Discuss the circumstances which an auditor should use to ascertain reliability of audit evidence

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ANSWER:

While auditing, the auditor come across various assertions of the management . The auditor has to evaluate these assertion so that he would be able to express his opinion on finanacial statements. This evaluation can be made in the light of some facts and reasons . These facts and reasons called audit evidence.

The auditor should evaluate that whether he has obtained sufficient appropriate audit evidence so that reasonable conclusion can be drawn there from .

It is possible only if audit evidence obtained and appropriateness relates to its reliability.

The reliability of audit evidence depends on its source - internal or external and on its nature - visual, documentary or oral. While the reliability of audit evidence is dependent on the circumstances under which it is obtained.

The following factors may be useful in assessing the reliability of audit evidence:

(a) External evidence (e.g. confirmation received from a third party) is generally more reliable than internal evidence.

(b) Internal evidence is more reliable when related internal control is satisfactory.

(c) Evidence in the form of documents and written representation is usually more reliable than oral representation.

(d) Evidence obtained by the auditor himself is more reliable than that obtained through the entity.

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ekkarill92 answered 2 years ago

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