Federal Audits: How Much Evidence is Enough?

How much evidence is enough? Is this a question answered by using “professional judgment?”

Unfortunately there is no formula in the Yellow Book – or anywhere else for that matter — that answers these questions.  So … how do we know?

The Yellow Book (para. 6.67) says: “Sufficiency is a measure of the quantity of evidence used for addressing the audit objectives and supporting findings and conclusions.”  O.K. then.  Quantity is the key.  The more evidence we have, the better the audit.  The more people will be convinced of the audit message, right?

Not so fast!  Why gather more evidence than you need?  If a reader is going to be convinced with five pages of evidence, then any more than that is a waste.  Further, the standard goes on to say that sufficiency and appropriateness (the other major characteristic required by the Yellow Book) are relevant concepts.  It says that having a large volume of evidence does not compensate for a lack of relevance, validity, or reliability, the three elements of appropriateness.

So how much evidence is enough? It’s simple.  When there is enough relevant, valid, and reliable evidence to convince the auditee to take action, according to the professional judgment of the auditors.