What should be done with explanations provided by personnel of the audited entity?

The appropriate course of action with explanations provided by personnel of the audited entity is to document and verify them through physical review whenever feasible. This process ensures that the information gathered during the audit is supported by tangible evidence, enhancing its reliability and credibility.

By documenting the explanations, auditors can create a comprehensive record of what personnel have communicated, which is essential for transparency and reference throughout the audit process. Verification through physical review helps validate the information, confirms its accuracy, and ensures that it aligns with the actual practices and records of the entity. This method not only promotes thoroughness in the audit but also helps mitigate the risk of relying solely on potentially biased statements that may not reflect the true state of affairs.

Overall, combining documentation with verification is vital to maintain the integrity of the audit findings and to support conclusions drawn in the audit report.