art 5 Appropriateness of Audit Evidence (20 points) 1. discuss what is meant by Relevance of Audit Evidence. 2. For each situation shown below, indicate which alternative #1 or #2, would be considered more reliable AND indicate a reason from the following list: A. of the information (Independence of provider); B. Auditor's direct knowledge C. Effectiveness of client's Internal controls D. ledgeable source of individuals providing the information) Degree of objectivity versus subjectivity DO NOT DISCUSS your answer CHOOSE ONLY ONE LETTER Answers Item Number more reliable Letter for reason 1. The auditor relies on an analysis prepared by the controller of gross margin to sales for the current and prior periods; The auditor calculates gross margin sales and compares to similar data prior periods. b. Test the existence of accounts receivable 1. By tracing amounts from of invoices to amounts in the accounts receivable subsidiary ledger; or, 2 By sending accounts receivable confirmation letters to selected the auditor considers evidence relating to: (1) the adequacy of land allowance for doubtful accounts, the cost of acquired by the company d. Auditor tests two segments of the company 1. In the first segment, the auditor assesses control risk as .80; or (2) In econ the auditor assesses control risk as