Answer: a. Explain why confirmations are normally more reliable evidence than inquiries of the client. Confirmations are normally more reliable evidence than inquiries of the client because the confirmations usually come from an independent party outside of the company. b. Describe a situation in which confirmation will be considered highly reliable and another in which it will not be reliable. Confirmation of bank balances are considered highly reliable because, bank maintainsexact accounting records which seems to be highly reliable.Bank records are highly reliable because, qualifying individual provides the information. Departmental store records are not reliable when compared to bank statement. c. Under what circumstances is the physical observation of inventory considered relatively unreliable evidence? If auditor is not qualified to distinguish between the inventory like diamonds and glass, the physical examination of inventory will not be considered as reliable evidence. d. Explain why recalculation tests are highly reliable but of relatively limited use. Recalculation tests are highly reliable because, it generates assurance of the accuracy. A testverifies accuracy of the recorded amount. Recalculation fails to cover the omitted amountsand fictitious amounts. e.Give three examples of relatively reliable documentation and three examples of less reliable documentation. What characteristics distinguish the two? Following are the relatively reliable documentation: 1.Vendor statements 2.Bank statements 3.Signed lease agreements Following are the less reliable documentation: 1.Copies of customer invoice 2.Duplicate sales invoice 3.Internal memorandum Distinguish between relatively reliable documentation and less reliable documentation is: Relatively reliable documentationLess reliable documentation These documents are highly reliablebecause Less reliable document originates frominside of it originates from outside client’sorganization the organization. Documents are prepares by the qualifiedexperts Documents prepares by particulardepartment in the organization. f.Give several examples in which the qualifications of the respondent or the qualifications of the auditor affect the reliability of the evidence. 1. Confirmation of accounts receivable: Confirmation of the balance of accounts receivablecompared with the members of general public. 2. Observes the corporate minutes: Observation by an experienced auditor when comparedto the new audit assistant. 3. Physical examination of inventory: Auditor should have the knowledge to compare theclient’s inventory. 4. Attorney letter: Letter involves only with the patents. g. Explain why analytical procedures are important evidence even though they are relatively unreliable by themselves. 1. Analytical procedures are effectively used to state that the financial statements aremisstated. 2. Analytical procedures result in detail procedure in specific audit areas. Solution Answer: a. Explain why confirmat.

1. Answer:
a. Explain why confirmations are normally more reliable evidence than inquiries of the client.
Confirmations are normally more reliable evidence than inquiries of the client because the
confirmations usually come from an independent party outside of the company.
b. Describe a situation in which confirmation will be considered highly reliable and another in
which it will not be reliable.
Confirmation of bank balances are considered highly reliable because, bank maintainsexact
accounting records which seems to be highly reliable.Bank records are highly reliable because,
qualifying individual provides the information.
Departmental store records are not reliable when compared to bank statement.
c. Under what circumstances is the physical observation of inventory considered relatively
unreliable evidence?
If auditor is not qualified to distinguish between the inventory like diamonds and glass, the
physical examination of inventory will not be considered as reliable evidence.
d. Explain why recalculation tests are highly reliable but of relatively limited use.
Recalculation tests are highly reliable because, it generates assurance of the accuracy. A
testverifies accuracy of the recorded amount. Recalculation fails to cover the omitted
amountsand fictitious amounts.
e.Give three examples of relatively reliable documentation and three examples of less reliable
documentation. What characteristics distinguish the two?
Following are the relatively reliable documentation:
1.Vendor statements
2.Bank statements
3.Signed lease agreements
Following are the less reliable documentation:
1.Copies of customer invoice
2.Duplicate sales invoice
3.Internal memorandum
Distinguish between relatively reliable documentation and less reliable documentation is:
Relatively reliable documentationLess reliable documentation
These documents are highly reliablebecause Less reliable document originates frominside of
it originates from outside client’sorganization the organization.
Documents are prepares by the qualifiedexperts Documents prepares by particulardepartment in
the organization.
f.Give several examples in which the qualifications of the respondent or the qualifications of the

2. auditor affect the reliability of the evidence.
1. Confirmation of accounts receivable: Confirmation of the balance of accounts
receivablecompared with the members of general public.
2. Observes the corporate minutes: Observation by an experienced auditor when comparedto the
new audit assistant.
3. Physical examination of inventory: Auditor should have the knowledge to compare theclient’s
inventory.
4. Attorney letter: Letter involves only with the patents.
g. Explain why analytical procedures are important evidence even though they are relatively
unreliable by themselves.
1. Analytical procedures are effectively used to state that the financial statements aremisstated.
2. Analytical procedures result in detail procedure in specific audit areas.
Solution
Answer:
a. Explain why confirmations are normally more reliable evidence than inquiries of the client.
Confirmations are normally more reliable evidence than inquiries of the client because the
confirmations usually come from an independent party outside of the company.
b. Describe a situation in which confirmation will be considered highly reliable and another in
which it will not be reliable.
Confirmation of bank balances are considered highly reliable because, bank maintainsexact
accounting records which seems to be highly reliable.Bank records are highly reliable because,
qualifying individual provides the information.
Departmental store records are not reliable when compared to bank statement.
c. Under what circumstances is the physical observation of inventory considered relatively
unreliable evidence?
If auditor is not qualified to distinguish between the inventory like diamonds and glass, the
physical examination of inventory will not be considered as reliable evidence.
d. Explain why recalculation tests are highly reliable but of relatively limited use.
Recalculation tests are highly reliable because, it generates assurance of the accuracy. A
testverifies accuracy of the recorded amount. Recalculation fails to cover the omitted
amountsand fictitious amounts.
e.Give three examples of relatively reliable documentation and three examples of less reliable
documentation. What characteristics distinguish the two?
Following are the relatively reliable documentation:

3. 1.Vendor statements
2.Bank statements
3.Signed lease agreements
Following are the less reliable documentation:
1.Copies of customer invoice
2.Duplicate sales invoice
3.Internal memorandum
Distinguish between relatively reliable documentation and less reliable documentation is:
Relatively reliable documentationLess reliable documentation
These documents are highly reliablebecause Less reliable document originates frominside of
it originates from outside client’sorganization the organization.
Documents are prepares by the qualifiedexperts Documents prepares by particulardepartment in
the organization.
f.Give several examples in which the qualifications of the respondent or the qualifications of the
auditor affect the reliability of the evidence.
1. Confirmation of accounts receivable: Confirmation of the balance of accounts
receivablecompared with the members of general public.
2. Observes the corporate minutes: Observation by an experienced auditor when comparedto the
new audit assistant.
3. Physical examination of inventory: Auditor should have the knowledge to compare theclient’s
inventory.
4. Attorney letter: Letter involves only with the patents.
g. Explain why analytical procedures are important evidence even though they are relatively
unreliable by themselves.
1. Analytical procedures are effectively used to state that the financial statements aremisstated.
2. Analytical procedures result in detail procedure in specific audit areas.