It is the responsibility of the auditor to obtain reasonable assurance by conducting audit engagement and expressing his opinion in the audit report. This expression of opinion results in reasonable assurance which is conveyed to users of financial statements via audit report. However, to form audit opinion, auditor is required to stay objective and he cannot express an opinion on his own and by his own free will rather his opinion must be based upon evidence i.e. audit evidence (as it is collected as a result of application of audit procedures during audit engagement thus called audit evidence) and it should be that sufficient and appropriate that a reasonable assurance can be drawn on the basis of such evidence by the auditor.
Sufficiency is the measure of quantity of audit evidence i.e. the amount of evidence obtained must be enough that it can be used and considered by the auditor. The quantity of audit evidence required depends on the assessment of risk conducted by the auditor. If the risk of material misstatement is high then higher quantity of audit evidence is required to establish (confirm) by the application of audit procedures.
Appropriateness on the other hand is the measure of quality of audit evidence. Audit evidence is said to be appropriate if it is relevant and reliable in the given set of circumstances. However, the appropriateness of audit evidence is affected by the time, source and the circumstances under which such evidence is obtained.
However, the two features of evidence are NOT independent and isolated rather they are closely interrelated. A quality audit evidence, even if it is in small quantity, might be enough in some situation i.e. higher the quality lesser the amount of evidence required, however, a large quantity of audit evidence cannot be a substitute for inappropriateness of audit evidence i.e. poor quality of audit evidence cannot be rectified by merely increasing the amount of evidence.
Sufficient appropriate audit evidence is obtained by applying appropriate audit procedures keeping the risk assessment in consideration. It is up to the auditor to decide whether a certain audit procedure is appropriate enough to obtain sufficient appropriate evidence in a particular situation. Sufficient appropriate audit evidence is said to have been obtained if the audit risk is reduced by the auditor (through application of audit procedures) to such level that enables the auditor to draw reasonable inferences on which ultimately auditor’s opinion will be based.