Auditing Evidence

Auditing evidence is the information collected for review of a company's financial transactions, internal control practices and other factors necessary for the certification of financial statements by an auditor or certified public accountant. The amount and type of auditing evidence considered varies considerably based on the type of firm being audited as well as the required scope of the audit.

The goal of any audit is to determine whether a company's financial statements comply with generally accepted accounting principles (GAAP), international financial reporting standards (IFRS) or another set of standards applicable to an entity's jurisdiction. Publicly traded companies are generally required to present fully audited financial statements to shareholders periodically, and thus the compilation and organization of auditing evidence is essential for auditors and accountants to do their work.

Auditing evidence is defined as a term by non-profit accounting boards whose goal is to protect investors by promoting transparent, accurate and independent audit reports. The Public Company Accounting Oversight Board (PCAOB), created by the Sarbanes-Oxley Act of 2002, has the following definition: "Audit evidence is all the information, whether obtained from audit procedures or other sources, that is used by the auditor in arriving at the conclusions on which the auditor's opinion is based. Audit evidence consists of both information that supports and corroborates management's assertions regarding the financial statements or internal control over financial reporting and information that contradicts such assertions."

Similarly, the American Institute of Certified Public Accountants (AICPA) defines audit evidence in AU Section 326.02: "Audit evidence is all the information used by the auditor in arriving at the conclusions on which the audit opinion is based and includes the information contained in the accounting records underlying the financial statements and other information. Auditors are not expected to examine all information that may exist. Audit evidence, which is cumulative in nature, includes audit evidence obtained from audit procedures performed during the course of the audit and may include audit evidence obtained from other sources, such as previous audits and a firm's quality control procedures for client acceptance and continuance.