Why is the appropriateness of audit evidence obtained by the auditor important in forming an audit...

Why is the appropriateness of audit evidence obtained by the auditor important in forming an audit opinion? Describe the qualities information should have to be considered appropriate by the auditor.

Expert Solution

Audit Evidences help an Auditor to draw conlcusions and for an Opinion. During the Audit Period, Audit Team has to obtain SUFFICIENT AND APPROPRIATE Audit Evidences as a important part of the Audit Procedures as a whole.

APPROPRIATENESS is the measure of QUALITY of Audit Evidence. Quality in turn refers to the RELIABILITY AND RELEVENCE. Only on the basis of reliable and relevant Audit Evidences, an auditor can form an Opinion about the Financial Statements and Accounts under Audit.

Relevance: It refers to the relationship to the Assertion or the objective of the control being tested. It depends upon:

a. Design of the Audit Procudure to test the Assertion or Control, whether it is mean to test the assertion or control directly or to test for understatement or overstatement.

b. Timing of the audit procedure meant to test the assertion or control.

Reliability: It refers to the nature, source and circumstancein which audit evidence is obtained.

Examples:

1. Written Audit evidence is more effective than oral audit evidence.

2. Audit Evidence for exernal sources of firm is more reliable than from internal sources.

3. Audit Evidence directly obtained by Auditor are more appropriate.

4. Original documents are more appropriate than auditor.

ekkarill92 answered 2 years ago

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