All else being equal, external documents are preferred over internal documents.

Internal documents created under strong internal controls are more reliable than internal documents created under weak intern

controls.

Why are external documents preferred?

Is a bank statement an external or internal document?

Is a bank reconciliation an external or internal document?

Observation

Definition: Use of the senses to assess certain activities

Note that physical examination is a subset of observation

Observation is rarely sufficient by itself because of:

The risk that knowledge of being observed changes people's behavior

Example: people don't cheat when someone is watching them

Inquiry

Definition: Obtaining written or oral information from the client in response to questions from the auditor.

Can inquiry be regarded as conclusive? Why or why not?

Normally, evidence obtained through inquiry needs further corroborating evidence through other procedures.

Recalculation

Definition: Rechecking a sample of the computations

Includes:

Rechecking arithmetical accuracy $($e$.$g$.,$ footing and cross$-$footing$)$

Checking computation of depreciation expense $($e$.$g$.,$ tests of extension$)$

Recalculating the allowance for doubtful accounts based on a formula $($e$.$g$.,$ recalculation of an estimate$)$

Which determinants of persuasiveness$/$reliability are in operation?