ACCA Audit and Assurance (F8) Practice Exam

What does appropriateness of audit evidence measure?

1. Quantity of audit evidence

2. Quality of audit evidence

3. Cost-effectiveness of audit procedures

4. Time efficiency of audit tests

The correct answer is: Quality of audit evidence

The appropriateness of audit evidence refers to its quality, which encompasses both its relevance and reliability in addressing the specific audit objectives. High-quality audit evidence is essential because it provides a stronger foundation for the auditor's conclusions and helps ensure that the financial statements are free from material misstatement. Quality is determined by factors such as the source of the evidence and its nature. For instance, evidence obtained directly by the auditor, such as observations or inspections, is typically more reliable than evidence provided by third parties. Similarly, evidence that has been obtained through rigorous controls and processes is generally considered more relevant to the auditor's assessment. This focus on quality helps auditors form a well-supported opinion on the financial statements, as they evaluate how well the evidence supports the underlying assertions made by management. Thus, while the quantity of evidence and other factors like cost-effectiveness and time efficiency are important in the audit process, appropriateness primarily emphasizes the quality of the evidence gathered.