26.Nature and reliability of audit evidence
The reliability of audit evidence is influenced by it‟s source and by it‟s nature and is dependent on the individual circumstances under which it was obtained.
Audit evidence is more reliable when it is obtained from independent sources outside the entity.
Audit evidence that is generated internally is more reliable where the related internal controls are effectives.
Audit evidence obtained directly by the auditor is more reliable than audit evidence obtained indirectly.
Documentary audit evidence is more reliable than oral audit evidence.
Audit evidence obtained from original documents is more reliable than evidence provided by facsimiles.
Procedures of obtaining audit evidence
The auditor should use one or more of the following procedures in gathering audit evidence:
Inspection
This consist of the examination of supporting documents, records, or tangible assets for example the inspection of plant and machinery against the asset register.
Observation
This consists of looking at a process or procedure being performed by others for example the observation of a stock count.
Enquiry and