Corporate Accounting and Auditing · Audit Engagement, Audit Program, Audit Documentation and Audit Evidence

Audit Procedures for Obtaining Audit Evidence

Updated 10 October 2026 · Fact-checked

Audit procedures for obtaining evidence are the methods an auditor uses to gather proof for an opinion: inspection, observation, inquiry, external confirmation, recalculation, reperformance and analytical procedures. You solve a question by matching the procedure to the assertion and risk, then choosing how to select items: all items, specific items or sampling.

Understand Audit Procedures for Obtaining Evidence

Audit evidence is the information the auditor uses to reach conclusions for the opinion. SA 500 says most of the auditor's work consists of obtaining and evaluating it. The auditor does this by performing audit procedures.

SA 500 lists the procedures: inspection, observation, confirmation, recalculation, reperformance and analytical procedures, often in combination, in addition to inquiry. Inspection means examining records, documents or tangible assets. Observation means watching a process, such as an inventory count. Inquiry means asking people, inside or outside the entity. Recalculation checks arithmetic accuracy. Reperformance means the auditor independently carries out a procedure or control the entity performed.

External confirmation is evidence obtained as a direct written response to the auditor from a third party, in paper or electronic form. It is often used for account balances, such as debtors, banks and lenders. It can also confirm the terms of agreements, or the absence of a side agreement that could affect revenue recognition. SA 505 gives further guidance.

Analytical procedures evaluate financial information by studying plausible relationships among financial and non-financial data. They also include investigating fluctuations that are inconsistent with other information or deviate significantly from predicted amounts. SA 520 gives further guidance.

These procedures are used in two stages: risk assessment procedures, and further audit procedures. Further procedures are tests of controls (when required or chosen) and substantive procedures (tests of details and substantive analytical procedures). The same procedure can serve any of these purposes depending on how it is applied.

Inquiry alone ordinarily does not give sufficient evidence that there is no material misstatement at assertion level, nor that controls operate effectively. Inquiry must be backed by other procedures.

Key rules to remember

Procedures listed in SA 500: Inspection, observation, confirmation, recalculation, reperformance, analytical procedures + inquiry; Use these exact names in answers. They may be combined.
Means of selecting items for testing: (a) 100% examination; (b) specific items; (c) audit sampling; Choice depends on risk of material misstatement, practicality and efficiency. One or a combination may be used.
Selecting specific items: Result cannot be projected to the whole population; It is not audit sampling and gives no evidence about the remaining items. It is subject to non-sampling risk.
Inquiry limitation: Inquiry alone ordinarily is not sufficient; Not sufficient for absence of material misstatement at assertion level, or for operating effectiveness of controls.
Inspection of tangible assets: Reliable for existence; not necessarily for rights, obligations or valuation; Frequent MCQ point.
Stages of audit procedures: Risk assessment procedures + further audit procedures (tests of controls, substantive procedures); Substantive procedures = tests of details + substantive analytical procedures.

How to solve Audit Procedures for Obtaining Evidence questions

Use this order for any question on obtaining audit evidence, whether it asks you to name, explain or choose a procedure.

1Read what the question asks: define a procedure, pick a procedure for a given situation, or decide how to select items.
2Identify the assertion or objective at stake, such as existence of stock, completeness of liabilities or accuracy of calculation.
3Match the procedure: inspection or observation for physical things, confirmation for third-party balances, recalculation for arithmetic, reperformance for controls, analytical procedures for trends and unusual movements.
4Note that inquiry alone is not enough. Pair it with another procedure.
5State whether the procedure is used as risk assessment, test of controls or substantive procedure.
6If items must be selected, choose among 100% examination, specific items or sampling, and link the choice to risk and practicality.
7If specific items are chosen, add that the results cannot be projected to the rest of the population.
8Conclude with the evidence obtained and any limitation, for example that inspection shows existence but not ownership.

Quickest way: Assertion-to-procedure match

When to use it: Use it for MCQs and short case questions where you must pick the best procedure in under a minute.

Underline the object: asset, balance, calculation, control or trend.
Physical asset or process: inspection or observation.
Balance with an outside party: external confirmation.
Numbers computed by the entity: recalculation. Control performed by the entity: reperformance.
Unusual ratios or fluctuations: analytical procedures.
If the only option is inquiry for a conclusion, treat it as weak.
If the options say a judgmental selection can be projected to the population, reject it.

