Question 1

In determining the quantity and quality of evidence to gather, the auditor will be satisfied when the evidence is

Accepted Answer

A)  irrefutable. 
B)  conclusive. 
C)  highly persuasive. 
D)  sufficiently convincing. 
A)  irrefutable. 
B)  conclusive. 
C)  highly persuasive. 
D)  sufficiently convincing.

Question 2

Identify and explain the three determinants of the persuasiveness of evidence.

Accepted Answer

The three determinants of the persuasive

Question 3

The two most important factors that determine the appropriate sample size in audits are

Accepted Answer

A)  the auditor's expectation of errors and the effectiveness of the client's internal controls. 
B)  the auditor's expectation of errors and materiality. 
C)  the effectiveness of the client's internal controls and materiality. 
D)  materiality and the type of audit procedure to be applied to the population. 
A)  the auditor's expectation of errors and the effectiveness of the client's internal controls. 
B)  the auditor's expectation of errors and materiality. 
C)  the effectiveness of the client's internal controls and materiality. 
D)  materiality and the type of audit procedure to be applied to the population.

Question 4

A major benefit of computerized analytical procedures is the

Accepted Answer

A)  ease of doing the calculations. 
B)  ease of updating the calculations. 
C)  ease of correcting math calculations. 
D)  ability to push the work down to lower levels of the audit staff to do the analysis. 
A)  ease of doing the calculations. 
B)  ease of updating the calculations. 
C)  ease of correcting math calculations. 
D)  ability to push the work down to lower levels of the audit staff to do the analysis.

Question 5

Most auditors prefer to replace external confirmation with analytical procedures whenever possible because the

Accepted Answer

A)  analytical procedures are more reliable. 
B)  external confirmations are more expensive. 
C)  analytical procedures are more persuasive. 
D)  tests of details are more difficult to interpret. 
A)  analytical procedures are more reliable. 
B)  external confirmations are more expensive. 
C)  analytical procedures are more persuasive. 
D)  tests of details are more difficult to interpret.

Question 6

An aspect of analytical procedures is referred to as "attention-directing" when it highlights

Accepted Answer

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

Question 7

Inquiry is a valuable technique during the planning phase of the audit because it

Accepted Answer

A)  involves the rechecking of controls to ensure that they are conducted accurately. 
B)  is a type of audit evidence that provides a very high level of assurance. 
C)  is conclusive evidence from an independent source. 
D)  helps obtain information about how procedures and internal controls operate. 
A)  involves the rechecking of controls to ensure that they are conducted accurately. 
B)  is a type of audit evidence that provides a very high level of assurance. 
C)  is conclusive evidence from an independent source. 
D)  helps obtain information about how procedures and internal controls operate.

Question 8

The Bank of New Haven relies heavily on computers to calculate the settlements of amounts due to other banks. Given that the process is highly automated, the auditor would not be able to obtain sufficient evidence with substantive procedures. The auditors of the Bank of New Haven should

Accepted Answer

A)  design and perform tests of controls. 
B)  qualify the opinion for the section on settlements. 
C)  hire a specialist to give an opinion on the proper functioning of the system. 
D)  perform a walkthrough of the system. 
A)  design and perform tests of controls. 
B)  qualify the opinion for the section on settlements. 
C)  hire a specialist to give an opinion on the proper functioning of the system. 
D)  perform a walkthrough of the system.

Question 9

Those procedures specifically outlined in an audit program are primarily designed to

Accepted Answer

A)  prevent litigation. 
B)  detect errors or irregularities. 
C)  test internal controls. 
D)  collect evidence. 
A)  prevent litigation. 
B)  detect errors or irregularities. 
C)  test internal controls. 
D)  collect evidence.

Question 10

Which of the following characteristics of samples would make the sample more sufficient?

Accepted Answer

A)  Samples that contain at least one of each type of transaction that is in the population and have a high number of sample items. 
B)  Samples that contain items with a high likelihood of error and have large dollar values as well as being representative of the population. 
C)  Samples that contain multiple items from different layers of the population (strata) as well as all items that are above the materiality threshold. 
D)  Samples that contain items that have a high likelihood of error as well as being related to the audit assertions that are being tested. 
A)  Samples that contain at least one of each type of transaction that is in the population and have a high number of sample items. 
B)  Samples that contain items with a high likelihood of error and have large dollar values as well as being representative of the population. 
C)  Samples that contain multiple items from different layers of the population (strata) as well as all items that are above the materiality threshold. 
D)  Samples that contain items that have a high likelihood of error as well as being related to the audit assertions that are being tested.

Question 11

Which of the following types of evidence is most appropriate in the audit of fixed assets?

Accepted Answer

A)  recalculation of the amortization schedule provided by the client 
B)  auditor inspection of recently acquired fixed assets 
C)  reperformance of the posting of depreciation expenses to the general ledger 
D)  analytical review to assess the reasonableness of depreciation expense 
A)  recalculation of the amortization schedule provided by the client 
B)  auditor inspection of recently acquired fixed assets 
C)  reperformance of the posting of depreciation expenses to the general ledger 
D)  analytical review to assess the reasonableness of depreciation expense

Question 12

The most common statistical technique for analytical procedures is

Accepted Answer

A)  analysis of variance. 
B)  bell-curve analysis. 
C)  time-series analysis. 
D)  regression analysis. 
A)  analysis of variance. 
B)  bell-curve analysis. 
C)  time-series analysis. 
D)  regression analysis.

