Certified Government Auditing Professional (CGAP) Practice Exam

How is adequate audit evidence characterized in the standards?

1. Evidence that is inexpensive and quick to obtain.

2. Evidence that is comprehensive and covers all potential risks.

3. Evidence that is sufficient to enable the auditor to draw reasonable conclusions.

4. Evidence that can be easily reproduced for verification purposes.

The correct answer is: Evidence that is sufficient to enable the auditor to draw reasonable conclusions.

Adequate audit evidence is characterized primarily by its sufficiency and relevance, which enables the auditor to draw reasonable conclusions about the financial statements or other subject matter being audited. This characteristic is essential because it ensures that the auditor can rely on the evidence gathered to support their findings and opinions. Sufficiency refers to the quantity of evidence collected, while relevance pertains to its relationship to the specific audit objectives. This means that the auditor must gather enough evidence to form a basis for their audit conclusion while ensuring that the evidence directly relates to the identified risks and assertions being examined. This approach is consistent with generally accepted auditing standards, which emphasize that the quality and quantity of evidence must meet the requirements for the auditor's work to be credible and defensible in any assessment they perform. Thus, the defining characteristic of adequate audit evidence centers on its ability to provide a solid foundation for the auditor's judgments and conclusions in the audit process.