8 Types of Audit Evidence: All You Should Know!

Auditing is a process in which independent parties, known as auditors, examine the financial statements of a company, known as the client. The primary goal with auditing is for auditors to determine whether the financial statements of the client are free from material misstatement and present a true and fair view. Once auditors evaluate whether the financial statements are materially misstated or not, they give an opinion regarding it. This opinion comes in the form of an audit report, which is an official document from auditors presenting their opinion about the financial statements of the client.

Usually, auditors need to perform specific procedures on all material items in the financial statements. Auditors carry out these procedures during the audit to ensure all the assertions related to a financial statement item are correct. By checking these assertions, auditors can form an opinion about each individual item of financial statements. Once auditors cover all the material aspects of the client’s financial statements, they can present an opinion and provide an audit report. However, to support their opinion, auditors must gather audit evidence.

What is Audit Evidence?

The Internal Standard on Auditing that deals with Audit Evidence are ISA 500 – Audit Evidence. The standard states that the auditor’s responsibility is “to design and perform audit procedures in such a way to enable the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor’s opinion.”

So, what is audit evidence? Audit evidence consists of accounting records related to the financial statements and other information that auditors gather. These may contain documents such as circularization that they obtain from third parties or the client.  Gathering and objectively evaluating audit evidence requires the auditor to consider two factors, sufficiency, and appropriateness. These are both characteristics of reliable audit information.

It is considered sufficient when the auditors determine the quantity of the audit evidence enough on which they base their opinion. Therefore, sufficiency relates to the quantity of the audit evidence, rather than its quality. Appropriateness, on the other hand, relates to the quality of audit evidence. The appropriateness of audit evidence represents the relevance and reliability of audit evidence in providing support for the conclusions on which auditors base their opinion.

The major reason an independent auditor gathers audit evidence is to support their conclusions related to financial statement items. For auditors’ work to be trustworthy, they must use proper procedures and techniques to evaluate the truthfulness and fairness of the financial statements. Therefore, they gather evidence to support these procedures and their opinion.

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Why is Audit Evidence Important?

Many reasons show the importance of audit evidence. First of all, audit evidence is the basis on which auditors base their opinion. In the absence of audit evidence, auditors cannot form an opinion. Similarly, when the audit evidence is not sufficient or appropriate, the quality of the opinion provided also suffers. Furthermore, in case of a dispute, audit evidence forms the basis for auditors to illustrate their point of view.

When a company’s stakeholders want to make decisions regarding their relationships with it, they use the audit report as a basis. These stakeholders may include shareholders, investors, employees, financial institutions, etc. Since the audit opinion presented in the audit report depends on the evidence gathered by auditors during fieldwork, the importance of audit evidence becomes more significant.

Similarly, auditors cannot depend on the financial systems of the client to provide evidence for their work. While it is a part of the audit evidence process, it does not form sufficient appropriate audit evidence. Therefore, auditors need to gather evidence on their own related to the financial statements. Similarly, they must ensure whether the evidence comes from an authentic source to verify it.

Finally, the importance of evidence also becomes apparent by considering its absence. In the absence of audit evidence, any audit opinion does not constitute a valid opinion. In addition, providing an opinion without gathering audit evidence is considered professional misconduct by many accounting bodies around the world. It can also further translate into legal issues. Therefore, gathering audit evidence is critical.

Types of Audit Evidence

While there are 8 types of audit evidence, some auditors only rely on 6 types of audit evidence. Which type of evidence auditors obtain for a specific item in the financial statements depends on the item itself, the assertion auditors are testing, the nature of the client, etc. Some types of audit evidence that auditors can gather include the following.

1. Physical examination

Physical examination consists of auditors physically verifying the existence of various assets. On the other hand, auditors can also use a physical examination to verify the state or condition of an asset. Auditors collect this type of audit evidence themselves. Physical examinations are one of the main sources of audit evidence for fixed assets.

2. Confirmations

Confirmations consist of auditors sending circularization to third parties, which mainly include banks, accounts payables, and receivables. Through confirmations, auditors confirm the closing balance recorded in the financial statements for particular parties. The most effective evidence gather for accounts receivable is the circularization sent to receivable balance parties. The same is true for accounts payable and bank balances.

