Problem

Inspection of records and documents relates to the auditor’s examination of entity account...

Inspection of records and documents relates to the auditor’s examination of entity accounting records and other information. One issue that affects the reliability of documentary evidence is whether the documents are internal or external. Following are examples of documentary evidence:

1. Duplicate copies of sales invoices.

2. Purchase orders.

3. Bank statements.

4. Remittance advices.

5. Vendors’ invoices.

6. Materials requisition forms.

7. Overhead cost allocation sheets.

8. Shipping documents.

9. Payroll checks.

10. Long-term debt agreements.

Required:

a. Classify each document as internal or external evidence.


b. Classify each document as to its reliability (high, moderate, or low).

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