Common mistakes in Audit Procedures for Obtaining Evidence

Treating inquiry alone as enough to conclude that controls operate effectively.
Inquiry is easy and gives quick answers, so students rate it highly.
Fix: Write that inquiry ordinarily does not give sufficient evidence of control effectiveness or absence of material misstatement. Pair it with inspection, observation or reperformance.
Confusing recalculation with reperformance.
Both involve the auditor doing the work again.
Fix: Recalculation checks arithmetic accuracy of documents or records. Reperformance is the auditor independently carrying out a procedure or control the entity performed.
Saying inspection of an asset proves ownership and valuation.
Seeing the asset feels like full proof.
Fix: Inspection of tangible assets is reliable for existence, but not necessarily for rights and obligations or valuation.
Projecting the result of high-value item testing to the whole population.
Students treat any selection of items as a sample.
Fix: Selective examination of specific items is not audit sampling. Its result cannot be projected, and it gives no evidence about the remaining items.
Limiting external confirmation to debtor balances.
Textbook examples mostly use debtors' confirmation.
Fix: Add that confirmations can cover terms of agreements and the absence of conditions, such as a side agreement affecting revenue recognition.
Treating analytical procedures as only a final-stage review.
They are often taught as an overall review technique.
Fix: State that they involve studying relationships among financial and non-financial data and investigating unexpected fluctuations. Link to SA 520.

Worked examples

Example 1

At a manufacturing company, the auditor wants evidence that stock shown in the books actually exists at year end. Name two procedures, and state what each does not prove.

Show the solution

Assertion: existence of inventory, a tangible asset.
Procedure 1: observation of the physical inventory count, which shows the counting process and what stock is present.
Procedure 2: inspection of individual inventory items, which SA 500 says may accompany observation of the count.
Limitation: inspection of tangible assets may be reliable for existence, but not necessarily for rights and obligations or valuation.
So the auditor needs further evidence, such as purchase documents for ownership and cost records for valuation.

Answer: Observation of the count and inspection of items give reliable evidence of existence. They do not by themselves prove ownership or valuation, which need other procedures.

Example 2

The auditor of a company with 4,000 purchase invoices decides to examine all invoices above a stated amount and concludes that the remaining invoices are also free from material misstatement. Is this conclusion valid?

Show the solution

Identify the selection means: all items over a certain amount, a form of selecting specific items.
This can be efficient, because it verifies a large proportion of the total amount.
However, selecting specific items is not audit sampling.
Its results cannot be projected to the entire population.
So it provides no audit evidence about the remaining invoices.
The auditor should test the remainder by another means, such as audit sampling under SA 530, or by other procedures, if the risk requires it.

Answer: The conclusion is not valid. Testing specific items gives no evidence about the untested invoices, so the auditor needs sampling or other procedures for them.

Exam tips

MCQs often test the limits: inquiry alone, inspection of assets and projection from specific items. Learn the three limitations word for word.
In written answers, name each procedure as SA 500 does and add one practical example for each.
For selection of items, always list the three means and link your choice to risk, practicality and efficiency.
When asked about confirmation or analytical procedures, mention SA 505 and SA 520 respectively as the standards for further guidance.
Never write a number of marks or percentages for the evidence. Focus on the logic of matching procedure to assertion.

Practice questions from Audit Engagement, Audit Program, Audit Documentation and Audit Evidence

Audit Procedures for Obtaining Evidence in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Audit Procedures for Obtaining Evidence: frequently asked questions

What are the audit procedures to obtain audit evidence?

SA 500 lists inspection, observation, confirmation, recalculation, reperformance and analytical procedures, often in combination, in addition to inquiry. They can be used as risk assessment procedures, tests of controls or substantive procedures.

What is external confirmation under SA 500 and SA 505?

It is audit evidence obtained as a direct written response to the auditor from a third party, in paper or electronic form. It is often used for account balances, but can also confirm terms of agreements or the absence of side agreements. SA 505 gives the detailed guidance.

What are analytical procedures under SA 520?

They are evaluations of financial information made by studying plausible relationships among financial and non-financial data. They also include investigating fluctuations that are inconsistent with other information or differ significantly from predicted amounts.

Is selecting high-value items the same as audit sampling?

No. Selecting specific items, such as high-value or unusual items, is not audit sampling. Its results cannot be projected to the whole population. Audit sampling is designed to let the auditor draw conclusions about the population, and is covered in SA 530.