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3. Documentary evidence

Documentation is also a crucial part of any audit. Documentation requires auditors to gather documents regarding different aspects of an audit, which may be internal or external. With documentation, the sources of audit evidence also matter. Auditors can use various techniques such as vouching or tracing with documentation as a part of their audit procedures.

4. Analytical procedures

Analytical procedures include performing various analyses on the financial statements of the client to identify any trends or discrepancies. Auditors use their own calculations to perform analytical procedures. Similarly, analytical procedures can help obtain an overall view of the changes in the financial year.

5. Oral evidence

During the audit process, auditors may come across various items where they need to understand the process to design audit procedures. It is where inquiries help them. Auditors can enquire the management of the client regarding various aspects of their operations or processes to gather evidence. However, inquiries may not be considered a strong form of audit evidence.

6. Accounting system

The accounting system of the client is also a source of audit evidence for auditors. Through the accounting system of the client, auditors can obtain all the information related to the financial statements. Similarly, it can help auditors in gathering other types of audit evidence. If the client uses a computerized accounting system, auditors can also use electronic procedures for obtaining audit evidence.

7. Reperformance

Reperformance is the process of auditors reperforming various internal control processes to check for deficiencies. The examples for reperformance include reperforming bank or account receivables/payables reconciliations to evaluate the internal controls in place at the client. Through reperformance, auditors can also determine the control risk of a client.

8. Observatory evidence

The next type of audit evidence that auditors can obtain is through observation. In observation, auditors observe various aspects of the client’s operations or processes. It can help auditors get a view of the client’s processes and analyze them for deficiencies. Observation is different from a physical examination as it focuses on processes rather than physical assets.

Audit Procedures to Obtain Audit Evidence

Audit procedures for obtaining audit procedures include all the different types of audit procedures that auditors can apply. Given below are the audit procedures used by auditors to obtain audit evidence.

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Inspection is an audit procedure in which auditors inspect the records, documents, or physical assets of the client.


Observation helps auditors in going through the operations and processes of the client and observing them identify any weaknesses.

External confirmation

External confirmations allow auditors to obtain third-party accounts of the balances recorded by the client in its financial statements.


Recalculation consists of auditors recalculating balances or transactions and comparing them with reported amounts.


Reperformance allows auditors to reperform various internal control procedures of the client to identify any weaknesses.

Analytical procedures

Analytical procedures allow auditors to analyze the client’s financial statements to identify discrepancies or trends.


Inquiry consists of auditors enquiring about the client’s management or personnel to clarify various aspects of the audit process.

Quality of Audit Evidence

The reliability of audit evidence is typically influenced by the source and nature of information obtained. This typically includes the controls over its preparations as well as the maintenance of such information. The table below lists out the degree of the reliability of audit evidence:

SourceQuality or Reliability of Audit Evidence
ExternalThe audit evidence obtained from external sources is more reliable than the information obtained from the company’s record. This is because it is obtained from an independent source.
AuditorThe audit evidence obtained directly by the auditor is more reliable than the evidence received indirectly or by any inference.
EntityThe audit evidence obtained from the company’s record is more reliable when the company’s internal controls or control system is functional and operates effectively.
WrittenWritten audit evidence, for instance, from documents or any written representation, are typically more reliable than any oral representation.
OriginalsBasically, the original documents are more reliable than the photocopies documents, given that the photocopied documents can be easily altered by the auditee.

Limitation Audit Evidence

Several factors limit the audit evidence that auditors can gather. These factors include things such as limitations enforced or imposed by the management of the client. Similarly, some restrictions may be outside of both the auditors’ and the client’s control. Some other limitations may also come due to the nature of the client or the timing of the audit.

When faced with limitations in obtaining the evidence, auditors must use their professional judgment to determine whether these limitations can affect their ability to form an opinion and act accordingly. For example, the auditor may either modify their audit report to give a ‘qualified except for’ opinion or issue a ‘disclaimer’ opinion.


Audit evidence is the documentation or other information that auditors gather as a result of audit procedures. Furthermore, audit evidence is a vital part of any audit as it allows auditors to reach conclusions and form an opinion. There are 8 types of audit evidence that auditors can obtain. Sometimes, auditors may also face limitations in gathering evidence and must use their professional judgment to act accordingly. 

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