SAS 106 – Audit Evidence: Is it Effective?

Abstract

What constitutes audit evidence has always been a “gray” area in the audit profession, as no clear-cut guidance has ever been released that provides an auditor with details of what exactly to collect. SAS 31 attempted to provide this guidance, but ultimately came up short. SAS 106 – Audit Evidence superseded SAS 31 – Evidential Matter, with the aim of finally providing ultimate guidance as to what exactly constitutes acceptable audit evidence. It should be noted that SAS 105 changed the term from “evidential matter” to “audit evidence”. This paper examines the contents of “Statement of Auditing Standards 106 – Audit Evidence”, SAS 106, which was released by the AICPA in 2006 as part of an updated series of risk assessment statements. The main points of SAS 106 are discussed, as are the issues that have arisen since its release. The paper then provides an important recommendation on how the statement might be updated to provide the audit profession with more guidance on the subject of audit evidence. Finally, a conclusion summarizing the key points of the paper is provided, which also states the benefits that an update to the statement would provide for the audit profession.