SA 500-599
Published by Finin2min
Audit evidence, external confirmations, analytical procedures, sampling, estimates and related parties.
SA 500-599
Audit evidence, external confirmations, analytical procedures, sampling, estimates and related parties.
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1. Objective
The 500-series standards govern what counts as sufficient appropriate audit evidence, and set specific evidence requirements for particular balances, transactions and judgement areas that carry higher inherent risk — confirmations, estimates, related parties, subsequent events and going concern chief among them.
2. Applicability
SA 500 applies to every audit; the item-specific standards (501, 505, 510, 520, 530, 540, 550, 560, 570, 580) apply whenever that specific balance, transaction type or circumstance is present in the engagement.
3. Core Rules
| SA | Subject |
|---|---|
| SA 500 | Audit evidence — sufficiency and appropriateness |
| SA 501 | Specific considerations for selected items (inventory, litigation/claims, segment information) |
| SA 505 | External confirmations |
| SA 510 | Initial audit engagements — opening balances |
| SA 520 | Analytical procedures |
| SA 530 | Audit sampling |
| SA 540 | Auditing accounting estimates, including fair value estimates, and related disclosures |
| SA 550 | Related parties |
| SA 560 | Subsequent events |
| SA 570 | Going concern |
| SA 580 | Written representations |
4. Practical Example
For a first-year audit (SA 510), the incoming auditor cannot simply accept the closing balances certified by the outgoing auditor — they must obtain sufficient appropriate evidence that opening balances do not contain misstatements materially affecting the current period, and that accounting policies are consistently applied or that a change is properly accounted for and disclosed.
5. Common Mistake
Treating SA 580 written representations as a substitute for other audit evidence. Representations corroborate other evidence obtained; they do not, by themselves, provide sufficient appropriate evidence about the matters they address.
Evidence-type map
| Higher-risk area | Standard | Typical evidence |
|---|---|---|
| Receivables, bank balances, litigation status | SA 505 / SA 501 | External confirmations, legal confirmation letters |
| Opening balances (first-year audit) | SA 510 | Prior-period file review, re-performed procedures where predecessor evidence is insufficient |
| Accounting estimates (provisions, fair values, expected credit loss) | SA 540 | Management's basis, key assumptions tested, retrospective review of prior-year estimate outcomes |
| Related-party transactions | SA 550 | Related-party register, arm's-length/approval evidence, disclosure completeness testing |
| Events between period-end and report date | SA 560 | Subsequent-events review procedures up to the report date |
| Entity's ability to continue as a going concern | SA 570 | Management's assessment, cash-flow/financing evidence, mitigating-factor evaluation |
Exceptions and red flags
- Risk: Accepting a low external-confirmation response rate without performing alternative procedures on the non-responses (SA 505) — a non-response is not itself audit evidence.
- Risk: Evaluating a going-concern conclusion only at the report date rather than through the full look-forward period required by SA 570, which extends at least twelve months from the date of approval of the financial statements.
- Risk: Treating related-party disclosures as complete based solely on management's own register — SA 550 requires the auditor to remain alert to related parties not identified or disclosed by management.
Implementation checklist
- ✓ Design confirmation requests (SA 505) with a clear escalation path for non-responses and exceptions.
- ✓ Document the specific evidence obtained for each significant accounting estimate's key assumptions (SA 540), not just management's final number.
- ✓ Extend related-party procedures (SA 550) beyond management's own disclosure list — check statutory registers, board minutes, and related filings.
- ✓ Perform subsequent-events review procedures (SA 560) right up to the date of the audit report, not just up to period-end.
Q&A
| What is the difference between SA 501 and SA 500? | SA 500 sets the general evidence framework; SA 501 adds specific procedures for particular items — physical inventory counts, litigation and claims, and segment information — where general procedures alone are considered insufficient. |
|---|---|
| Does SA 570 require a formal going-concern opinion in every report? | No — it requires the auditor to evaluate going concern in every audit and to modify the report or add appropriate disclosure/emphasis only where a material uncertainty or inappropriate use of the going-concern basis is identified. |
| Can audit sampling (SA 530) be used for every test? | No — sampling is appropriate where testing 100% of a population is not necessary or practical; some procedures (e.g. testing a small population of high-value, unique items) are more appropriately tested in full. |
| Can this be used as professional advice? | No. Confirm the exact current text of each SA and apply it to the entity's specific facts before relying on a conclusion. |
Finin2min Summary
SA 500-599 in 2 minutes: General evidence sufficiency (SA 500) plus specific rules for inventory/litigation (501), confirmations (505), opening balances (510), analytics (520), sampling (530), estimates (540), related parties (550), subsequent events (560), going concern (570), and written representations (580) — each addressing an area where evidence risk is elevated.
Source log
- ICAI — Standards on Auditing, complete text — SA complete text
- ICAI — Guidance Notes on Auditing Aspects — Guidance Notes
- ICAI — Checklist on Standards on Auditing — SA checklist