ACCA Advanced Audit and Assurance (AAA) Practice Exam

What type of evidence obtained by auditors is deemed more reliable?

1. Indirect evidence

2. Oral representations

3. Direct evidence

4. Heard statements

The correct answer is: Direct evidence

Direct evidence is considered the most reliable type of evidence obtained by auditors because it provides the strongest support for the assertions being tested. This type of evidence includes information that is obtained directly from a source, such as confirmations from third parties, physical inspection of assets, or direct observations made by the auditor. Because it is firsthand and originates from primary sources, direct evidence tends to be more persuasive in establishing the validity and accuracy of financial statements or transactions. In contrast, indirect evidence, oral representations, and heard statements may lack the same level of reliability. Indirect evidence often requires inferences or assumptions, which can introduce uncertainty into the audit conclusions. Oral representations can be subject to misinterpretation or lack corroboration, making them less trustworthy. Heard statements, which may rely on what others say rather than being substantiated through documents or physical evidence, are also less reliable. Overall, the use of direct evidence allows auditors to form more robust conclusions regarding the financial records they are auditing, ultimately leading to higher confidence in the audit findings.