Concept of Audit Evidence

The auditing is an evidence gathering exercise.  It is an exercise continued out to confirm the assertions made through the management in carrying out the management duties and in producing accounts meant to provide a fair and true view.  So the authoritative document is the ISA 500 Audit Evidence.

The auditor proceeds through:

1. Identifying the assertions made by the directors expressed or implied for every item in the accounts;
2. The evaluation of every assertion for relative importance so as to assess the quantity and quality of audit evidence required;
3. Using both compliance and substantive procedures to collect information and evidence to support the amount at which items have been disclosed and the nature of that disclosure;
4. The evaluation of the evidence collected to ensure that it is relevant, reliable and sufficient;
5. To formulate a judgement on the truth and fair presentation of the items.

Having formulated the judgment on each item included or excluded from the accounts, the auditor then formulates a judgment on the truth and fairness of the accounts taken as a whole.  To do this he will find that he needs other evidence in addition to the judgment he made on the individual items.