Question

An internal auditor has set an engagement objective of determining whether all cash receipts are deposited intact daily. To satisfy this objective, the internal auditor interviewed the controller who gave assurances that all cash receipts are deposited as soon as is reasonably possible. As information that can be used to satisfy the stated engagement objective, the controller's assurances are

1) Sufficient but not reliable or relevant.
2) Sufficient, reliable, and relevant.
3) Not sufficient, reliable, or relevant.
4) Relevant but not sufficient or reliable.

Answer 1

The controller's assurances are relevant but not sufficient or reliable to satisfy the engagement objective of determining whether all cash receipts are deposited intact daily.

Step-by-step explanation:

The controller's assurances regarding all cash receipts being deposited intact daily are relevant but not sufficient or reliable to satisfy the engagement objective.

Relevance means that the information is related to the objective. In this case, the controller's assurances are relevant because they address the objective of determining whether all cash receipts are deposited intact daily.

However, sufficiency refers to the quantity of evidence and reliability refers to the quality of evidence. The auditor cannot solely rely on the controller's assurances as they may not be sufficient or reliable.