Lack of audit evidence

Audit evidence can consist of:

A: Analytical procedures (basically comparisons and ratios to look for ‘odd’ amounts)
E: Enquiry and confirmation directly from a third party – eg a debtors circularisation
I: Inspection of records and assets (eg verify the existence of a non-current asset))
O: Observation (eg watch warehouse count receipts of goods)
U: recalcUlation and reperformance (eg reperform a bank reconciliation to ensure it was done correctly).

If none of these is carried out, or an appropriate procedure is not carried out, then there is a lack of audit evidence and a gap in the audit.

For example, auditors must carry out procedures to test if the cash on the SOFP is properly presented. Appropriate evidence is looking at a year-end bank statement (or preferably a bank certificate) and reperforming the bank reconciliation.