CPA Exam — AUDPerforming Further Procedures and Obtaining EvidenceMedium
An auditor is evaluating the appropriateness of audit evidence obtained during the audit of a client's inventory balance. Which of the following statements about the appropriateness of audit evidence is MOST accurate?
- AEvidence obtained from internal sources is generally more appropriate than evidence obtained from external sources.
- BThe appropriateness of audit evidence is inversely related to its persuasiveness.
- CThe relevance of evidence relates to its connection to the assertion being tested, while reliability relates to its trustworthiness.
- DOral representations from management are generally considered highly appropriate evidence when corroborated by other audit procedures.
Show answer & explanationAnswer & explanation
Correct answer: C. The relevance of evidence relates to its connection to the assertion being tested, while reliability relates to its trustworthiness.
Appropriateness of audit evidence is defined by its relevance and reliability. Relevance refers to the logical connection with, or bearing upon, the purpose of the audit procedure and the assertion under consideration. Reliability refers to the source and nature of the evidence, indicating its trustworthiness.
Why the other options are wrong
- A. Evidence from external sources is generally considered more reliable and thus more appropriate than evidence obtained solely from internal sources.
- B. Appropriateness is directly related to persuasiveness; more appropriate evidence is more persuasive.
- D. Oral representations from management are generally considered *less* appropriate as standalone evidence and require strong corroboration; they are not inherently 'highly appropriate'.
Appropriateness of Audit Evidence
The measure of the quality of audit evidence, including its relevance and its reliability, in providing support for the conclusions on which the auditor's opinion is based.
- Comprises relevance and reliability.
- Relevance: connection to the assertion being tested.
- Reliability: trustworthiness of the evidence (source, nature).
- More appropriate evidence is more persuasive.
Memory trick: Appropriate evidence is RELEVANT and RELIABLE.