When completing an audit, there is a hierarchy of data. AICPA AUC 500 states that data confirmed from third parties is the most effective data that can be had as an auditor. The same kind of hierarchy relates to a forensic accountant when they are collecting data for a forensic investigation. Data that comes from the client that is being investigated can not really be relied on because it could be manipulated in order to look better than it really is. A forensic accountant would have to analyze all the journal entries made by the company in order to see how the ending balances that are being analyzed are actually correct. By being able to confirm these balances with a third party would give more assurance that what is being analyzed is legitimate.

Third party confirmations can be done for cash, receivables, payables, and debt which are typically the largest balance sheet amounts. If a forensic accountant is able to confirm these balances he or she would have a sufficient and reliable amount of data. If the confirmation cam back as different balances as to what the client has on their trial balance, the forensic accountant would know that this is an area that needs to be investigated more thourghly.

Question

How Rule 201 of the AICPA Code of Professional Conduct, Rule 702 of the Federal Rules of Evidence, and any other regulations might influence a factor regarding the gathering of sufficient relevant data?