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

For Ganga Foods Ltd, the auditor finds that the board minutes support a management claim on a contingent liability. The auditor also obtains a reply from the company's external legal counsel, consistent with the minutes. Which statement best reflects SA 500 on the effect of this combination?

Consistent evidence from different sources gives more assurance than items considered individually. SA 500 notes that corroborating information from a source independent of the entity, such as legal counsel's reply, may increase the assurance obtained from internal evidence like minutes of meetings.

  1. AThe minutes alone are always more reliable than any external source
  2. BConsistent evidence from different sources, including one independent of the entity, ordinarily gives more assurance than items considered individuallyCorrect
  3. CThe legal counsel's reply makes the minutes unnecessary and they should be ignored
  4. DConsistency between sources reduces assurance as it suggests collusion

Explanation

SA 500 notes that more assurance is ordinarily obtained from consistent evidence from different sources or of a different nature, and that corroborating information from an independent source can increase assurance from internally generated evidence such as minutes. Other options contradict this.

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