Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

Which term identifies a requirement for audit evidence?

1. Reasonable.

2. Adequate.

3. Appropriate.

4. Disconfirming.

The correct answer is: Appropriate.

The term that identifies a requirement for audit evidence is "appropriate." In auditing, the term "appropriate" refers to the quality of audit evidence, which encompasses both relevance and reliability. When auditors gather evidence, they must assess whether the information is directly related to the audit objectives (relevance) and whether it is trustworthy or credible (reliability). The appropriateness of audit evidence is crucial as it affects the auditor's ability to form a sound basis for their opinion on the financial statements. For instance, obtaining data from independent sources or direct observations is generally considered more appropriate than relying on internal financial reports without further verification. While "adequate" is related to the quantity of audit evidence, focusing on whether there is enough evidence to support the conclusions drawn, it does not specifically emphasize the quality as "appropriate" does. The term "reasonable" typically pertains to the threshold of assurance that the auditor seeks rather than the characteristics of the evidence itself. Similarly, "disconfirming" relates to evidence that contradicts other evidence but isn’t a recognized requirement on its own. Thus, "appropriate" effectively captures the essence of what is required in audit evidence, making it the correct choice.