Audit Evidence Techniques

Audit Evidence Techniques

ISA 500 Audit Evidence identifies eight types of evidence gathering procedure that the auditor can adopt to obtain audit evidence.

Inspection of documents and records

  • May give evidence of ownership (rights and obligations), e.g. title deeds
  • May give evidence that a control is operating, e.g. invoices stamped paid or authorised for payment by an appropriate signature.
  • May give evidence about cut-off, e.g. the dates on invoices, despatch notes, etc.
  • Confirms sales values and purchases costs (i.e. by inspecting the invoice)

Inspection of tangible assets

  • Will usually give pretty conclusive evidence of existence!
  • May give evidence of valuation, e.g. obvious evidence of impairment of inventory or non-current assets.


  • Involves looking at a process or procedure.
  • May well provide evidence that a control is being operated, e.g. double staffing or a cheque signatory.

You need to remember that this is only evidence that the control was operating properly at the time of the observation, and the auditor's presence may have had an influence on the client's staff's behaviour.

Observation of a one-off event, e.g. an inventory count, may well give good evidence that the procedure was carried out effectively.


Whilst a major source of evidence, the results of enquiries will usually need to be corroborated in some way through other audit procedures. This is because responses generated by the audit client are considered to be of a low quality due to their inherent bias.

The answers to enquiries may themselves be corroborative evidence. In particular they may be used to corroborate the results of analytical procedures.

Management representations are part of overall enquiries. These involve obtaining written responses from management to confirm oral enquiries. These are considered further in chapter on completion and review.


  • This refers to the auditor obtaining a direct response (usually written) from an external, third party.
  • Examples include:
    • circularisation of receivables;
    • confirmation of bank balances in a bank letter;
    • confirmation of actual/potential penalties from legal advisers; and     
    • confirmation of inventories held by third parties.
  • May give good evidence of existence of balances, e.g. receivables confirmation.
  • May not necessarily give reliable evidence of valuation, e.g. customers may confirm receivable amounts but, ultimately, be unable to pay in the future.


This involves checking the arithmetical accuracy of the client's calculations, e.g. depreciation amounts.


This involves reperforming client procedures, e.g. test checking inventory counts.

Analytical procedures

These involve the comparisons of sets of data to identify trends and understand the relationships between the sets of data.

Created at 10/3/2012 6:10 PM  by System Account  (GMT) Greenwich Mean Time : Dublin, Edinburgh, Lisbon, London
Last modified at 1/18/2013 3:41 PM  by System Account  (GMT) Greenwich Mean Time : Dublin, Edinburgh, Lisbon, London

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