QUESTION Corroboratory evidence inspected by an auditor in the course of an audit includes: 1. A...

QUESTION
Corroboratory evidence inspected by an auditor in the course of an audit includes:
1. A letter from the bank confirming the company’s bank balance, which is sent directly to the auditor.
2. The creditor’s monthly statement from the company’s file.

3. Copies of sales invoices sent to customers from the company’s files.
4. Delivery notes, sent with goods, receipted/signed by customers and held in the company’s office.
5. Title deeds for the company’s properties, which are held at the company’s safe deposit box at the bank.
6. A bank statement from the client’s files.
7. Material requisitions filed in a storeroom.
8. A board minute authorizing the purchase of new equipment.

Required:
For each item, discuss and comment on its reliability as audit evidence. Is the evidence highly reliable,
reliable or of low reliability?

Expert Solution

1. Confirmation by bank is a strong evidence as regard its ownership, existence and valuation assertion because it is an external confirmation which is directly received by auditor. Hence it is highly reliable.

2. Creditors’ monthly statement from the company file has low reliability, as it does not provide a confirmation from the creditors. It is just a source of document from the books of the company.

3. Copy of sales invoice from the companies file again has low reliability as there is no confirmation received from debtors. So just by seeing the sales invoice it cannot be judged that those are genuine or not.

4. Delivery notes which are sent with goods and signed by customers is reliable source, because it is properly signed by the customers.

5. The title deeds of the company properties have high reliability as it provides all the details regarding the ownership of the assets and properties.

6. A bank statement from the client file is also a reliable source as the bank statement is provided by the bank which is generally genuine in nature.

7.Material requisitions have low reliability as that can be manipulated by the employees.

8. A board minute which authorizes purchase of new equipment is highly reliable as this is the summary of the board meeting on which an auditor can rely.

ekkarill92 answered 1 year ago

Corroboratory evidence inspected by an auditor, such as the Kathmandu audit examined in Assignment 2, could...

Corroboratory evidence inspected by an auditor, such as the Kathmandu audit examined in Assignment 2, could include: (a) A letter from the bank confirming Kathmandu’s bank balance, which is sent directly by the bank to the auditor. (b) The monthly statement sent by Kathmandu creditors to Kathmandu and filed in the Kathmandu creditors ledger files. (c) Copies of sales invoices sent to Kathmandu customers retained in the Kathmandu sales and debtors ledger files. (d) Delivery notes sent with goods purchased...

8. Audit evidence obtained directly by the auditor will not be reliable if: A. The auditor...

8. Audit evidence obtained directly by the auditor will not be reliable if: A. The auditor lacks the qualifications to evaluate the evidence B. It is impossible for the auditor to obtain additional supporting evidence. C. The client denies that it is authentic D. It is provided by the client’s attorney 9. Audit documentation should possess certain characteristics such as Audit documentation should be indexed and cross-referenced/audit documentation should be organized to benefit the client’s staff A. Yes/No B. No/No...

HKSA 500 “Audit Evidence” requires the auditor to obtain sufficient appropriate audit evidence to be able...

HKSA 500 “Audit Evidence” requires the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the audit opinion. HKSA500 also identifies different types of audit procedures for obtaining audit evidence as well as offers guidance on how to assess the reliability of audit evidence. Required: For the four audit procedures which are Observation, Re-calculation, Inspection, Analytical procedures, describe an audit test using each of the procedure above to obtain evidence as...

Why is the appropriateness of audit evidence obtained by the auditor important in forming an audit...

Why is the appropriateness of audit evidence obtained by the auditor important in forming an audit opinion? Describe the qualities information should have to be considered appropriate by the auditor.

Audit Evidence – Is it Persuasive? As a staff auditor you are asked to gather information...

Audit Evidence – Is it Persuasive? As a staff auditor you are asked to gather information about the existence of physical inventory. For each of the three types of audit evidence obtained, discuss whether the audit evidence is appropriate and sufficient. Physical examination of inventory in warehouse.Documented discussion with inventory control manager that the inventory agrees to the accounting records and is in saleable condition.Observation of annual physical inventory count and re-performance of a sample inventory counts.Explain with Real World...

Question 1: A student in an introductory statistics course investigated if there is evidence that the...

Question 1: A student in an introductory statistics course investigated if there is evidence that the proportion of milk chocolate M&M's that are green differs from the proportion of dark chocolate M&M's that are green. She purchased a bag of each variety, and her data are summarized in the following table. Green Not Green Total Milk Chocolate 8 33 41 Dark Chocolate 4 38 42 Total 12 71 83 c. Estimate the p-value using the randomization distribution and show...

During the course of the audit of Nature Sporting Goods, the auditor discovered the following: The...

During the course of the audit of Nature Sporting Goods, the auditor discovered the following: The accounts receivable confirmation work revealed one pricing misstatement. The book value of $12,955.68 should be $11,984.00. The total misstatement based on this difference is $14,465, which includes a $972 known misstatement and an unknown projected misstatement of $13,493. Nature Sporting Goods had understated the accrued vacation pay by $13,000. A review of the prior-year documentation indicates the following uncorrected misstatements: Accrued vacation pay was...

Identify sources of evidence and testing the auditor may use in the audit of marketable securities by...

Identify sources of evidence and testing the auditor may use in the audit of marketable securities by major assertion tested China Huishan Dairy Holdings Co. LTd. .??

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

Question 1. Trusts The course includes the study of trusts - a complex area of the...

Question 1. Trusts The course includes the study of trusts - a complex area of the law. The creation of an express trust (i.e. one intended created and not arising by law or fact) requires ‘three certainties.’ They are; • Certainty of intention • Certainty of subject matter (trust property) • Certainty of the object (beneficiary or purpose) Scenario Basil declared himself trustee of 5% of the issued share capital of Basil Electrical Co Pty Ltd. There were 1000 shares...

Question