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CA Final · Advanced Auditing, Assurance and Professional Ethics · Audit Evidence

During the audit of Rohan Pharma Ltd, the auditor finds that the quality of evidence on a material provision is poor, as it consists only of unsigned internal notes. The audit senior suggests collecting a much larger number of similar internal notes to make up for it. Which statement is correct under SA 500?

Obtaining more audit evidence may not compensate for its poor quality. Sufficiency measures quantity and appropriateness measures quality; they are interrelated, but a larger volume of weak internal notes does not fix the lack of reliable evidence.

  1. AMore evidence of the same poor quality will make up for the deficiency
  2. BSufficiency depends only on the size of the audit team's working papers
  3. CObtaining more audit evidence may not compensate for its poor qualityCorrect
  4. DQuality matters only for appropriateness and has no link with quantity

Explanation

Sufficiency (quantity) and appropriateness (quality) are interrelated. Higher quality may reduce the quantity needed, but obtaining more evidence may not compensate for poor quality. So piling up similar weak notes is not a valid response.

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