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CMA Intermediate · Corporate Accounting and Auditing · Audit Engagement, Audit Program, Audit Documentation and Audit Evidence

While auditing Kaveri Textiles Ltd, the auditor finds that the evidence obtained on a debtor balance is of poor quality. Which statement is consistent with SA 500?

Obtaining more audit evidence may not compensate for its poor quality. Sufficiency and appropriateness are interrelated, and better quality can reduce the quantity needed, but a larger volume of weak evidence does not make it appropriate.

  1. AObtaining more audit evidence may not compensate for its poor qualityCorrect
  2. BObtaining a larger quantity of evidence always cures poor quality
  3. CPoor quality evidence is acceptable if the sample size is doubled
  4. DQuality of evidence has no bearing on how much evidence is needed

Explanation

SA 500 says the higher the quality, the less evidence may be required, and that obtaining more evidence may not compensate for poor quality. Hence quantity cannot cure weak quality, which makes the 'always cures' and 'doubling' options wrong.

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