Question
For each situation below and on the next page indicate whether the first or second type of evidence is more reliable. Provide a rationale for
For each situation below and on the next page indicate whether the first or second type of evidence is more reliable. Provide a rationale for your choice. Fully explain your rationale (1 mark for choice and 2 marks for rationale)
a.A bank confirmation received by the auditor (first) versus observation of the segregation of duties between cash receipts and recording payment in the accounts receivable sub-ledger.( second)
More Reliable Evidence, First or second?
Rationale:
b.Examine duplicate sales invoices when several competent people are checking on auditor's work ( first) versus examining documents prepared by a competent person in a one-person staff. (second)
More Reliable Evidence, First or second?
Rationale:
c. Question operating personnel about the possibility of obsolete inventory or slow moving inventory ( first)versus recount client's inventory counts to make sure the recorded counts are accurate.( second)
More Reliable Evidence, First or second?
Rationale:
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