What is classified as audit evidence?

Audit evidence consists of information collected by an auditor to reach conclusions about the financial statements being examined. Bank statements and invoices are considered strong forms of audit evidence because they are directly sourced from third parties and provide tangible documentation to support transactions recorded in the financial statements. These documents can validate the existence, accuracy, and completeness of the financial records, which is essential for forming an opinion on the fairness of the financial statements.

In contrast, auditor opinions on financial performance do not provide direct evidence but rather summarize the auditor’s conclusions based on the evidence collected. Management's internal reports, while they can be informative, are often subject to bias and may not provide the same reliability as external documents. Financial ratios calculated by analysts, although useful for analysis, do not constitute primary audit evidence; instead, they derive from the data presented in the financial statements and other documents, making them less direct in supporting the audit conclusions.