Audit working papers should always be sufficiently complete and detailed to enable an auditor with no previous connection with the audit to subsequently ascertain from them what work was performed and to support the conclusions reached by the auditor . Required; Briefly explain giving two examples, the quality of audit evidence generated by third parties

You are required to discuss the quality of audit evidence generated by third parties

Quality of audit evidence refers to the reliability and relevance of the evidence.
The reliability of evidence refers to the credibility of the source of the information i.e. the question of how much trust can the auditor place on the evidence while relevance refers to the usefulness of the evidence in testing the management‘s assertions or the audit objective.
Evidence generated by third parties mainly includes direct confirmations of balances obtained from such parties and documentary evidence such as statements and invoices sent by such parties. The reliability of evidence obtained from such parties mainly depends on the following:

  •  The evidence is usually in writing. Documentary evidence is more reliable than oral evidence;
  •  The evidence is usually from an independent source. This increases its reliability. However, the auditor must be cautious to ensure that the third party is independent of the client and there is no possibility of collusion.

Examples of third party evidence include:

  •  Direct confirmations such as replies to debtors circularization or banker‘s certificates and
  •  Statements received from suppliers‘ on balances outstanding



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