Question 1

What is the procedure referred to when the auditor examines the client's documents and records to substantiate the information in the financial statements?

Accepted Answer

A)  confirmation 
B)  inquiry 
C)  physical examination 
D)  vouching 
A)  confirmation 
B)  inquiry 
C)  physical examination 
D)  vouching D

Question 2

Which one of the following statements is NOT correct?

Accepted Answer

A)  Analytical procedures use comparisons and relationships to determine which account balances are in error. 
B)  In some instances, other types of evidence may be reduced when analytical procedures indicate that an account balance appears reasonable. 
C)  Analytical procedures are used to isolate accounts or transactions that should be investigated more extensively. 
D)  For certain immaterial accounts, analytical procedures may be the only evidence needed. 
A)  Analytical procedures use comparisons and relationships to determine which account balances are in error. 
B)  In some instances, other types of evidence may be reduced when analytical procedures indicate that an account balance appears reasonable. 
C)  Analytical procedures are used to isolate accounts or transactions that should be investigated more extensively. 
D)  For certain immaterial accounts, analytical procedures may be the only evidence needed. A

Question 3

Which of the following statements is correct?

Accepted Answer

A)  A specific type of evidence is sufficient by itself to provide reliable evidence to satisfy any audit objective. 
B)  Since the auditor performs the analytical procedures, these will be competent evidence even if internal controls provide inaccurate data. 
C)  The effectiveness of the client's internal control has a significant effect on the competence of most types of evidence. 
D)  Both physical examination and mechanical accuracy are likely to be highly reliable if the internal control structure is ineffective. 
A)  A specific type of evidence is sufficient by itself to provide reliable evidence to satisfy any audit objective. 
B)  Since the auditor performs the analytical procedures, these will be competent evidence even if internal controls provide inaccurate data. 
C)  The effectiveness of the client's internal control has a significant effect on the competence of most types of evidence. 
D)  Both physical examination and mechanical accuracy are likely to be highly reliable if the internal control structure is ineffective. C

Question 4

The list of audit procedures for an audit area or an entire audit is known as:

Accepted Answer

A)  the audit conclusion 
B)  the audit program. 
C)  audit objectives. 
D)  all of the above 
A)  the audit conclusion 
B)  the audit program. 
C)  audit objectives. 
D)  all of the above

Question 5

Analytical procedures are referred to as 'attention-direction' when they highlight:

Accepted Answer

A)  areas that need more detailed procedures. 
B)  errors. 
C)  irregularities. 
D)  areas of improvement. 
A)  areas that need more detailed procedures. 
B)  errors. 
C)  irregularities. 
D)  areas of improvement.

Question 6

When will the validity of audit evidence be called into question?

Accepted Answer

A)  The client denies its veracity. 
B)  The auditor lacks the qualifications to evaluate the evidence. 
C)  It is provided by the client's solicitor. 
D)  It is impossible for the auditor to obtain additional corroborative evidence. 
A)  The client denies its veracity. 
B)  The auditor lacks the qualifications to evaluate the evidence. 
C)  It is provided by the client's solicitor. 
D)  It is impossible for the auditor to obtain additional corroborative evidence.

Question 7

Audit evidence obtained from scanning a ledger is more conclusive than evidence obtained from examining the ledger.

Accepted Answer

A) True 
 B)False

Question 8

One purpose of performing analytical procedures in the planning phase of an audit is to assess the client's financial condition.Explain how the assessment of a client's financial condition can affect the auditor's decisions concerning evidence accumulation in later phases of the audit.

Accepted Answer

Ceteris paribus, the weaker the client's

Question 9

The Auditing and Assurance Standards Board has concluded that analytical procedures are so important that they are required during:

Accepted Answer

A)  testing and completion phases. 
B)  planning and testing phases. 
C)  planning and completion phases. 
D)  planning, testing, and completion phases. 
A)  testing and completion phases. 
B)  planning and testing phases. 
C)  planning and completion phases. 
D)  planning, testing, and completion phases.

Question 10

Samples are considered to be insufficient if they contain only:

Accepted Answer

A)  items with a high likelihood of misstatement. 
B)  items that are representative of the population. 
C)  largest dollar items from a population, even though these items make up a large portion of the total population. 
D)  largest dollar items from the population. 
A)  items with a high likelihood of misstatement. 
B)  items that are representative of the population. 
C)  largest dollar items from a population, even though these items make up a large portion of the total population. 
D)  largest dollar items from the population.

Question 11

The audit program usually states all four of the choices below, but it always includes the:

Accepted Answer

A)  sample sizes. 
B)  audit procedures. 
C)  timing of the tests. 
D)  particular items to select. 
A)  sample sizes. 
B)  audit procedures. 
C)  timing of the tests. 
D)  particular items to select.

Question 12

Analytical procedures are required during the planning and completion phases of all audits.

Accepted Answer

A) True 
 B)False

Question 13

Which is the least reliable form of evidence?

