Eight different types of evidence were discussed. The following questions concer

Question

Eight different types of evidence were discussed. The following questions concern the reliability of that evidence. Give three examples of relatively reliable documentation and three examples of less reliable documentation. What characteristics distinguish the two? Explain why confirmations are normally more reliable evidence than inquiries of the client. Explain why recalculation tests are highly reliable but of relatively limited use. Explain why analytical procedures are important evidence even though they are relatively unreliable by themselves. Describe a situation in which confirmation will be considered highly reliable and another in which it will not be reliable. Under what circumstances is the physical observation of inventory considered relatively unreliable evidence? Give several examples in which the qualifications of the auditor affect the reliability of the evidence.

Explanation / Answer

Relatively reliable documentation:

Relatively less reliable documentation:

The difference between reliable and unreliable documentation is whether they originate from inside or outside the client's organisation. External information is considered more reliable than internal documentation.

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