Define\\Discuss what is meant by RELIABILITY. 2. For each situation presented be

Question

DefineDiscuss what is meant by RELIABILITY. 2. For each situation presented below, indicate which means of gathering evidence would be considered more reliable AND indicate a reason from the following list: A. Independent source of the information (Independence of provider); B. Auditor's direct knowledge; C. Knowledgeable source (qualifications of individuals providing the information); D. Degree of objectivity versus subjectivity; and E. Functioning system of internal controls. a. As a test of accounts receivable, (1) the auditor reviews a confirmation received directly from the customer of the company being audited, or 2. The auditor compares customer balances for the year under audit to respective customer balances for previous years. b. Auditor tests two segments of the company. 1. In the first segment, no one bothers to check others' work; or 2. In the second segment, the auditor notices that people are assigned to check the work of other employees; c. In testing inventory, (1) the auditor makes test counts of inventory, or (2) the auditor reviews the estimation of the market value of inventory in testing Lower of Cost or Market for inventory. d. 1. The auditor relies on an analysis prepared by the controller of gross margin to sales for the current and prior periods; or (2) The auditor calculates gross margin to sales and compares to similar data for prior periods.

Explanation / Answer

1)

Reliability :

Reliability is an quality of that steadily performs according to its conditions. It has long been careful one of three related qualities that must be considered when making, buying, or using a computer creation or component.

Reliability engineering is manufacturing that emphasizes trustworthiness in the life cycle supervision of a product. Dependability, or reliability, labels the ability of a system or constituent to function under specified conditions for a stated period of time.

The probability that an product will perform a obligatory function without failure under specified conditions for a stated retro of time."

2)

a) Independent source of information : Reputation or reference of the source will help to increase the reliability of the data.

b) Auditors Direct Knowledge :Auditors task under taken till date & how successfully completed that task will generate more reliability.

c) Knowledgeable source :Knowledgeable source information , academic qualification & past experience will help to generate more reliable data.

d) Degree of Objectivity vs Subjectivity : What is the requirement of objectivity or subjectivity leads to finding to reliability.

e) Functioning system of internal controls :How internal controls are following the policy , rules & regulations will lead to generate more reliability.

Item No. more Reliable Letter For Reason a 1 Confirmation received from customer b 2 More reliability as work is evaluated by other people c 2 More reliability from Market value point of view. d 2 Additional calculation or separate calculation will lead to more reliability

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