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CS Professional · Internal and Forensic Audit · Internal Audit Tools and Techniques

Of the following pieces of evidence collected by an internal auditor of Neelkanth Foods Ltd, which is generally the most reliable?

A bank confirmation received directly from the bank is most reliable because it comes from an independent external source without passing through the entity. Internal records, photocopies and verbal assurances are generated or controlled by the company and so carry less evidential weight.

  1. AA bank balance confirmation received directly from the bankCorrect
  2. BA bank reconciliation prepared by the company's accountant
  3. CA verbal assurance by the finance manager
  4. DA photocopy of the cash book page

Explanation

Evidence obtained directly from an independent external source under the auditor's control is generally more reliable than internally generated documents or oral statements. The reconciliation and cash book come from the entity itself, and verbal assurance is weakest.

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