Final answer:
Types of evidence for audit include evidence from an independent source outside the entity, evaluation of the internal controls' effectiveness, the auditor's direct personal knowledge, and documentary evidence.
Step-by-step explanation:
The types of evidence available for conducting an audit include:
- Independent source outside the entity: Evidence obtained from sources external to the audited organization, such as confirmations from third parties.
- Effectiveness of internal control: Evidence that assesses how well the entity's internal control systems are functioning, which can affect the auditor's reliance on operational systems.
- Auditor's direct personal knowledge: Evidence that the auditor has personally observed, tested, or witnessed, which could include physical verification of assets or direct confirmation of transactions.
- Documentary evidence: Evidence contained within the documents and records of the organization, such as invoices, contracts, and journals, that support financial transactions.
When deciding on the types of evidence to use, it's imperative to choose evidence that is rooted in verifiable facts and that effectively supports the audit objectives. It is also important to meet any specific requirements outlined by the instructor or the auditing standards and to appropriately cite any evidence used from external sources.