Document ID: chunk:federal_register_of_legislation:F2022C01189:reg:7:p6
Version: federal_register_of_legislation:F2022C01189
Segment Type: reg
Provision Reference: reg 7 (pt 6/21)
Character Range: 24329–27403

considered to be information from an external information source. However, if the same type of information has been specifically commissioned by the entity to use its expertise to develop information about those risks, tailored to the entity's circumstances, the external individual or organisation is likely to be acting as a management's expert.

           * An external individual or organisation may apply its expertise in providing information about current and future market trends, which it makes available to, and is suitable for use by, a broad range of users. If used by the entity to help make decisions about assumptions to be used in making accounting estimates, such information is likely to be considered to be information from an external information source. If the same type of information has been commissioned by the entity to address current and future trends relevant to the entity's specific facts and circumstances, the external individual or organisation is likely to be acting as a management's expert.

Sufficient Appropriate Audit Evidence (Ref: Para. 6)

A5.             Audit evidence is necessary to support the auditor's opinion and report.  It is cumulative in nature and is primarily obtained from audit procedures performed during the course of the audit.  It may, however, also include information obtained from other sources such as previous audits (provided the auditor has evaluated whether such information remains relevant and reliable as audit evidence for the current audit)[9] or through the information obtained by the firm in the acceptance or continuance of the client relationship or engagement. In addition, the entity's accounting records and other sources internal to the entity are important sources of audit evidence.  Information that may be used as audit evidence may have been prepared using the work of a management's expert or be obtained from an external information source. Audit evidence comprises both information that supports and corroborates management's assertions, and any information that contradicts such assertions.  In addition, in some cases the absence of information (for example, management's refusal to provide a requested representation) is used by the auditor, and therefore, also constitutes audit evidence.

A6.             Most of the auditor's work in forming the auditor's opinion consists of obtaining and evaluating audit evidence.  Audit procedures to obtain audit evidence can include inspection, observation, confirmation, re‑calculation, re‑performance and analytical procedures, often in some combination, in addition to enquiry.  Although enquiry may provide important audit evidence, and may even produce evidence of a misstatement, enquiry alone ordinarily does not provide sufficient audit evidence of 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