ACCA Audit and Assurance (F8) Practice Exam

What is the relevance of audit evidence?

1. Materiality of the audit findings

2. Logical connection to the audit procedures

3. Preparation of the financial statements

4. Involvement of external parties in the audit

The correct answer is: Logical connection to the audit procedures

The relevance of audit evidence primarily stems from its logical connection to the audit procedures being performed. Audit evidence must support the assertions made by management in the financial statements. This connection ensures that the evidence gathered is pertinent to the specific audit objectives and assertions under examination, such as existence, completeness, rights and obligations, valuation, and presentation. When evidence is logically connected to the procedures, it enhances the reliability and quality of the audit findings. This is crucial because the auditor's role is to gather sufficient and appropriate evidence that directly addresses the risks associated with the financial statements. An effective audit relies on such relevancy to form conclusions about whether the financial statements present a true and fair view of the entity’s financial position and performance. While materiality, the preparation of financial statements, and the involvement of external parties also hold importance in the audit process, they do not directly define the relevance of audit evidence itself. Materiality pertains to the significance of findings but does not address whether the evidence is logically connected to the audit procedures. Preparation relates to the process of forming financial statements, while the involvement of external parties may provide additional perspectives or verification but does not clarify the relevance of the evidence in relation to the resulting audit conclusions.