Sources of Audit Evidence refer to where audit evidence originates from. Based on your Audit Planning 3B notes, audit evidence can be obtained from three main sources, each differing in reliability and persuasiveness.
1. Auditor-originated evidence
This is evidence obtained directly by the auditor and is considered the most reliable and highest quality source of audit evidence.
Examples:
- Analytical review
- Observation of the accounting system and internal control
- Physical inspection of assets
- Recalculation and re-performance
- Arithmetic checks of client records
- Because the auditor generates this evidence independently, it carries strong credibility
2. Evidence created by third parties
This is evidence obtained from independent external sources outside the company. It is generally more reliable than internally generated evidence, especially when received directly by the auditor.
Examples:
- Bank confirmation letters
- Debtors’ statements
- Supplier invoices
- Legal confirmations
- The independence of the source increases the reliability of this evidence
3. Evidence provided by management
This refers to evidence generated by the client or management. Written evidence is more reliable than oral explanations, but this source is usually less reliable compared to auditor-originated or third-party evidence.
Examples:
- Accounting records
- Internal documents
- Letter of representation from management
Such evidence often requires corroboration with other sources
Summary
In general, the reliability hierarchy of audit evidence is:
Auditor-originated evidence → Third-party evidence → Management-provided evidence
Auditors rely on a combination of these sources to obtain sufficient and appropriate audit evidence to support their audit opinion.
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