## Evaluating Audit Evidence

### Governing Standard

SA 500 applies to all audit evidence obtained during the audit, to enable the auditor to draw reasonable conclusions and form an opinion.

### Core Requirement

The auditor must obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level.

Dimension	Meaning
Sufficiency	Quantity of evidence — more evidence needed for higher-risk areas or less reliable evidence
Appropriateness	Quality of evidence — relevance to the assertion + reliability of the source

Whether sufficient appropriate evidence has been obtained is a matter of professional judgment — there is no formula.

### Handling Inconsistencies (SA 230 Linkage)

If the auditor identifies information that is inconsistent with the final conclusion on a significant matter:

SA 230 imposes a specific documentation requirement
The auditor must document how the inconsistency was addressed and resolved
Inconsistent evidence cannot simply be set aside — it must be confronted and explained

### When Doubts Arise Over Reliability

Obtain alternative or additional evidence
Assess the impact on related evidence already gathered
If reliability is fundamentally in doubt, reassess the sufficiency of evidence as a whole

> The auditor's obligation is not just to collect evidence, but to conclude whether what has been collected is enough and reliable enough to support the audit opinion.

Worked example

### Example 1

An auditor receives management's written representation that no litigation is pending. During a review of legal correspondence, a lawyer's letter referencing an ongoing court case is found. This is inconsistent evidence. Under SA 230, the auditor must document how this inconsistency was resolved — typically by obtaining a direct confirmation from the company's lawyers.

### Example 2

An auditor has large quantities of internal documents (e.g., internally prepared schedules) supporting a balance, but each document is of low reliability because they are all created by management. Despite sufficiency in quantity, appropriateness (reliability) is insufficient — the auditor must obtain corroborating external evidence.

⚠️ Common exam mistakes

Treating sufficiency and appropriateness as independent — they interact. A large quantity of low-quality evidence may still be insufficient overall.
Ignoring documentation requirements under SA 230 when inconsistencies arise — the standard mandates specific documentation, not just mental resolution by the auditor.
Thinking professional judgment means the auditor has discretion to ignore inconvenient evidence — judgment must be exercised honestly and documented.

Bare-Act text SA 500 Scope; SA 230 Para 11 · SA 500 – Audit Evidence; SA 230 – Audit Documentation · click to expand

SA 500 'Audit Evidence' is applicable to all the audit evidence obtained during the course of the audit 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. SA 230 includes a specific documentation requirement if the auditor identified information that is inconsistent with the auditor's final conclusion regarding a significant matter.

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Evaluating Audit Evidence — Sufficiency, Appropriateness, and Inconsistencies (SA 500 / SA 230)

Worked example

⚠️ Common exam mistakes