Document ID: chunk:federal_register_of_legislation:F2022C01189:reg:7:p7
Version: federal_register_of_legislation:F2022C01189
Segment Type: reg
Provision Reference: reg 7 (pt 7/21)
Character Range: 27125–30216

the absence of a material misstatement at the assertion level, nor of the operating effectiveness of controls.

A7.             As explained in ASA 200,[10] reasonable assurance is obtained when the auditor has obtained sufficient appropriate audit evidence to reduce audit risk (that is, the risk that the auditor expresses an inappropriate opinion when the financial report is materially misstated) to an acceptably low level.

A8.             The sufficiency and appropriateness of audit evidence are interrelated.  Sufficiency is the measure of the quantity of audit evidence.  The quantity of audit evidence needed is affected by the auditor's assessment of the risks of misstatement (the higher the assessed risks, the more audit evidence is likely to be required) and also by the quality of such audit evidence (the higher the quality, the less may be required).  Obtaining more audit evidence, however, may not compensate for its poor quality.

A9.             Appropriateness is the measure of the quality of audit evidence; that is, its relevance and its reliability in providing support for the conclusions on which the auditor's opinion is based.  The reliability of evidence is influenced by its source and by its nature, and is dependent on the individual circumstances under which it is obtained.

A10.         ASA 330 requires the auditor to conclude whether sufficient appropriate audit evidence has been obtained.[11]  Whether sufficient appropriate audit evidence has been obtained to reduce audit risk to an acceptably low level, and thereby enable the auditor to draw reasonable conclusions on which to base the auditor's opinion, is a matter of professional judgement.  ASA 200 contains discussion of such matters as the nature of audit procedures, the timeliness of financial reporting, and the balance between benefit and cost, which are relevant factors when the auditor exercises professional judgement regarding whether sufficient appropriate audit evidence has been obtained.

Sources of Audit Evidence

A11.         Some audit evidence is obtained by performing audit procedures to test the accounting records, for example, through analysis and review, reperforming procedures followed in the financial reporting process, and reconciling related types and applications of the same information.  Through the performance of such audit procedures, the auditor may determine that the accounting records are internally consistent and agree to the financial report.

A12.         More assurance is ordinarily obtained from consistent audit evidence obtained from different sources or of a different nature than from items of audit evidence considered individually.  For example, corroborating information obtained from a source independent of the entity may increase the assurance the auditor obtains from audit evidence that is generated internally, such as evidence existing within the accounting records, minutes of meetings, or a management representation.

A13.         Information from sources independent of the entity that the auditor may use as audit evidence