CPA Exam — AUDPerforming Further Procedures and Obtaining EvidenceEasy
An auditor is evaluating the audit evidence obtained for a client's inventory balance. Which of the following factors is most indicative of the appropriateness of audit evidence?
- AThe quantity of evidence obtained.
- BThe relevance and reliability of the evidence.
- CThe auditor's prior experience with the client.
- DThe cost of obtaining the evidence.
Show answer & explanationAnswer & explanation
Correct answer: B. The relevance and reliability of the evidence.
Appropriateness of audit evidence is determined by its relevance (how it relates to the assertion being tested) and its reliability (its trustworthiness).
Why the other options are wrong
- A. Quantity of evidence relates to sufficiency, not appropriateness.
- C. Prior experience can inform risk assessment but does not directly determine the appropriateness of specific evidence.
- D. Cost is a practical consideration, but does not define appropriateness.
Appropriateness of Audit Evidence
A measure of the quality of audit evidence, including its relevance to the assertion being tested and its reliability (trustworthiness) in supporting or detecting misstatements.
- Relevance: Does it relate to the assertion?
- Reliability: Is it trustworthy (e.g., from independent sources, directly obtained)?
- Higher quality evidence is more appropriate.
Memory trick: QR: Quality is R&R (Relevance & Reliability).