ACCA Advanced Audit and Assurance (AAA) Practice Exam

Oral representations in audit evidence are often less reliable because they can be:

1. Complex and convoluted

2. Referred in financial statements

3. Retracted by the individual

4. Too general in nature

The correct answer is: Retracted by the individual

Oral representations are often considered less reliable in the context of audit evidence primarily because they can be retracted by the individual who made them. This characteristic raises concerns about their dependability since the individual may change their statements or deny making them entirely, which can undermine the trustworthiness of the evidence presented. In an audit, it is crucial to have verifiable and consistent evidence. Written documentation serves to affirm the accuracy and permanence of statements, while oral representations can lack this consistency and can be subject to misinterpretation or memory lapses. Therefore, auditors typically prefer to seek corroborative evidence to support any oral representations made during the audit process. While the complexity or general nature of oral statements can contribute to their perceived reliability, the ability to retract these representations fundamentally impacts their credibility more directly. This is why oral representations are typically treated with greater skepticism compared to written confirmations.