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CS Professional · Compliance Management, Audit and Due Diligence · Audit Principles and Techniques

While auditing Kaveri Textiles Ltd, the auditor finds that the inventory records are accurate but the physical count sheets are poorly maintained and unreliable. A junior suggests simply selecting a much larger number of count sheets to make up for this. Under the principles in SA 200 on sufficiency and appropriateness of audit evidence, what is the correct view?

Obtaining more audit evidence may not compensate for poor quality. Sufficiency measures quantity and appropriateness measures quality, and they are interrelated, so a larger volume of unreliable count sheets does not give the auditor reliable support for the opinion.

  1. AObtaining more audit evidence may not compensate for its poor quality, so quantity alone cannot cure unreliable evidenceCorrect
  2. BA larger quantity of evidence always cures poor quality because sufficiency and appropriateness are unrelated
  3. CPoor quality evidence is acceptable if the sample is large enough to cover every count sheet
  4. DQuality matters only for evidence from external sources, so internal count sheets need only more volume

Explanation

SA 200 states that sufficiency (quantity) and appropriateness (quality) are interrelated, and that obtaining more audit evidence may not compensate for its poor quality. So increasing the number of unreliable count sheets does not fix the problem. The other options wrongly treat quantity as a substitute for quality.

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