Understanding the Framework and Importance of Audit Evidence in Audit Engagements

Part - 1
Framework for Audit Evidence and its importance in Audit
Engagement:
Audit Evidence:
It refers to all the information (basically the findings and other information
gathered from the audit procedures) which can be used by the auditor to arrive
at the reasonable and consistent conclusions on which the auditor bases his
opinion ("Auditing Standard No. 15", n.d.). The features of Audit evidence are as follows
("AU 326 Evidential Matter", n.d.):
 It consists of information
 Such information either supports or contradicts with the management’s
assertions
 Such assertions made by the management may be pertaining to the
financial statements & internal controls involved in preparation and
presentation of such financial statements.
Framework:
‘Framework’, in the context of ‘Audit’ refers to a systematic and disciplined
approach to conduct the audit with effectiveness and efficiency.
Importance of Framework for Audit Evidence:
Framework for audit evidence helps the auditor in accomplishing the objectives
of auditing by providing the disciplined and more systematic approach in
evaluation and continuous improvement of how effectively the evidence were
gathered and thereby increases the quality of conclusions drawn from the
evidence so gathered.
Audit Evidence - Sufficiency and appropriateness:
The framework of audit evidence compels the auditor to obtain sufficient
appropriate audit evidence from various audit procedures he intends to perform.
The auditor is bound to obtain audit evidence which should be sufficient as well
as appropriate so that the auditor can base his overall opinion, as to whether
financial statements of the entity are free from material misstatement and the
operational efficiency of the internal controls, on audit evidence so obtained. The
sufficiency is quantitative aspect of the audit evidence while the appropriateness
is the qualitative aspect.

Importance of Audit Evidence in Audit Engagement:
Audit evidence is important to the auditor as it provides the auditor with the
information regarding the potential threats or weakness that may be occurred in
the clients’ financial statements. Audit evidence also provides the premise and a
degree of competent evidential support for the expression of opinion on the
financial statements as to whether the financial statements are free from
material misstatement or not.