For Each of the Following Combinations of Audit Evidence, Rank

question 25

Essay

For each of the following combinations of audit evidence, rank the items in terms of their reliability:
1.
A. Bank statement from the entity's records
B. Bank statement sent directly to the auditor
C. Cash at bank ledger
2.
D. Audit firm conducts the physical count of inventory
E. Internal audit reports on the physical count of inventory
F. Auditor supervises internal audit conducting the physical count of inventory
3.
G .Management provides a representation letter on the accuracy of valuations
H. The auditor receives a letter from the agent who conducted the valuation confirming its accuracy
I. The auditor hires an independent agent to confirm the valuation
4.
J. The auditor conducted an inventory count two months before reporting date
K. Internal audit conducted an inventory count 3.days before reporting date
L .Internal audit conducted a supervised inventory count on reporting date
5.
M. Management assured the auditor of the probable outcome of a pending court case
N .The entity's lawyers assured the auditor of the probable outcome of a pending court case
O. The auditor received a representation from the entity's lawyers regarding the probable outcome of a pending court case

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Definitions:

In-House

Refers to activities or operations conducted within a company by its own staff or resources, rather than being outsourced to external entities.

First-Impression Error

A type of judgment bias where an initial impression about a person affects the evaluator's perception of subsequent information.

Job Requirements

The qualifications, skills, and experience deemed necessary for a person to perform a particular job.

Legal Issues

Disputes or controversies that arise in the interpretation and application of laws.