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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Evidence and testing considerations

During the audit of Kestrel Ltd, the audit senior notes that the evidence obtained for inventory existence comes from a very large sample of count sheets prepared by Kestrel's own warehouse staff. The team argues the evidence is sufficient because of its volume. Under ISA 500, which statement is correct?

Sufficiency is about the quantity of evidence and appropriateness is about its quality, meaning relevance and reliability. A large volume of internally prepared count sheets does not fix weak reliability, because more poor-quality evidence cannot compensate for low quality.

  1. ASufficiency measures the quantity of evidence, while appropriateness measures its relevance and reliability, so a large quantity of weak evidence may still be inadequateCorrect
  2. BSufficiency measures the reliability of evidence, so a large volume of internal evidence is always sufficient
  3. CAppropriateness measures the quantity of evidence, so more count sheets will make the evidence appropriate
  4. DSufficiency and appropriateness are the same concept, so large volume cures any reliability weakness

Explanation

ISA 500 defines sufficiency as the quantity of audit evidence and appropriateness as its quality (relevance and reliability). The quantity needed depends on assessed risk and on quality, but more evidence cannot compensate for poor quality. Internally generated count sheets remain less reliable regardless of volume.

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