Evidence comes in various types and has different degrees of reliability. Following are some statements that compare various types of evidence.
a. A bank confirmation versus observation of the segregation of duties between cash receipts and recording payment in the accounts receivable subsidiary ledger.
b. An auditor’s recalculation of depreciation versus examination of raw material requisitions.
c. A bank statement included in the entity’s records versus shipping documents.
d. Physical inspection of common stock certificates held for investment versus physical examination of inventory components for a personal computer.
Required:
For each situation, indicate whether the first or second type of evidence is more reliable. Provide a rationale for your choice.
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