ACCA Advanced Audit and Assurance (AAA) Practice Exam

What is the interrelated concept that ISA 500 emphasizes while obtaining audit evidence?

1. Objectivity and independence

2. Professional judgement and due care

3. Sufficiency and appropriateness

4. The reliability of client information

The correct answer is: Sufficiency and appropriateness

The interrelated concept that ISA 500 emphasizes while obtaining audit evidence is sufficiency and appropriateness. When auditors gather evidence, these two characteristics are critical in determining the quality and quantity of the evidence collected. Sufficiency refers to the measure of the quantity of audit evidence needed to form a reasonable basis for the audit opinion. This can depend on the risk of misstatement, which means a higher risk necessitates a greater amount of evidence to support the auditor's conclusions. Appropriateness, on the other hand, pertains to the quality of the evidence, which includes its relevance to the assertion being tested and its reliability. Reliable evidence is credible and trustworthy, such as evidence obtained from independent sources. Together, sufficiency and appropriateness are essential for ensuring that the gathered evidence is adequate and suitable to mitigate audit risks and support the auditor’s findings and opinions. Understanding these concepts is vital for auditors to ensure that they conduct thorough audits that adhere to professional standards.