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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Audit procedures and obtaining evidence

In auditing a sample of purchase invoices at Orchid Trading, the auditor obtains a supplier's statement sent directly to the auditor by post, a copy invoice supplied by the client, and a verbal explanation from the purchasing manager. Which ranking of reliability of this evidence is most consistent with ISA 500 principles?

The most reliable is the supplier's statement received directly by the auditor, then the client-supplied copy invoice, then the verbal explanation. Under ISA 500, evidence from independent external sources and documentary evidence is more reliable than internally generated or oral evidence.

  1. AVerbal explanation, copy invoice, supplier's statement sent to auditor
  2. BSupplier's statement sent to auditor, copy invoice from the client, verbal explanationCorrect
  3. CCopy invoice from the client, supplier's statement, verbal explanation
  4. DAll equally reliable, as each relates to the same transaction

Explanation

ISA 500 states evidence is more reliable when obtained from independent external sources, and documentary evidence is more reliable than oral representations. The supplier's statement sent directly is external and independent, the copy invoice is client-held documentary evidence, and the verbal explanation is least reliable.

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