In this chapter, several different kinds of audit evidence were identified. The following questions concern the reliability of audit evidence.

Required

a. Explain why confirmations are normally considered more reliable than inquiries of the client. Under what situations might the opposite hold true?

b. Give three examples of reliable documentation and three examples of less reliable documentation. What characteristics distinguish them?

c. Explain why physical examination is considered strong, but limited, evidence. Under what circumstances would the auditor's physical examination of inventory be considered of limited use?

d. Identify characteristics of internal evidence that would lead the auditor to assess its reliability as high.

e. Explain why tests of details may be more reliable than analytical procedures.

f. Explain how analytical procedures might lead to insight about the correctness of an account balance that might not be obtained through tests of details.

g. Identify three instances when an auditor is likely to use recomputation as audit evidence. Why is it important that recomputation take place? Is an auditor-prepared spreadsheet a recomputation or an independent estimate of an account balance? Explain.