Certified Government Auditing Professional (CGAP) Practice Exam

What is a key concept regarding the nature of audit evidence?

1. It should be based on historical records only.

2. It must be confidential and not shared with anyone.

3. It must be consistent with the audit objectives.

4. It can be subjective as long as it is justified.

The correct answer is: It must be consistent with the audit objectives.

Audit evidence is fundamental to the auditing process, as it is the information collected by auditors to support their findings and form conclusions about the financial statements or operational effectiveness of an entity. The requirement that audit evidence must be consistent with the audit objectives is key because audit objectives guide what an auditor is trying to ascertain through the audit. Each piece of evidence should directly relate to those objectives, ensuring that the conclusions drawn are relevant and reliable. For instance, if the objective is to determine whether financial statements present a true and fair view, the evidence gathered must specifically support assertions made in those statements, such as existence, completeness, rights and obligations, and valuation. Looking at the other options, while historical records can provide useful audit evidence, relying solely on them may not encompass the full picture needed to assess current operational efficiency or compliance with regulations. Confidentiality of evidence is important but does not inherently relate to its nature as evidence; the value lies in the evidence being relevant and reliable rather than solely in its confidentiality. Subjectivity in audit evidence can lead to bias, undermining the objectivity and reliability needed in audit conclusions, and thus it isn't emphasized as a core aspect of audit evidence.