Audit Evidence Brochure

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The Victorian Auditor-General’s Office (VAGO) conducts financial and performance audits in accordance with Australian Auditing Standards, as required by section 13 of the Audit Act 1994 (the Act). These standards require auditors to design and perform procedures to obtain sufficient and appropriate audit evidence. This evidence is then used to draw conclusions to form the basis of the auditor’s opinion for financial statement audits and for reports to Parliament.

Financial and performance audits

The gathering of evidence is vital to all audits conducted by VAGO. VAGO audits the financial statements of all public sector entities and the Auditor-General must express a written opinion on those statements. Performance audits are undertaken to assess whether entities and their program objectives are managed effectively, economically, efficiently and in compliance with relevant Acts. What is audit evidence? For financial audits, audit evidence includes information from financial records and systems used to prepare the report and other relevant information. Financial records include data from accounting entries and supporting documents.

These include, but are not limited to:

  • cheques
  • details of electronic fund transfers
  • invoices, contracts
  • general and subsidiary ledgers
  • journal entries
  • information technology systems policies, procedures and documentation
  • reports and outputs from application controls
  • work sheets and spreadsheets supporting cost allocations, computations, reconciliations and disclosures.

For performance audits, audit evidence gathered is usually broader than that obtained for the audit of a financial report. Some examples include, but are not limited to:

  • strategic plans
  • meeting minutes
  • tender documents
  • business cases
  • performance data
  • Cabinet submissions
  • consultant’s reports
  • legal opinions
  • contracts with private providers.

These documents can be accessed even if they are in draft form or subject to privacy restrictions.

However, persuasive audit evidence must have the same characteristics whether it is obtained as part of a financial or performance audit. That is, the evidence must be sufficient and appropriate. Audit evidence is cumulative and is also gathered to corroborate management representations.

What is sufficient and appropriate audit evidence?

Australian auditing standards require sufficient and appropriate evidence in order to form an audit conclusion, for both performance and financial audits. The Act requires VAGO to comply with these standards.

Sufficiency is a measure of the quantity of audit evidence. In assessing sufficiency, the Auditor-General and his staff consider whether enough evidence has been obtained to support our audit opinion and conclusions.

Appropriateness is a measure of the quality of evidence. The quality of all audit evidence is affected by the relevance and reliability of the information it is based on.

The reliability of information is influenced by its source, nature and how it is obtained. For example, a bank statement obtained directly from the bank is more reliable than a bank statement provided by the entity being audited, and an original bank statement is more reliable than a photocopy of a bank statement.

The following diagram depicts the characteristics of audit evidence needed to support the conclusions made.

Diagram describing the process to determine relevant evidence

What audit procedures are used to obtain audit evidence?

A combination of audit procedures are used to obtain audit evidence during the conduct of both financial and performance audits. These include:

  • enquiry—seeking information from knowledgeable people within and outside the entity, ranging from formal written enquiries to informal discussions—this may also include seeking independent expert opinions
  • inspection—examining records or documents in paper or electronic form
  • observation—looking at a process or procedure being performed by others
  • external confirmation—obtaining a written confirmation directly from a third party, such as a bank or debtor
  • recalculation—checking the mathematical accuracy of documents or records
  • re-performance—independently re-performing procedures or controls that were originally performed as part of the entity’s internal control
  • analytical procedures—evaluating financial information made by a study of plausible relationships among both financial and non-financial data, surveys, data analysis.

While enquiry may provide important audit evidence, enquiry alone usually does not provide sufficient audit evidence upon which to form a conclusion. Auditors are required to corroborate evidence obtained via enquiry through other means, such as inspecting relevant documents or confirming the information with an independent third party (e.g. a bank).

What powers does the Auditor-General have to obtain audit evidence? 

The Auditor-General has broad powers under the Audit Act to access information necessary to perform the duties under that Act.

For example, under section 12, the Auditor-General or an authorised representative can access information that is otherwise subject to secrecy or other disclosure restrictions, such as Cabinet documents. Also, if there is lack of cooperation by someone representing an entity subject to audit, under section 11 of the Act, the Auditor-General can compel individuals to provide information and to perform a search for any documents in the possession, custody or control of any authority.

The Act gives VAGO powers to gather evidence even if the information:

  • contains third party intellectual property
  • is prohibited from disclosure by privacy legislation or other statute
  • is draft and not final
  • contains possible parliamentary questions
  • is a copy of an original held by another party
  • is not considered by the agency to be relevant to the audit.


The Auditor-General, his staff and contractors are required to maintain the confidentiality of any information gathered in an audit.

Such information may be disclosed in an Auditor-General’s report, under section 16 of the Act, if the information is relevant to the subject matter of the report and its inclusion in the report is in the public interest. Information may also be disclosed to certain public officials during the course of the audit if that matter warrants urgent investigation or attention. VAGO has obligations under sections 19A and 19B of the Act to notify the Independent Broad-based Anti-corruption Commission (IBAC) and the Victorian Inspectorate (VI) of corrupt conduct or conduct that is relevant to the functions of the VI and this overrides the requirement for confidentiality.

Providing evidence to audit

The provision of complete and timely evidence to VAGO is essential to the ability of auditors to reach robust findings and conclusions. Where evidence gaps exist, auditors must necessarily make conclusions based on the available evidence, as required of them by the Australian Auditing Standards. Where agency staff dispute VAGO findings this is sometimes because the agency has: 

  • failed to provide evidence of impacts or evaluation
  • not provided sufficient, corroborative evidence for auditors to make a strong finding
  • not yet provided the necessary evidence due to internal delays or failure to identify or locate available evidence
  • provided material that is not reliable or relevant, for example, a single case study presented to show the outcomes of a program, or data that is out-of-date.

Preparing early, understanding evidence requirements and making sure all the relevant staff and business units of the agency are across the audit greatly assists in addressing such issues.


Last updated on 15/07/2016