United States

Proposed SAS on audit evidence


The Auditing Standards Board (ASB) recently issued a proposed Statement on Auditing Standards (SAS), Audit Evidence, in which it is proposing to expand the focus of AU-C section 500, Audit Evidence, from “the design and performance of audit procedures to obtain sufficient and appropriate audit evidence” to “understanding the attributes and factors to consider in assessing whether sufficient appropriate audit evidence has been obtained.” This overarching requirement to evaluate whether sufficient appropriate audit evidence has been obtained is followed by separate requirements for the auditor to consider the individual attributes and factors of audit evidence — that is, its relevance and reliability, its sources, and whether the information corroborates or contradicts the assertions in the financial statements.

Also, in light of the pace of change surrounding the use of technology today, the proposed SAS includes several examples of how automated tools and techniques may be used by the auditor. However, because the quantity of audit evidence, in itself, may not be determinative of its sufficiency, the ASB has proposed to amend the definition of sufficiency to focus on the measure of the persuasiveness of audit evidence rather than emphasizing the quantity of audit evidence.

Further, among other changes, the proposed SAS addresses the topic of professional skepticism as follows:

  • It incorporates the definition of professional skepticism as set out in AU-C section 200.
  • It interweaves the concepts surrounding professional skepticism throughout the proposed SAS. The auditor’s considerations of risk of bias (whether by management or the auditor) and whether the information corroborates or contradicts the assertions in the financial statements are specifically intended to bring the issue of professional skepticism into more focus.
  • It explains auditor performance that would demonstrate the application of professional skepticism when obtaining and evaluating sufficient appropriate audit evidence.

If issued as final, the proposed SAS will be effective for audits of financial statements for periods beginning on or after June 15, 2021. The proposed SAS is available for comment until September 18, 2019.