Types of Audit Evidence

Depending upon nature , we have 3 types of evidences , these are -

1	Visual
2	Oral
3	Documentary-

Let us understand in details

1	*Visual*	Visual evidenve refers to that situation or happening what auditor see himself. Auditor observe himself
2	*Oral*-	Oral evidence refrs to that evidence what auditor extract after discussion.
3	*Documentary*-	Documentary evidences refers to evidence lying in document such as loan agreement, sales invoices etc.

Sources Of Audit Evidence

The auditor should obtain audit evidence to draw reasonable conclusions on which to base the audit opinion by performing –

Source of audit evidence means different way through which audit evidence can be generated.

Depending on situation there are internal sources of evidences and external sources of evidence

Let us understand one by one

Internal evidence:

Evidence which originates within the organisation being audited, is internal evidence.

Example-Sales invoice, Copies of sales challan and forwarding notes, goods received note, inspection report, copies of cash memo, debit and credit notes, etc.

External evidence:

External evidence on the other hand is the evidence that originates outside the client’s organization.

Example- Purchase invoices, supplier’s challan and forwarding note, debit notes and credit notes coming from parties, quotations confirmations, etc.

Evaluation of responses of inquiries.

Evaluating responses to inquiries is an integral part of the inquiry process.

Inquiry normally involves:

1	Considering the knowledge, objectivity, experience, responsibility, and qualifications of the individual to be questioned.
2	Asking clear, concise, and relevant questions
3	Using open or closed questions appropriately
4	Listening actively and effectively
5	Considering the reactions and responses and asking follow-up questions.
6	Evaluating the response.
7	In some cases, the auditor should obtain replies to inquiries in the form of written representations from management. For example, when obtaining oral responses to inquiries, the nature of the response may be so significant that it warrants obtaining written representation from the source.

Out come of response of inquries.

Responses of Inquiries may provide many facts

Responses of Inquiries may provide followings:

1	New information	Responses to inquiries may provide the auditor with information not previously possessed or with corroborative audit evidence.
2	Different information	Alternatively, responses might provide information that differs significantly from other information that the auditor has obtained, for example, information regarding the possibility of management override of controls. In some cases, responses to inquiries provide a basis for the auditor to modify or perform additional audit procedures. The auditor should resolve any significant inconsistencies in the information obtained
3	Sufficient and appropriate audit evidence	The auditor should perform audit procedures in addition to the use of inquiry to obtain sufficient appropriate audit evidence.
4	Inquieries alone is not sufficient	Inquiry alone ordinarily does not provide sufficient appropriate audit evidence to detect a material misstatement at the relevant assertion level. Moreover, inquiry alone is not sufficient to test the operating effectiveness of controls.
5	Management intent becomes clear	Although corroboration of evidence obtained through inquiry is often of particular importance, in the case of inquiries about management's intent, the information available to support management's intent may be limited. In these cases, understanding management's past history of carrying out its stated intentions with respect to assets or liabilities, management's stated reasons for choosing a particular course of action, and management's ability to pursue a specific course of action may provide relevant information about management's intent.

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