How do you think an auditor should determine the reliability of potential audit evidence? You may...

How do you think an auditor should determine the reliability of potential audit evidence? You may wish to provide an example of what you think is reliable audit evidence.

Expert Solution

Audit evidence is the information which is used by the auditors to arrive to the conclusions on the basis of which, he may provide his opinions and present the financial statements of the company. To verify if the evidence collected are correct and fully satisfying, they must be collected from a reliable source.

The reliability of audit evidence is influenced by its source and its nature and also depends on the circumstances under which they were obtained.

The reliability of audit evidence can be checked in the following ways:

It is more reliable when it is obtained from outside the entity from independent sources.
The internally generated audit evidence is more reliable when the related controls imposed by the entity are effective.
There will be more reliability of audit evidence if it is obtained directly by the auditor himself and not indirectly or by inference of others.
If the source of audit evidence is documents, whether in the form of papers, electronic mode, or other medium, it may be proved as a more reliable source.
The evidence provided by original documents is generally more reliable than audit evidence provided by photocopies of original documents.

The examples of audit evidence are checks, invoices, general and subsidiary ledgers, worksheets, minutes of
meetings, confirmations from third parties, analysts' reports.

ekkarill92 answered 1 year ago

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

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