(a) Sufficiency of evidence
– Assessment of risk at the financial statement level and/or the individual transaction level. As risk increases then more evidence is required.
– The materiality of the item. More evidence will normally be collected on material items whereas immaterial items may simply be reviewed to ensure they appear correct.
– The nature of the accounting and internal control systems. The auditor will place more reliance on good accounting and internal control systems limiting the amount of audit evidence required.
– The auditor’s knowledge and experience of the business. Where the auditor has good past knowledge of the business and trusts the integrity of staff then less evidence will be required.
– The findings of audit procedures. Where findings from related audit procedures are satisfactory (e.g. tests of controls over receivables) then substantive evidence will be collected.
– The source and reliability of the information. Where evidence is obtained from reliable sources (e.g. written evidence)
then less evidence is required than if the source was unreliable (e.g. verbal evidence).
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