Provide a detailed example of an audit evidence that is reliable but not relevant, and an example of an evidence that is relevant but not reliable.
Relevance : Relevance Deals with the logical connection with, or bearing upon, the purpose of the audit procedure and, where appropriate, the assertion under consideration. The relevance of information to be used as audit evidence may be affected by the direction of testing. For example, if the purpose of an audit procedure is to test for overstatement in the existence or valuation of accounts payable, testing the recorded accounts payable may be a relevant audit procedure.
Reliable : The reliability of information to be used as audit evidence, and therefore of the audit evidence itself, is influenced by its source and its nature, and the circumstances under which it is obtained, including the controls over its preparation and maintenance where relevant. Therefore, generalizations about the reliability of various kinds of audit evidence are subject to important exceptions. Even when information to be used as audit evidence is obtained from sources external to the entity, circumstances may exist that could affect its reliability. For example, information obtained from an independent external source may not be reliable if the source is not knowledgeable, or a management’s expert may lack objectivity.
Sufficient: The measure of the quantity of audit evidence. The quantity of the audit evidence needed is affected by the auditor’s assessment of the risks of material misstatement and also by the quality of such audit evidence. The quantity of evidence needed is affected by the risk of the subject matter information being materially misstated (the greater the risk, the more evidence is likely to be required) and also by the quality of such evidence (the higher the quality, the less may be required).
Important for an internal auditor to apply professional skepticism:
An attitude of professional skepticism is necessary throughout the internal audit for the internal auditor to reduce the risk of overlooking suspicious circumstances, of over generalizing when giving report from observations, and of using faulty assumptions in determining the nature, timing and extent of evidence-gathering procedures and evaluating the results thereof.
Provide a detailed example of an audit evidence that is reliable but not relevant, and an example of an evidence that is relevant but not reliable.
DQ1. Discuss the terms 'Relevant', 'Reliable' and 'Sufficient as they relate to audit evidence. Provide an example of each. Why is it important for an internal auditor to apply professional skepticism when evaluating audit evidence?
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. auditor’s direct knowledge; C. Knowledgeable source (qualifications of individual providing the information); D. degree of objectivity versus subjectivity;...
asap clearly pls Chapter 5 1. 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. auditor's direct knowledge; C. Knowledgeable source (qualifications of individual providing the information); D. degree of objectivity versus subjectivity; and E. Functioning...
Which of the following is the most accurate statement regarding audit evidence? Accounting data developed under satisfactory conditions of internal control are more relevant than data developed under unsatisfactory internal control conditions. The auditor must obtain sufficient appropriate audit evidence. Audit evidence gathered by an auditor from outside an enterprise is reliable. Oral representations made by management are not valid evidence.
Distinguish between the concepts of “sufficient” and "appropriate” as they apply to audit evidence. Give examples of evidence that is not relevant and/or not reliable. Refer back to the description of posting located on our course Syllabus to ensure you are in compliance to receive full credit.
Identify and briefly explain the eight general audit procedures used to gather evidence (10 pts). Provide an example for each of the eight procedures.
To provide efficient, reliable evidence, confirmations should be ________. a) created by the client and sent to third parties to be returned to the client b) created by the auditor and sent to third parties to be returned to the client c) created by the auditor and sent to third parties to be returned to the auditor d) created by the client and sent to third parties to be returned to the auditor
Should we always consider a reliable measure as valid? Why or why not? Provide an example.
What is the mean of Audit assertions? please provide an example to explain.
Auditors sometimes use ratios as audit evidence. For example, an unexplained DECREASE in the ratio of gross profit to sales may suggest which of the following possibilities? a. Fictitious purchases. b. Unrecorded purchases. c. Fictitious sales. d. Selling expense recorded as general expense.