Audit evidence can include physical evidence, testimonial material, and analysis of information. Together, the body of evidence should allow an auditor to make an authoritative statement. Auditors may find evidence of irregularities, information that suggests accounting practices are sound, or inconclusive evidence that makes it difficult to take a firm position. In the audit report, the auditor will discuss the evidence and its sources so anyone who reviews the report can understand how the auditor arrived at a given conclusion.

In terms of physical evidence, auditors have several kinds of evidence available to them. One is documentary in nature; a firm should have hard copy accounting records as well as electronic ones, and this information can be very useful. Furthermore, audit evidence can include a physical inspection of assets. If a firm claims to own a piece of real estate, for example, the auditor can go to look at it and determine whether the property matches the description in accounting documentation.

Testimonial evidence includes confirmations, or third party responses to queries sent out by an auditor. The auditor could ask a bank for information about a company, for example, or request an assessment of the value of an asset from an expert. Auditors also make direct client inquiries and use this as part of the audit evidence. Responses from a client can provide important insight into accounting practices and client attitudes. Observation is another form of audit evidence, where the auditor looks at how the client behaves to contextualize the audit findings.

Analysis of information is a key part of an audit. This includes going through other forms of evidence to come up with a coherent narrative and to identify areas of concern, like accounting statements that do not match. Auditors can also engage in re-performance, where they check calculations and transfers for accuracy. Errors can reveal a problem with accounting practices, or a simple mistake that compounded into a bigger issue when it was not caught.

The source of audit evidence can be important when evaluating the validity of an audit. External evidence and audits tend to be stronger, as reviewers assume third parties do not have a specific interest in the outcome of the audit. Internal evidence and audits can be valuable, but may also be biased in nature. Auditors aim for a mixture of sources in their evidence to create a balanced picture of a company's overall financial situation.

Share
SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
By ysmina — On Aug 27, 2011

In court cases, there is also a type of evidence called demonstrative evidence. This is usually a picture, image or photograph that relates to that case.

Is there such an audit evidence? For example, could it could be a photograph of a property that the client claims to have?

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
Share
https://www.smartcapitalmind.com/what-are-the-different-types-of-audit-evidence.htm
Copy this link
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.