Types of Audit Evidence

Audit is undertaken to check the accuracy of the financial statements prepared by an organization and in order to do auditing an auditor requires certain evidences so that he or she can undertake the work properly.

Two types of audit evidence

1. Internal

While internal evidence refer to that proof which is there within the company and hence an auditor does not has look anywhere else for getting these, examples of internal audit evidence are vouchers, debit note, credit note, sales invoice and so on. The biggest advantage of internal source is that auditor does not need to go anywhere as he or she gets all the information from single point, however there are certain disadvantages also like the reliability factor is less in this source as most of these documents are prepared by company staff, also these documents can be manipulated easily and hence auditor should be more vigilant if this is the only source of information.

2. External

External evidence implies that it does not originate from company’s records rather they are present with outside parties and an auditor has to check those also in order to carry the work properly. Example of external audit evidence is forwarding note, suppliers note and so on. The biggest benefit of checking this information is that since it involves third parties this information is more accurate than internal information. However an auditor needs to follow up and go to third parties in order to obtain this information which may delay the auditing of the firm.

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