Audit Evidence Reliability: External vs Internal Evidence
Not all evidence has the same persuasive value.
External evidence
Evidence obtained directly from an independent external source is often more reliable than evidence generated internally.
Internal evidence
Internally generated evidence can be reliable when related controls are effective and the information is complete and accurate.
Direct versus indirect
Evidence obtained directly by the auditor is generally stronger than evidence obtained indirectly.
Exam strategy
Rank evidence by independence, directness, documentation, and control over its creation.
The takeaway
Independent, direct evidence is generally more reliable than indirect or weakly controlled internal evidence.
Related Summit resources
FAQ
What is the core idea?
Independent, direct evidence is generally more reliable than indirect or weakly controlled internal evidence.
What should you identify first?
Not all evidence has the same persuasive value.
Why does this matter on the CPA Exam?
Understand why the source, nature, and circumstances of evidence affect reliability.