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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Audit procedures and obtaining evidence

Harbor Lane Ltd is a retailer audited by Pryce & Co. The audit senior wants to gather evidence on the existence of inventory. Under ISA 500, which of the following best describes what 'sufficiency' of audit evidence measures?

Sufficiency measures the quantity of audit evidence. It rises when assessed risks of material misstatement are higher and when evidence quality is lower. Appropriateness, by contrast, measures quality, meaning relevance and reliability. Auditors need both sufficient and appropriate evidence to support their opinion.

  1. AThe quantity of audit evidence, which is affected by the assessed risks of material misstatement and the quality of the evidenceCorrect
  2. BThe relevance and reliability of the audit evidence obtained
  3. CThe extent to which evidence is obtained from external sources
  4. DThe degree to which evidence has been documented in the working papers

Explanation

ISA 500 and ISA 200 define sufficiency as the measure of the quantity of audit evidence. Appropriateness is the measure of its quality, meaning relevance and reliability. The option describing relevance and reliability is appropriateness, not sufficiency. More evidence is needed when risks are higher or evidence quality is lower.

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