In order to arrive at an opinion on the truth and fairness of a set of financial statements, auditors have to gather and evaluate audit evidence.

Required:

(a) The source of the evidence is of prime importance in evaluating the quality of the evidence. For example, one type of evidence originates from the clients company, passes through the hands of third parties, and is then returned to the client where it is available for the auditors inspection. Briefly discuss the effect of the sources of documents on the reliability of the evidence. Give examples to support your answers. (7 marks)

(b) Discuss reasons why auditors may make use of the work of experts, other auditors etc. as audit evidence. In general, how do auditors check the quality of the work performed by experts? (3 marks)

(c) The major purpose of audit working papers is to document the evidence gathered by the auditor. List five other purposes or uses of audit working papers. (5 marks)