Which of the following best describes the nature of audit evidence?

The nature of audit evidence is best described as information used to form the auditor's opinion. This encompasses a wide range of information gathered throughout the audit process, which may include physical inspection, observation, inquiries, and documentation review. The audit evidence is critical because it supports the auditor's conclusions and helps ascertain the truthfulness and reliability of the financial statements being audited.

This answer aligns with the fundamental purpose of an audit, which is to express an opinion on whether the financial statements present a true and fair view of the entity’s financial position and performance. Audit evidence serves as the foundation for this opinion, enabling auditors to assess risks and test the assertions made by management regarding the financial statements.

In contrast, the other options do not fully capture the broad and multifaceted nature of audit evidence. For example, stating that audit evidence is always quantitative overlooks qualitative aspects that are essential for a comprehensive audit. Similarly, suggesting that audit evidence is composed solely of external confirmations ignores the variety of procedures and sources from which evidence can be obtained, including internal data and management representations. Lastly, asserting that audit evidence is primarily based on management assertions does not adequately reflect that while assertions are important, the auditor must also independently verify those assertions through gathered evidence. Thus, the comprehensive perspective that