Question 1

Confirmations are a highly regarded and often-used type of evidence because they:

Accepted Answer

A)  come from an independent source. 
B)  are inexpensive. 
C)  cause no inconvenience for the auditor or third party. 
D)  all of the above 
A)  come from an independent source. 
B)  are inexpensive. 
C)  cause no inconvenience for the auditor or third party. 
D)  all of the above

Question 2

When an analytical procedure reveals no unusual fluctuations, the implication is that there are no material misstatements.

Accepted Answer

A) True 
 B)False

Question 3

Which two characteristics of audit evidence comprise its appropriateness?

Accepted Answer

A)  the independence of the provider and reliability 
B)  persuasiveness and independence 
C)  relevance and reliability 
D)  persuasiveness and relevance 
A)  the independence of the provider and reliability 
B)  persuasiveness and independence 
C)  relevance and reliability 
D)  persuasiveness and relevance

Question 4

Which type of audit evidence can the auditor use in support of the 'existence of inventory' audit objective?

Accepted Answer

A)  direct confirmation with vendor 
B)  physical examination 
C)  examine title for ownership of asset 
D)  examine invoice from vendor 
A)  direct confirmation with vendor 
B)  physical examination 
C)  examine title for ownership of asset 
D)  examine invoice from vendor

Question 5

When an analytical procedure reveals no unusual fluctuations, discuss what this means for the audit.

Accepted Answer

When an analytical procedure reveals no

Question 6

Rank the reliability of the following items of audit evidence:
1)schedules of details of physical inventory counts conducted by the client
2)the auditor's notation of inferences drawn from ratios and trends
3)copies of bank statements held by the client
4)copies of bank statements obtained directly from the bank

Accepted Answer

A)  2, 3, 4, 1 
B)  3, 4, 2, 1 
C)  4, 2, 3, 1 
D)  4, 1, 2, 3 
A)  2, 3, 4, 1 
B)  3, 4, 2, 1 
C)  4, 2, 3, 1 
D)  4, 1, 2, 3

Question 7

Physical inspection or count by the auditor is performed on items such as:

Accepted Answer

A)  cash, inventory, cancelled cheques, and tangible fixed assets. 
B)  cash or inventory only. 
C)  cash, inventory, securities, notes receivable, and tangible fixed assets. 
D)  cash, inventory, cancelled cheques, and sales documents. 
A)  cash, inventory, cancelled cheques, and tangible fixed assets. 
B)  cash or inventory only. 
C)  cash, inventory, securities, notes receivable, and tangible fixed assets. 
D)  cash, inventory, cancelled cheques, and sales documents.

Question 8

Not accumulating the appropriate evidence has the effect of:

Accepted Answer

A)  a failure to meet the standards expected of the profession. 
B)  a failure to use evidence in performing the audit. 
C)  the auditor being found negligent in his or her audit. 
D)  all of the above 
A)  a failure to meet the standards expected of the profession. 
B)  a failure to use evidence in performing the audit. 
C)  the auditor being found negligent in his or her audit. 
D)  all of the above

Question 9

Why are analytical procedures often called attention directing?

Accepted Answer

Analytical procedures are often called a

Question 10

'The detailed description of the results of the four evidence decisions for a specific audit is called an:

Accepted Answer

A)  audit program. 
B)  audit procedure. 
C)  audit plan. 
D)  audit guide. 
A)  audit program. 
B)  audit procedure. 
C)  audit plan. 
D)  audit guide.

Question 11

When the auditor is gathering evidence, if the source of the evidence is independent of the client, the auditor will conclude that the evidence is:

Accepted Answer

A)  not reliable. 
B)  reliable if the provider has no reason to be biased. 
C)  reliable. 
D)  not reliable unless the provider is qualified to provide the evidence. 
A)  not reliable. 
B)  reliable if the provider has no reason to be biased. 
C)  reliable. 
D)  not reliable unless the provider is qualified to provide the evidence.

Question 12

Which one of the following is NOT a liquidity activity ratio?

Accepted Answer

A)  days to collect receivables ratio 
B)  inventory turnover ratio 
C)  days to sell inventory ratio 
D)  time interest earned ratio 
A)  days to collect receivables ratio 
B)  inventory turnover ratio 
C)  days to sell inventory ratio 
D)  time interest earned ratio

Question 13

The reliability of audit evidence cannot be improved by testing a larger sample of items.

