For any given audit, there are many ways in which an auditor can accumulate evidence to meet the overall audit objective of providing an opinion on the financial statements. Two overriding considerations affect the approach the auditor selects: (1) Sufficient appropriate evidence must be accumulated to meet the auditor's professional responsibility, and (2) The cost of accumulating the evidence should be minimized.

Required:

a. Discusses how the auditors can balance between these two considerations?

b. Give three examples of relatively reliable documentation and three examples of less reliable documentation. What characteristics distinguish the two?

c. Explain why external evidence is more reliable than internal evidence.