Important Factors To Be Considered While Obtaining Audit Evidence

In this tutorial, we will learn about important factors to consider while obtaining audit evidence to support observation than is required to support contextual information included in the report.

  • In the quality of the evidence, its relevance, reliability, and validity.
  • The level of materiality or the significance of the observation or conclusion in general, the higher level of importance or materiality, the higher standard that evidence will have to meet.
  • Whether an audit level of assurance or a review level of reliability is required, for example, a higher level of security is necessary for evidence to support observation than is needed to support contextual information included in the report.
  • The risk involved in making an incorrect observation or reaching an invalid conclusion an example, if any chance of legal action against the auditor results from reporting an inspection, the standard of evidence demanded will be high.
  • The cost of obtaining additional evidence relative to likely benefits in terms of supporting observation and conclusions as in most things, diminishing returns apply in gathering audit evidence at some point, incurring the cost of obtaining more evidence will not justify by changes in the persuasiveness of total body of evidence.

Techniques for obtaining evidence:


I was inspecting the documentary evidence like deed papers, certificates, etc. relating to the audit, whether in possession of the entity or the third parties.


We are observing the process or procedure performed by others, like physical verification and counting of inventory.


He was enquiring from the client his staff or third parties knowing a particular item or activity.


Seeking information from a third party knowing a particular transaction. It involves checking the arithmetical accuracy of source documents and accounting records.

Analytical review procedures: 

Analysis of significant ratios and trends for investigating unusual fluctuations and items.

Independent execution: 

In this, the auditor performs the procedures and controls that initially performed as a part of the entity’s internal control system.

Working Papers:

Audit working papers are the documents prepared or obtained by the auditors and retained by him in connection with the audit. Audit working papers used to support the audit work done to assure that the inspection was the performance by the relevant auditing standards. Working papers include all the evidence gathered by an auditor indicating what he has done work and the procedures followed in verifying a particular asset or a liability and also provide information on whether:

  • The audit was planned correctly.
  • The audit was carried out
  • The audit was adequately supervised
  • The appropriate review was undertaken
  • The evidence is sufficient and appropriate to support the opinion.

Working papers are the connecting links between the client’s records and the audited accounts. These provide a permanent historical record. These also serve as an excellent guide to staff to whom the work of the audit has assigned.

Types of working papers:

The auditor’s working papers are divided into two parts:

  • Permanent file
  • Current file



It consists of data which is of continuous use in current as well as subsequent audits

This file has:

● Articles of incorporation.

● Loan agreements.

● Leases.

● Audit observation of previous years.

● Notes regarding significant accounting policies.

● Documents related to understanding internal control.

● Others.

It consists of data that is relevant for the current period audit.

This file has:

●Working trial balance and worksheets.

● Audit program.

● Financial statements.

● Confirmation responses.

● Record of audit exceptions and their resolutions.

● Letter of attorneys and representation letters.

 ● Others

Advantages of maintenance of working papers:

  • The working paper helps in proper planning and performance of the audit.
  • Seniors can supervise the audit work performed by the juniors by examining their working papers.
  • It provides evidence of the audit work performed to support the auditor’s opinion.