Question

Which of the following statements regarding the reliability of data is correct?

1) Audit evidence obtained orally is more reliable than in documentary form.
2) Audit evidence that has been transformed into electronic form is more reliable than audit evidence provided by original documents.
3) Audit evidence provided by facsimile is more reliable than audit evidence provided by original documents.
4) Audit evidence obtained directly by the auditor is more reliable than audit evidence obtained indirectly or by inference.

Answer 1

The correct statement regarding the reliability of data is: Audit evidence obtained directly by the auditor is more reliable than audit evidence obtained indirectly or by inference.

Step-by-step explanation:

Out of the four statements provided, the correct statement regarding the reliability of data is: 4) Audit evidence obtained directly by the auditor is more reliable than audit evidence obtained indirectly or by inference.

Audit evidence that is obtained directly by the auditor is considered to be more reliable because it is firsthand information that the auditor has personally gathered. This type of evidence is less likely to be influenced by biases or errors compared to evidence that is obtained indirectly or by inference.

For example, if an auditor conducts an observation of a manufacturing process, it provides direct evidence of the process's compliance with the required standards. On the other hand, if the auditor relies on documents or reports provided by the management, it is considered indirect evidence.