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CMA Intermediate · Corporate Accounting and Auditing · Nature, Scope, Objectives and Significance of Auditing

Which statement best describes a limitation arising from the nature of audit evidence?

Audit evidence is mostly persuasive rather than conclusive, which is why the auditor can give only reasonable assurance. Judgement, sampling and the nature of the evidence mean certainty is not achievable, even where internal controls are strong or management is cooperative.

  1. AMost audit evidence is persuasive rather than conclusive, so the auditor reaches conclusions on a reasonable-assurance basisCorrect
  2. BAudit evidence is always conclusive when obtained from the client's management
  3. CAudit evidence is unnecessary when internal control is strong
  4. DAudit evidence must be obtained only from external confirmations

Explanation

Auditors form opinions from evidence that is mostly persuasive, not conclusive, and rely on testing and judgement. Strong internal control reduces testing but never eliminates the need for evidence, and evidence can come from many sources, not only confirmations.

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