Difference of Audit Evidence and Legal Evidence

Evidence is the information helpful in forming a conclusion or judgments. Evidence is the ground for belief or disbelief. From this point of view, audit evidence and legal evidence serve the same object as to base proof and establish truth or falsehood.

For auditing work, audit evidence is obtained during the financial audit and recorded in the audit working paper. In the audit engagement acceptance or reappointment stage, audit evidence is the information that the auditor is to consider for the appointment, such as the change of entity control environment, or inherent risk and nature of the entity business, etc. In the audit planning stage, audit evidence is the information that the auditor is to consider for the most effective and efficient audit approach. For examples, reliability of internal control procedures, and analytical system. In the control testing stage, audit evidence is the information that the auditor is to consider audit test of control and audit substantial test. In the substantive testing stage, audit evidence is the information that the auditor is to make sure the appropriation of financial statement assertion, such as existence, right and obligations, or disclosure of a particular transaction, etc. In the conclusion and opinion formulation stage, audit evidence is information that the auditor is to consider whether the financial statements as a whole presents with completeness, validity, accuracy and consistency with the auditor's understanding of the entity.

SAS 31 and SAS 106 provide guidance the use of management assertions in obtaining audit evidence. The measure of the validity of such evidence lies in auditors' judgment. For example, as an auditor, if you document and assess the system of internal control, and perform a walkthrough of the cycle you select, e.g. the sales and AR cycle, or the purchases and AP cycle. Having seen the controls in force, you identify the key controls, and then you decide whether you wish to perform tests of these controls, or whether you'd rather do substantive tests. If you're confident that the system is working very well, you may decide to cut down on substantive tests. Sometimes, even when your test of controls shows that internal control system is strong, you can still opt to perform substantive