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2 An audit junior has been assigned to the audit of bank and cash balances of Howard Co. He has obtained the
following audit evidence:
1 Bank reconciliation carried out by the cashier
2 Bank confirmation report from Howard’s bankers
3 Verbal confirmation from the directors that the overdraft limit is to be increased
4 Cash count carried out by the audit junior
What is the order of reliability of the audit evidence starting with the most reliable first?
A 4, 2, 1 and 3
B 2, 1, 4 and 3
C 4, 3, 2 and 1
D 2, 4, 1 and 3Why is the answer D? Shouldnt it be A, as 4 is evidence generated by auditor himself and thus likely to be most reliable?
Generally written confirmation from a third party, such as a bank is considered very strong evidence. Auditor-obtained is also strong. Perhaps it is casting doubt over the competence of the audit junior.
Quite a tricky point.
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