audit evidence

Information that supports or refutes an *audit objective. Lee (1993, 172) distinguishes between "evidence (the overall basis for audit reporting) and evidential material (the various means by which auditors construct their evidence to support their conclusions)," but in general usage the term audit evidence is used in both contexts. Audit evidence can be gathered from a wide variety of sources, ranging from documentary information to oral testimony to the Observation of procedures. For example, an auditor wishing to substantiate the existence and accuracy of an organization’s *accounts receivable balances at a specific date may turn to the following sources of evidence, among others: (i) detailed *general ledger transactions; (ii) original sales invoices; (iii) inventory dispatch information; (iv) *confirmation letters from customers; (v) the matching of cash received to specific accounts receivable balances; and (vi) discussions with management and employees. The interpretation of evidence is a fundamental aspect of auditing, and it has been suggested that "Deductive reasoning is by far the most important and also the most difficult source of audit evidence" (Flint, 1988, 113-114). Auditors tend to record the evidence used to support their judgments and opinions in formal *working papers. Further reading: Maroney and Bedard (1997); Ratliff and Johnson (1998)