Accepted Answer

A) True 
 B)False

Question 14

What are the two determinants of the persuasiveness of evidence?

Accepted Answer

A)  appropriateness and sufficiency 
B)  cost and efficiency 
C)  cost and sufficiency 
D)  appropriateness and efficiency 
A)  appropriateness and sufficiency 
B)  cost and efficiency 
C)  cost and sufficiency 
D)  appropriateness and efficiency

Question 15

Industry comparisons provide an important benefit as:

Accepted Answer

A)  an aid to understanding the client's business. 
B)  an indicator of errors. 
C)  a least-cost indicator for audit procedures. 
D)  an indicator of irregularities. 
A)  an aid to understanding the client's business. 
B)  an indicator of errors. 
C)  a least-cost indicator for audit procedures. 
D)  an indicator of irregularities.

Question 16

A common comparison occurs when the auditor calculates the expected balance and compares it with the actual balance.The auditor's expected account balance may be determined by:

Accepted Answer

A)  using ABS data. 
B)  using industry standards. 
C)  relating it to some other balance sheet or income statement account or accounts. 
D)  inquiry of client. 
A)  using ABS data. 
B)  using industry standards. 
C)  relating it to some other balance sheet or income statement account or accounts. 
D)  inquiry of client.

Question 17

Which one of the following forms of evidence would be most reliable?

Accepted Answer

A)  the file copy of a purchase requisition 
B)  the file copy of a receiving room report 
C)  an insurance policy in the client's file 
D)  the file copy of a sales invoice 
A)  the file copy of a purchase requisition 
B)  the file copy of a receiving room report 
C)  an insurance policy in the client's file 
D)  the file copy of a sales invoice

Question 18

Physical examination of assets is NOT a sufficient form of evidence when the auditor wants to determine the:

Accepted Answer

A)  quantity and description of the asset. 
B)  ownership of the asset. 
C)  condition or quality of the asset. 
D)  existence of the asset. 
A)  quantity and description of the asset. 
B)  ownership of the asset. 
C)  condition or quality of the asset. 
D)  existence of the asset.

Confirmations are a highly regarded and often-used type of evidence because they:

When an analytical procedure reveals no unusual fluctuations, the implication is that there are no material misstatements.

Which two characteristics of audit evidence comprise its appropriateness?

Which type of audit evidence can the auditor use in support of the 'existence of inventory' audit objective?

When an analytical procedure reveals no unusual fluctuations, discuss what this means for the audit.

Physical inspection or count by the auditor is performed on items such as:

Not accumulating the appropriate evidence has the effect of:

Why are analytical procedures often called attention directing?

'The detailed description of the results of the four evidence decisions for a specific audit is called an:

When the auditor is gathering evidence, if the source of the evidence is independent of the client, the auditor will conclude that the evidence is:

Which one of the following is NOT a liquidity activity ratio?

The reliability of audit evidence cannot be improved by testing a larger sample of items.

What are the two determinants of the persuasiveness of evidence?

Industry comparisons provide an important benefit as:

A common comparison occurs when the auditor calculates the expected balance and compares it with the actual balance.The auditor's expected account balance may be determined by:

Which one of the following forms of evidence would be most reliable?

Physical examination of assets is NOT a sufficient form of evidence when the auditor wants to determine the:

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

Confirmations are a highly regarded and often-used type of evidence because they:

When an analytical procedure reveals no unusual fluctuations, the implication is that there are no material misstatements.

Which two characteristics of audit evidence comprise its appropriateness?

Which type of audit evidence can the auditor use in support of the 'existence of inventory' audit objective?

When an analytical procedure reveals no unusual fluctuations, discuss what this means for the audit.

Physical inspection or count by the auditor is performed on items such as:

Not accumulating the appropriate evidence has the effect of:

Why are analytical procedures often called attention directing?

'The detailed description of the results of the four evidence decisions for a specific audit is called an:

When the auditor is gathering evidence, if the source of the evidence is independent of the client, the auditor will conclude that the evidence is:

Which one of the following is NOT a liquidity activity ratio?

The reliability of audit evidence cannot be improved by testing a larger sample of items.

What are the two determinants of the persuasiveness of evidence?

Industry comparisons provide an important benefit as:

A common comparison occurs when the auditor calculates the expected balance and compares it with the actual balance.The auditor's expected account balance may be determined by:

Which one of the following forms of evidence would be most reliable?

Physical examination of assets is NOT a sufficient form of evidence when the auditor wants to determine the:

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