8 Types of Audit Evidence All You Should Know!

According to International Standards on Auditing (ISA), the auditor’s responsibility is to design and perform the audit in a way that enables the auditor to obtain sufficient appropriate audit evidence to base his audit opinion.

Audit Evidence refers to accounting, financial records, and any other relevant information the auditor gathers during the audit.

This can be, for example, supplier invoices, external confirmation, agreements, internal management assessment, and so on.

The key criterion for Audit Evidence is that it must be sufficient and appropriate. Sufficient refers to quantity while appropriate refers to quality.

The auditor typically gathers eight types of Audit Evidence during the audit. We will go through each type of Audit Evidence below.

Physical examination

Physical examination means that the auditor physically verifies the existence of an asset. A physical examination requires the auditor to be present at the location of the asset to verify that it exists.

Physical examination is not only to verify the existence of a physical asset but also is to check the condition of an asset.

Although some assets exist, they may not be in a functional condition which can lead to the asset being obsolete and requiring impairment.

Physical examination is generally the key Audit Evidence for property, plant and equipment and is also commonly a part of the inventory count at the entity’s warehouse.

This is because the auditor needs to verify physically that the entity actually has the inventories stated on its balance sheet in its storage.


Confirmation is where the auditor sends a circularisation letter to an external or internal party to confirm a balance on the balance sheet. The external parties typically include banks, suppliers, customers, and at times, solicitors.

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Through the reply from the external party, which is an objective and external source, the auditor can confirm whether the closing balance recorded by the client is stated truly and fairly.

Since these external parties are independent of the entity, they will not have an issue being objective in their responses to the auditor.

It is crucial to remember that such confirmations should be prepared and sent by the auditor to prevent them from manipulating.

The auditor has to make sure all information needed to be confirmed is included in the confirmations. Confirmations are generally used when auditing cash and bank balances, trade receivables, and trade payables.

Documentary evidence

Documentary evidence is where the auditor gathers information such as financial records, agreements, and other relevant documents from both internal and external sources.

Auditors will then review or sight these documents to gather the information they need.

Documentary evidence is used across many different account balances and transactions. This is because most of the transactions performed by the entity should have clear document trails or financial records that the entity should properly maintain.

Some examples include invoices from suppliers, payment vouchers, and bank statements. Upon making a payment based on an invoice from a supplier, the client will have a payment voucher as a record and also a bank statement to trace the cash outflow.

Oral evidence

Oral evidence is the information obtained from the inquiry of different personnel in the entity. While oral evidence greatly enhances the auditor’s knowledge of certain transactions, it is not the best form of Audit Evidence.

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Auditors will still need to cross-check other types of Audit Evidence where applicable as oral evidence alone is not sufficient.

As such, oral evidence is usually used as additional support that the auditor will use to make sure he has gained a sufficient understanding of certain processes.

This is very important because a wrong understanding of a transaction or an internal process could cause the auditor to obtain inappropriate audit evidence.

Accounting system

The accounting system is also a piece of audit evidence. Through the accounting system, the auditor can obtain all relevant information relating to the financial statements.

Just like oral evidence, this form of Audit Evidence may not be the best as it is internally generated. It needs to be corroborated with another form of Audit Evidence to improve objectivity.

However, many global audit firms are adopting analytics tools that allow auditors to rely on information extracted from the accounting system. This will enable auditors to convert such data into potential Audit Evidence that is more reliable.


Reperformance is where the auditor reperforms what the client has performed step by step to identify potential risks and errors in the relevant processes. Reperformance is commonly applied by the auditor when testing the client’s internal controls.

The auditor can reperform, for example, the entity’s procure-to-pay process from placing a purchase order to obtaining the necessary approval and finally issuing the payment.

The auditor can better understand if proper controls were in place for each step in the process and if there is any risk identified.

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Subsequently, the auditor can utilize this to consider the implication of those identified control risks on the audit.

Observatory evidence

Observatory evidence is normally obtained from an observation made by the auditor on certain processes. It is used mainly in internal control processes to help identify control risks.

For example, the auditors will normally attend to and observe the client’s annual inventory count to ensure the client has appropriate procedures or guidelines to conduct a complete and accurate inventory count.

If observation is used as Audit Evidence to draw a conclusion, it is advisable to corroborate it with another form of Audit Evidence such as documentary evidence to increase its reliability.


The auditor usually gathers these eight types of audit evidence during the audit to support his audit opinion. Although they can each be used in isolation in an audit, they should not be mistaken as the only way.

Different types of Audit Evidence should be used in conjunction where applicable to enhance their sufficiency and appropriateness.

This is important for an auditor because he can only issue a correct audit opinion if the audit evidence gathered during the audit is sufficient and appropriate.