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- 5 Marks
Question
You have been asked by your Audit Manager to assess the audit evidence provided by a client, a small company owned by Mr. and Mrs. Randolph-Phillips. You observed that the files have been neatly packaged and well referenced. You are however skeptical as to the quality of evidence provided because the year’s audit encountered many difficulties.
Required:
Outline FIVE (5) general principles in accordance with ISA 500: Audit Evidence, that will assist you in assessing the reliability of the audit evidence received.
Answer
General principles for assessing reliability of audit evidence:
- Audit evidence is more reliable when it is obtained from independent sources outside the entity under audit.
- Internally generated audit evidence is more reliable when the internal controls are effective.
- Audit evidence obtained directly by the auditor is more reliable than audit evidence obtained indirectly or by inference.
- Audit evidence is more reliable if it exists in documentary form.
- Audit evidence provided by original documents is more reliable than evidence provided by photocopies or electronically transformed documents.
- Tags: Audit evidence, Audit Principles, Audit Process, ISA 500, Reliability
- Level: Level 2
- Topic: Audit and Assurance Evidence
- Series: DEC 2022
- Uploader: Theophilus