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

The audit team at Delmar Foods Co is considering the sufficiency of evidence for revenue. Risk of material misstatement is assessed as high, and the team has so far obtained evidence only from a small sample of invoices. Which statement correctly describes sufficiency?

Sufficiency is the quantity of audit evidence needed. It is influenced by the assessed risk of material misstatement and by the quality of the evidence, so where risk is high the auditor generally needs more evidence, and a small sample alone would usually be inadequate.

  1. ASufficiency measures the quality of evidence, so a small sample of external documents is always sufficient
  2. BSufficiency is the quantity of evidence, which is affected by assessed risk and the quality of evidence, so higher risk generally requires more evidenceCorrect
  3. CSufficiency depends only on the materiality of the audit firm's fee
  4. DSufficiency is achieved once the audit file contains evidence for every account balance, regardless of risk

Explanation

Sufficiency is a measure of the quantity of evidence, while appropriateness measures its quality (relevance and reliability). The quantity needed rises with assessed risk of misstatement and falls as evidence quality improves. Quality is appropriateness, so the first option confuses the two terms.

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