Final answer:
Lucas Roberts is concentrating on the appropriateness of audit evidence to support the existence assertion for accounts receivable. Appropriateness pertains to both the relevance and reliability of the evidence in confirming that the financial records truly reflect existing assets.
Step-by-step explanation:
Lucas Roberts, an auditor at Smithway Marina, is focusing on ensuring that his audit evidence supports the existence assertion of accounts receivable. The characteristic of audit evidence Lucas is concerned with is its appropriateness. Appropriateness refers to the relevance and reliability of audit evidence, specifically regarding if the information actually supports the existence of an asset or transaction.
Existence assertion means that assets or transactions recorded in the financial statements genuinely exist at a given date. To assess the appropriateness of evidence concerning the existence assertion of accounts receivable, Lucas would be evaluating aspects such as:
- Is the evidence obtained from a reliable source?
- Is the method used to gather evidence considered standard practice in the field of auditing?
- Does the evidence directly support the existence of accounts receivable?
Moreover, reliability is a key aspect of appropriateness. Reliable audit evidence is generally obtained from independent sources outside the entity, generated internally through a system of strong controls, and directly by the auditor's observation, inspection, or confirmation.
Lucas would also consider factors like whether the testimony provided by management or others is from experts in the relevant field, if there's a consensus among experts, and whether the testimony agrees with that consensus. This helps in determining if there are reasons to believe the evidence may be biased or if it stands up to professional scrutiny.