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21) Which of the following statements relating to the competence of evidential matter is always true?22) Discuss three of the following characteristics of relevant evidence.1.Independence of provider2.Effectiveness of client's internal controls3.Auditor's direct knowledge4.Qualification of individuals providing the information5.Degree of objectivity6.Timeliness
1.Independence of provider — Evidence obtained from a source outside the entity is more reliable and persuasive than that obtained from within.2.Effectiveness of client's internal controls — When a client's internal controls are effective, evidence obtained is more reliable than when the controls are not effective.3.Auditor's direct knowledge — Evidence obtained directly by the auditor through physicalexamination, observation, computation and inspection is more reliable than information obtained indirectly.4.Qualification of individuals providing the information — Although the source of information is independent, the evidence will not be reliable unless the individual providing it is qualified to do so. Communications from attorneys and bank confirmationsare typically more highly regarded than accounts receivable confirmations from persons not familiar with the business world. Also, evidence obtained directly by the auditor may not be reliable if the auditor lacks the qualifications to evaluate the evidence.5.Degree of objectivity — Objective evidence is more reliable than evidence that requires considerable judgment to determine whether it is correct.6.Timeliness — The timeliness of audit evidence can refer either to when it is accumulated or to the period covered by the audit. Evidence is usually more reliable for balance sheet accounts when it is obtained as close to the balance sheet date as possible.23) Why is the appropriateness of audit evidence obtained by the auditor important in forming anaudit opinion? Describe the qualities information should have to be considered appropriate by the auditor.
24) The reliability of evidence refers to the degree to which evidence is considered believable or trustworthy. There are six factors that affect the reliability of audit evidence. One factor is the independence of the provider; i.e., evidence obtained from a source outside the client company ismore reliable than that obtained within. Identify and discuss any two of the remaining five factors.