Certified Government Auditing Professional (CGAP) Practice Exam

What is the primary characteristic required from audit evidence according to audit standards?

1. Audit evidence must be timely.

2. Audit evidence must be sufficient and appropriate.

3. Audit evidence can be based on opinions.

4. Audit evidence can include management discussions.

The correct answer is: Audit evidence must be sufficient and appropriate.

The primary characteristic required from audit evidence according to audit standards is that it must be sufficient and appropriate. This means that the evidence gathered must be adequate in quantity (sufficient) to support the conclusions reached in the audit and relevant and reliable (appropriate) to the specific audit objectives. Sufficient evidence entails having enough information to provide a strong basis for the auditor's findings and recommendations. Appropriateness requires that the evidence is not only relevant to the matters being audited but also reliable in its source and nature. In the context of an audit, this characteristic is critical because auditors need to form a sound and justifiable opinion on the financial statements or compliance with laws and regulations. Gathering sufficient and appropriate audit evidence helps mitigate the risk of material misstatement and supports the integrity of the audit process. While timeliness can be an important factor in certain circumstances, it does not overshadow the foundational need for sufficiency and appropriateness of the evidence. Opinions and management discussions can provide insights but alone do not fulfill the rigorous standards of audit evidence without being accompanied by sufficient and appropriate supporting data.