Accepted Answer

A)  a letter from the client's solicitor stating that there are no known lawsuits pending against the client 
B)  the client's file copy of a purchase requisition 
C)  a positive confirmation of a customer's balance 
D)  a monthly bank statement 
A)  a letter from the client's solicitor stating that there are no known lawsuits pending against the client 
B)  the client's file copy of a purchase requisition 
C)  a positive confirmation of a customer's balance 
D)  a monthly bank statement

Question 14

ASA 500 requires auditors to accumulate sufficient appropriate evidence to support the opinion issued.Because of the nature of audit evidence, it is:

Accepted Answer

A)  likely the auditor will be completely convinced that the opinion is correct. 
B)  unlikely the auditor will arrive at a conclusion. 
C)  unlikely the auditor will be completely convinced that the opinion is correct. 
D)  likely that the auditor would change his or her mind about the opinion if he or she took the time to gather additional evidence. 
A)  likely the auditor will be completely convinced that the opinion is correct. 
B)  unlikely the auditor will arrive at a conclusion. 
C)  unlikely the auditor will be completely convinced that the opinion is correct. 
D)  likely that the auditor would change his or her mind about the opinion if he or she took the time to gather additional evidence.

Question 15

Inquiries of clients and reperformance normally have a low cost to perform.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following types of evidence commonly serve alone to provide reliable evidence to satisfy any audit objective?

Accepted Answer

A)  analytical procedures 
B)  observation 
C)  inquiries of client 
D)  all of the above 
A)  analytical procedures 
B)  observation 
C)  inquiries of client 
D)  all of the above

Question 17

The degree to which evidence can be considered believable or trustworthy is known as its:

Accepted Answer

A)  relevance. 
B)  completeness. 
C)  reliability. 
D)  adequacy. 
A)  relevance. 
B)  completeness. 
C)  reliability. 
D)  adequacy.

Question 18

What is the common rationale in the performance of audit procedures?

Accepted Answer

A)  to enable auditors to collect evidence at some time during the audit 
B)  to justify the conclusions auditors have otherwise reached 
C)  to defend auditors in the event of a lawsuit 
D)  to satisfy the requirements of the Corporations Act 
A)  to enable auditors to collect evidence at some time during the audit 
B)  to justify the conclusions auditors have otherwise reached 
C)  to defend auditors in the event of a lawsuit 
D)  to satisfy the requirements of the Corporations Act

Question 19

Distinguish between internal documentation and external documentation as types of audit evidence.Give two examples of each.Which type is considered more reliable?

Accepted Answer

Internal documentation involves the audi

Question 20

Knowledge of the client's business combined with analytical procedures assist in identifying possible oversights in an audit.

Accepted Answer

A) True 
 B)False

What is the procedure referred to when the auditor examines the client's documents and records to substantiate the information in the financial statements?

Which one of the following statements is NOT correct?

Which of the following statements is correct?

The list of audit procedures for an audit area or an entire audit is known as:

Analytical procedures are referred to as 'attention-direction' when they highlight:

When will the validity of audit evidence be called into question?

Audit evidence obtained from scanning a ledger is more conclusive than evidence obtained from examining the ledger.

One purpose of performing analytical procedures in the planning phase of an audit is to assess the client's financial condition.Explain how the assessment of a client's financial condition can affect the auditor's decisions concerning evidence accumulation in later phases of the audit.

The Auditing and Assurance Standards Board has concluded that analytical procedures are so important that they are required during:

Samples are considered to be insufficient if they contain only:

The audit program usually states all four of the choices below, but it always includes the:

Analytical procedures are required during the planning and completion phases of all audits.

Which is the least reliable form of evidence?

ASA 500 requires auditors to accumulate sufficient appropriate evidence to support the opinion issued.Because of the nature of audit evidence, it is:

Inquiries of clients and reperformance normally have a low cost to perform.

Which of the following types of evidence commonly serve alone to provide reliable evidence to satisfy any audit objective?

The degree to which evidence can be considered believable or trustworthy is known as its:

What is the common rationale in the performance of audit procedures?

Distinguish between internal documentation and external documentation as types of audit evidence.Give two examples of each.Which type is considered more reliable?

Knowledge of the client's business combined with analytical procedures assist in identifying possible oversights in an audit.

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters

Exam 5: Audit evidence

What is the procedure referred to when the auditor examines the client's documents and records to substantiate the information in the financial statements?

Which one of the following statements is NOT correct?

Which of the following statements is correct?

The list of audit procedures for an audit area or an entire audit is known as:

Analytical procedures are referred to as 'attention-direction' when they highlight:

When will the validity of audit evidence be called into question?

Audit evidence obtained from scanning a ledger is more conclusive than evidence obtained from examining the ledger.

One purpose of performing analytical procedures in the planning phase of an audit is to assess the client's financial condition.Explain how the assessment of a client's financial condition can affect the auditor's decisions concerning evidence accumulation in later phases of the audit.

The Auditing and Assurance Standards Board has concluded that analytical procedures are so important that they are required during:

Samples are considered to be insufficient if they contain only:

The audit program usually states all four of the choices below, but it always includes the:

Analytical procedures are required during the planning and completion phases of all audits.

Which is the least reliable form of evidence?

ASA 500 requires auditors to accumulate sufficient appropriate evidence to support the opinion issued.Because of the nature of audit evidence, it is:

Inquiries of clients and reperformance normally have a low cost to perform.

Which of the following types of evidence commonly serve alone to provide reliable evidence to satisfy any audit objective?

The degree to which evidence can be considered believable or trustworthy is known as its:

What is the common rationale in the performance of audit procedures?

Distinguish between internal documentation and external documentation as types of audit evidence.Give two examples of each.Which type is considered more reliable?

Knowledge of the client's business combined with analytical procedures assist in identifying possible oversights in an audit.

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters