ACCA AA Syllabus D. Audit Evidence - Quality and Quantity of Evidence - Past Papers ^{3 / 4}

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 3

ISA 500 Audit Evidence requires auditors to obtain sufficient and appropriate audit evidence. Appropriateness is a measure of the quality of audit evidence; that is, its relevance and its reliability.

Required:

Identify and explain THREE factors which influence the reliability of audit evidence. (3 marks)

The directors of a company have provided the external audit firm with an oral representation confirming that the bank overdraft balances included within current liabilities are complete.

Required:

Describe the relevance and reliability of this oral representation as a source of evidence to confirm the completeness of the bank overdraft balances. (3 marks)

ISA 500 Audit Evidence requires audit evidence to be reliable.

Required:

List FOUR factors that infl uence the reliability of audit evidence. (4 marks)

List and explain FOUR factors that will influence the auditor’s judgement regarding the sufficiency of the evidence obtained.