BU547 Lecture Notes - Lecture 7: Asset, Accounts Receivable, Accounts Payable
Document Summary
Bu547 les 7: when a client"s internal controls are effective, evidence obtained from the client is more reliable than when controls are weak qualified providers such as law firms and banks. Even when the source of information is independent, the evidence will not be reliable unless the individual providing it is qualified to do so. Communications from law firms and bank confirmations are typically more highly regarded than accounts receivable confirmations from persons not familiar with the business world. Evidence obtained directly by the auditor may not be reliable if he or she lacks the qualifications to evaluate the evidence. Objective evidence is more reliable than evidence that requires considerable judgment to determine whether it is correct. Examples of subjective evidence include communication from a client"s lawyers as to the likely outcome of outstanding lawsuits against the. Inspection the auditor"s physical examination or count of a tangible asset, or inspection of a document.
