Why Audit Evidence is needed?

Audit evidence is needed because it forms the foundation for the auditor’s opinion. An auditor cannot rely on assumptions or management explanations alone; conclusions must be supported by objective and verifiable information.

Based on the audit process outlined in your Audit Planning 3B notes, audit evidence is required for several key reasons:

1. To support the audit opinion

The audit report expresses an opinion on whether the financial statements are prepared fairly. That opinion must be backed by sufficient and appropriate audit evidence; otherwise, it has no credibility. Audit evidence provides the factual basis for that opinion 

2. To verify management assertions

Management makes assertions about existence, completeness, accuracy, valuation, and disclosure of transactions and balances. Audit evidence allows the auditor to independently test and validate these assertions rather than simply accepting them at face value 

3. To reduce audit risk

There is always a risk that financial statements contain material misstatements due to error or fraud. Gathering sufficient and reliable audit evidence reduces audit risk to an acceptably low level, enabling the auditor to draw reasonable conclusions.

4. To comply with professional standards

Auditing standards require auditors to obtain evidence that is sufficient, reliable, relevant, and useful to achieve audit objectives. Without audit evidence, the auditor would be in breach of professional and ethical requirements 

5. To provide accountability and legal protection

Audit evidence documented in audit working papers serves as proof of the work performed and judgments made. It protects the auditor if the audit is later questioned by regulators, courts, or other stakeholders 

In short, audit evidence is needed to transform professional judgment into a defensible, objective, and credible audit conclusion. Without audit evidence, an audit opinion would be merely an opinion—rather than an assurance supported by facts.