Rank the reliability of the following items of audit evidence:
1)schedules of details of physical inventory counts conducted by the client
2)the auditor's notation of inferences drawn from ratios and trends
3)copies of bank statements held by the client
4)copies of bank statements obtained directly from the bank
A) 2, 3, 4, 1
B) 3, 4, 2, 1
C) 4, 2, 3, 1
D) 4, 1, 2, 3

Question

Quizplus · Accepted Answer

1) Schedules of details of physical inventory counts conducted by the client - this is reliable evidence as it is directly related to the physical existence of inventory.
2) The auditor's notation of inferences drawn from ratios and trends - this is less reliable evidence as it is based on the auditor's judgment and is subjective.
3) Copies of bank statements held by the client - this is less reliable evidence as it is controlled by the client and may be subject to manipulation.
4) Copies of bank statements obtained directly from the bank - this is the most reliable evidence as it is obtained directly from a third party and is less subject to manipulation.

Rank the Reliability of the Following Items of Audit Evidence