The reliability of audit evidence is influenced by its source — internal or external and by it nature–visual, documentary or oral. While the reliability of audit evidence is dependent on the circumstances under which it is obtained the following generalizations may be useful in assessing the reliability of audit evidence :
(i) External evidence (e.g., confirmation received from a third party) is more reliable than internal evidence.
(ii) Internal evidence is more reliable when related internal control is satisfactory.
(iii) Evidence obtained by the auditor himself is more reliable than that obtained from the entity.
(iv) Evidence in the form of documents and written representations is more reliable than oral representations.
Best evidence : It is essentially a theoretical concept and normally not available in audit situations. Best evidence exercises compelling influence over the mind of the investigator or the auditor. Normally an auditor relies on prima facie evidence which is normally available and it is considered adequate in the absence of suspicious circumstances. In case of suspicious circumstances, however, the auditor should look for more compelling evidence and should attempt to obtain as much corroborative evidence as may be available. For example if there are reasons to suspect the figures of the creditors, the auditor should not only go for balance confirmation but also the statements of account received from the creditor, subsequent payments, tracing of the supplies received to the stock records, etc.