Explain the reliability of bank statements as audit evidence

Given the fact that a bank statement is an audit evidence from an external source, it‘s more reliable than if it were generated from within the entity. This is because an internal source of evidence is more likely to be distorted, intentionally or otherwise, than an external source of audit evidence.

A bank statement is in document form hence more reliable than if it were, say oral, since in the case of documents, references and confirmations can easily be carried out.

If the auditor directly makes an inquiry in writing, to the client‘s bank, then the bank statement would be a reliable audit evidence than if one of client staff was to do this.

However, internally generated audit evidence, say the bank statement was brought from a file in the client‘s office, would be reliable if the systems of internal controls were effective.

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