I. Evidence should be relevant and reliable to be appropriate. Define the terms Relevance and

Reliability.

II. For each situation presented below, indicate which means of gathering evidence would be

considered more reliable (#1 or #2) AND indicate a reason from the following list:

A. Independent source of the information (Independence of provider);

B. auditors direct knowledge;

C. Knowledgeable source (qualifications of individual providing the information);

D. degree of objectivity versus subjectivity; and

E. Functioning system of internal controls.

DO NOT DISCUSS your answer. CHOOSE ONLY ONE LETTER.

a. The auditor considers evidence relating to 1. The estimate of bad debts expense; or 2. The cost of

land acquired five years ago.

b. 1 The auditor relies on an analysis prepared by the controller of gross margin to sales for the current

and prior periods.; or (2) The auditor calculates gross margin to sales and compares to similar data

for prior periods .

c. Evidence involving audit judgement is considered by a member of the audit team. The individual is

1. An intern; or 2. The audit senior assigned to the engagement.

d. The auditor considers the quantity and valuation of 1. An inventory of cement blocks; or

2. An inventory of precious gems.

e. Auditor tests two segments of the company. (1) In the first segment, employees check another

employees work; or (2) In the second segment, no one checks the work of employees.