Of the following, which is the least persuasive type of audit evidence?

 Options:

a) Bank statements obtained from the client b) Documents obtained by auditor from third parties directly. c) Carbon copies of sales invoices inspected by the auditor d) Computations made by the auditor

The Correct Answer Is:

c) Carbon copies of sales invoices inspected by the auditor

Correct Answer Explanation: c) Carbon copies of sales invoices inspected by the auditor

The least persuasive type of audit evidence among the options provided is option c) Carbon copies of sales invoices inspected by the auditor.

Carbon copies of sales invoices are considered less reliable compared to other forms of evidence for several reasons. Firstly, they can be easily manipulated or altered by the client or others, which reduces their reliability and objectivity.

Unlike bank statements or documents obtained directly from third parties, carbon copies of sales invoices are within the control of the client and can be subject to intentional or unintentional changes.

Secondly, carbon copies of sales invoices may not provide sufficient assurance regarding the authenticity of the underlying transactions. They may not always reflect the true nature of the transaction, as they can be created or modified after the fact.

In contrast, bank statements obtained directly from the financial institution or documents obtained from third parties are more likely to be accurate and reliable representations of the actual financial transactions.

Furthermore, carbon copies of sales invoices may lack the necessary supporting documentation to verify the completeness and accuracy of the recorded transactions.

They may not include critical information such as purchase orders, shipping documents, or other corroborating evidence that would provide a comprehensive picture of the transaction.

Why the Other Options are Incorrect?

On the other hand, let’s evaluate why the other options are considered more persuasive forms of audit evidence:

a) Bank statements obtained from the client:

Bank statements obtained directly from the financial institution are considered highly reliable evidence. They are generated independently of the client’s accounting system and provide an objective record of the client’s financial transactions.

These statements are typically subject to strict regulatory and industry standards, reducing the likelihood of manipulation or fraud.

b) Documents obtained by auditor from third parties directly:

Documents obtained directly from third parties are generally considered reliable because they are independent of the client’s control.

For example, invoices received directly from suppliers or confirmations from customers provide external validation of the recorded transactions. These documents are less susceptible to manipulation by the client.

d) Computations made by the auditor:

While computations made by the auditor are based on the auditor’s professional judgment and expertise, they may still be considered more reliable than carbon copies of sales invoices.

Auditors use their knowledge of accounting principles and industry standards to perform calculations, and these computations can be independently verified and reviewed.

However, they are still considered less reliable than external documents and bank statements, which provide direct, objective evidence.

In summary, carbon copies of sales invoices are the least persuasive type of audit evidence because they are more susceptible to manipulation, may not provide sufficient assurance regarding the authenticity of transactions, and may lack supporting documentation.

In contrast, bank statements obtained directly from financial institutions and documents obtained from third parties are generally more reliable and objective sources of evidence. Computations made by the auditor, while based on professional judgment, are also considered more reliable than carbon copies of sales invoices

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