The reliability of audit evidence is influenced by: –
Its source: internal or external, andBy its nature: visual, documentary or oral. While the reliability of audit evidence is dependent on individual circumstances, the following generalizations will help in assessing the reliability of audit evidence:
(i) Audit evidence from external sources (e.g. confirmation received from a third party) is more reliable than that generated internally.
(ii) Audit evidence generated internally is more reliable when the related accounting and internal control systems are effective.
(iii) Audit evidence obtained directly by the auditor is more reliable than that obtained from the entity.
(iv) Audit evidence in the form of documents and written representations is more reliable than oral representations.
NB: Audit evidence is more persuasive when items of evidence from different sources or of different nature are consistent. Thus, the auditor may obtain a cumulative degree of confidence higher than would be obtained from items of audit evidence when considered individually.
Conversely, when audit evidence obtained from one source is inconsistent with that obtained from another, the auditor determines what additional procedures are necessary to resolve the inconsistency.
