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CA Final · Advanced Auditing, Assurance and Professional Ethics · Audit Evidence

Auditor CA Iyer has gathered a large volume of internal schedules for the inventory of Bharat Plastics Ltd, but these are of poor quality as they were prepared by the storekeeper after year-end from memory. The audit team proposes to collect even more such schedules to make up for the quality. Which view is correct under SA 500?

More low-quality schedules will not fix the problem. SA 500 states that sufficiency and appropriateness are interrelated and that obtaining more audit evidence may not compensate for its poor quality, so the auditor should obtain more reliable evidence rather than simply a larger quantity.

  1. AMore evidence of this type will cure the weakness because sufficiency and quality are unrelated
  2. BQuality is irrelevant once the quantity reaches the sample size
  3. CObtaining more audit evidence may not compensate for its poor quality, so the auditor should seek more reliable evidence such as physical observation or external sourcesCorrect
  4. DThe higher the quality, the more evidence is required

Explanation

SA 500 says sufficiency and appropriateness are interrelated, and obtaining more audit evidence may not compensate for poor quality. Higher quality may reduce the quantity needed, not increase it. Hence the auditor should obtain better evidence, not more of the same.

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