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

The auditor of Delta Retail is considering the reliability of audit evidence. Which of the following would generally be the most reliable evidence regarding the company's bank balance at the year-end?

A bank confirmation received directly by the auditor from the bank is the most reliable, because ISA 500 treats evidence from independent external sources, obtained directly, as stronger than internally generated or management-supplied information such as a reconciliation, cash book or photocopy.

  1. AA photocopy of the bank statement provided by the finance director
  2. BA bank reconciliation prepared by the company's accountant
  3. CA bank confirmation received directly by the auditor from the bankCorrect
  4. DThe cash book printout, with a written explanation from management

Explanation

Evidence obtained directly by the auditor from an independent external source in original form is generally the most reliable under ISA 500. The reconciliation, cash book and management explanation are internally generated, and a photocopy supplied by management is less reliable than an original obtained directly.

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