Objective of this session is to test the
understanding of the participants with
reference to the previous Theory Session
which covered the following:
 Competence,
relevance and sufficiency of
evidence
 Factors affecting the evidence
 Types of evidences
 Audit criteria & evidence
 Sources of evidence
 Sampling techniques
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Cont…
 Evidence analysis
 Evidential
process
 Documentation
 Characteristics of good quality working
papers
 Quality assurance in evidence gathering,
analysis and working papers
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Evidence and Documentation
Q.1. What is meant by Audit Evidence?
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Evidence and Documentation
Solution:1
Audit evidence is the information to be
collected to support audit findings. The
recommendation and conclusions in the p.a.
report are framed based on the audit
evidence.
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Evidence and Documentation
Q.2. What are the techniques followed to
collect Audit Evidence and Characteristic of
Good Evidence?
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Evidence and Documentation
Solution:2
The evidence that are gathered should be
competent i.e. valid and reliable and actually
represent the observations of audit
The evidence should be relevant and have a clear
bearing and logical relationships to audit
objectives.
Sampling techniques should be carefully chosen.
Inspection,observation,enquiry and conformation
are good procedure of techniques followed
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Evidence and Documentation
– Sufficiency and reasonableness is the other
requirement of valid evidence to strengthen the
performance audits
– The following documents were relied upon as
substantive evidence in the MAT review
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Evidence and Documentation







Audit queries
Copies of Assessment orders
Copies of the statement of accounts
Copies of the TDS certificates, advance tax
challans
Provisions of MAT
Case laws
Circulars and instructions
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Evidence and Documentation
Q.3 Explain competence relevance and
reasonableness of Audit Evidence?
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Evidence and Documentation
Solution: 3
A valid and reliable evidence is called competent evidence.
Documentary evidence are move valid than oral evidence
similarly evidence obtained by direct observation are more
reliable than indirectly obtained. Oral evidence should be
corroborated in writing and attestations. Entity generated
information is a reflection of reliability of internal control
system. Photo copies are to be certified with reference to.
their source and identity.
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Evidence and Documentation
Relevance of the evidence is determined the clear and
logical relationship it bears to the audit objective and
criteria. The objectives and criteria are known when the
subject is selected for p.a. Relevant evidence, its nature
and location are indicated in advance in accordance with
the audit objectives and criteria to support the views in p.a.
While sufficiency of evidence is quantitative,
recommendations is qualitative in p.a. Evidence is
sufficient if the fact is carried out on a reasonable
population selected on representative basis. It should be
convincing when the observation is sensitive and
controversial.
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Evidence and Documentation
Q.4. Classify the following evidences into
competence, relevance and reasonableness?
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Evidence and Documentation
(i) sample selected was not representative
(ii) evidence collected relate to insolated
occurrence
(iii) does not establish cause and effective
relationship
(iv) conflicting
(v) biased
(vi) obtained orally
(vii) unattested photo copy
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Evidence and Documentation
Solution: 4
(i) sufficiency
(ii) sufficiency, validity
(iii) sufficiency, reliability
(iv) reliability
(v) reliability
(vi) importance
(vii) competence
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Evidence and Documentation
Q.5 What types of evidences are collected in
audit? With Reference to MAT?
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Evidence and Documentation
Solution : 5
 Physical evidence- Possible
 Oral evidence – Not Possible
 Documentary evidence - Possible
 Analytical evidence - Possible
All types of evidence was not possible to
obtain in MAT.
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Evidence and Documentation
•
•
•
•
•
•
•
Evidences obtained for MAT
Replies to Audit queries
Copies of Assessment orders
Copies of the statement of accounts
Copies of the TDS certificates, advance tax
challans
Provisions of MAT
Case laws
Circulars and instructions
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Evidence and Documentation
(i)
(ii)
(iii)
(iv)
(v)
Provision of the Act detailing the scheme of
MAT.
Judicial decisions on interpretation of terms and
usages in I.T. Act and provision.
Assessment orders passed by the Assessing
officers.
Review orders and appeal orders.
Copies of accounts along with their tax returns
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Evidence and Documentation
Note accompanying the accounts,
director’s report and tax audit report.
(vii) Para's avoidable in the previous L.A.Rs
(viii) Guidelines received from the top
management of SAI
(ix) Discussion papers.
(vi)
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Evidence and Documentation
Q.6 A well prepared documentation of
evidence is a measure of quality assurance
of P.A. Do you agree?
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Evidence and Documentation
Solution 6
 Meticulous documentation of evidence in
working paper include:
 Planning
 Work performed
 Findings of Audit
 It should be sufficient enough to enable
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Cont

An experienced auditor having no previous
connection with the subject of P.A. to
understand the significant audit findings and
conclusions.
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