II. For each situation presented below. indicate which means of gathering evidence would he considered more reliable AND indicate a reason from the following list: provider}: . Auditor's direct knowledge; E c. Effectiveness of the client's Internal controls. D E . Knowledgeable source (qualifications of individuals providing the information}; and . Degree of Objectivity or Subjectivity of the account. DO NOT DISCUSS YOU: answer. CHOOSE ONE? ONE LETTER. Answers Item member more reliable Letter for reason If! a. l. 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. h. Test the existence of accounts receivable, 1. By tracing amounts from copies of sales invoices to amounts in the accounts receivable subsidiary ledger; or, 2. By sending accounts receivable confirmation letters to selected customers. c. In considering the valuation of inventory 1. The auditor reviews and makes test counts of computer components; or 2. The auditor reviews and makes test counts of the inventory consisting of lumber of different lengths. d. Auditor tests two segments of the company. 1. In the first segment. the auditor notices that people are assigned to check the work of other employees; or 2. In the second segment, no one bothers to check others' work