Question 13

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

Accepted Answer

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

Question 14

If most companies in the industry use FIFO inventory valuation and straight-line depreciation, and the audit client uses LIFO and double-declining balance, comparisons of client and industry data

Accepted Answer

A)  will be a meaningful highlight of the result of these differences in accounting methods. 
B)  will enable the auditor to spot errors but not irregularities. 
C)  will enable the auditor to spot irregularities but not errors. 
D)  may not be meaningful, affecting the comparability of data. 
A)  will be a meaningful highlight of the result of these differences in accounting methods. 
B)  will enable the auditor to spot errors but not irregularities. 
C)  will enable the auditor to spot irregularities but not errors. 
D)  may not be meaningful, affecting the comparability of data.

Question 15

Identify the characteristics that working papers should have. For each characteristic, briefly explain why it is important.

Accepted Answer

- properly identified: to clearly refere

Question 16

Which of the following is the best example of objective evidence?

Accepted Answer

A)  a letter written by a client's lawyer discussing the likely outcome of outstanding lawsuits 
B)  the physical count of securities and cash by the auditor 
C)  inquiries of the credit manager about the collectability of noncurrent accounts receivable 
D)  observation of cobwebs on some inventory bins 
A)  a letter written by a client's lawyer discussing the likely outcome of outstanding lawsuits 
B)  the physical count of securities and cash by the auditor 
C)  inquiries of the credit manager about the collectability of noncurrent accounts receivable 
D)  observation of cobwebs on some inventory bins

Question 17

The decision of how many items to test must be made by the auditor for each audit procedure. The sample size for any given procedure

Accepted Answer

A)  will be the same if the same level of assurance is required. 
B)  must cover the entire period under audit. 
C)  is focused on high-dollar-value items only. 
D)  is likely to vary from audit to audit. 
A)  will be the same if the same level of assurance is required. 
B)  must cover the entire period under audit. 
C)  is focused on high-dollar-value items only. 
D)  is likely to vary from audit to audit.

Question 18

Last year, the client's internal controls were weak. This year, the internal controls are stronger. This means that information recorded on internal documentation is

Accepted Answer

A)  more timely. 
B)  less reliable. 
C)  more reliable. 
D)  less timely. 
A)  more timely. 
B)  less reliable. 
C)  more reliable. 
D)  less timely.

Question 19

The working papers contain data useful for evaluating the adequacy of the audit scope and the fairness of the financial statements. This data helps the auditor to conclude whether

Accepted Answer

A)  control risks were accurately identified and tested. 
B)  inherent risks were set as low as possible. 
C)  an unqualified audit report can be issued. 
D)  the current files properly contain copies of client contracts and agreements. 
A)  control risks were accurately identified and tested. 
B)  inherent risks were set as low as possible. 
C)  an unqualified audit report can be issued. 
D)  the current files properly contain copies of client contracts and agreements.

Question 20

The audit working papers serve as a record of the evidence accumulated and the results of the audit tests. This helps to demonstrate that the audit was

Accepted Answer

A)  kept properly confidential; information was held secure. 
B)  completed using Canadian generally accepted accounting principles. 
C)  organized effectively with no mistakes in calculations. 
D)  conducted in accordance with Canadian generally accepted auditing standards. 
A)  kept properly confidential; information was held secure. 
B)  completed using Canadian generally accepted accounting principles. 
C)  organized effectively with no mistakes in calculations. 
D)  conducted in accordance with Canadian generally accepted auditing standards.

In determining the quantity and quality of evidence to gather, the auditor will be satisfied when the evidence is

Identify and explain the three determinants of the persuasiveness of evidence.

The two most important factors that determine the appropriate sample size in audits are

A major benefit of computerized analytical procedures is the

Most auditors prefer to replace external confirmation with analytical procedures whenever possible because the

An aspect of analytical procedures is referred to as "attention-directing" when it highlights

Inquiry is a valuable technique during the planning phase of the audit because it

The Bank of New Haven relies heavily on computers to calculate the settlements of amounts due to other banks. Given that the process is highly automated, the auditor would not be able to obtain sufficient evidence with substantive procedures. The auditors of the Bank of New Haven should

Those procedures specifically outlined in an audit program are primarily designed to

Which of the following characteristics of samples would make the sample more sufficient?

Which of the following types of evidence is most appropriate in the audit of fixed assets?

The most common statistical technique for analytical procedures is

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

If most companies in the industry use FIFO inventory valuation and straight-line depreciation, and the audit client uses LIFO and double-declining balance, comparisons of client and industry data

Identify the characteristics that working papers should have. For each characteristic, briefly explain why it is important.

Which of the following is the best example of objective evidence?

The decision of how many items to test must be made by the auditor for each audit procedure. The sample size for any given procedure

Last year, the client's internal controls were weak. This year, the internal controls are stronger. This means that information recorded on internal documentation is

The working papers contain data useful for evaluating the adequacy of the audit scope and the fairness of the financial statements. This data helps the auditor to conclude whether

The audit working papers serve as a record of the evidence accumulated and the results of the audit tests. This helps to demonstrate that the audit was

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Legal Liability

Professional Judgment and Ethics

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters

Exam 9: Audit Evidence

In determining the quantity and quality of evidence to gather, the auditor will be satisfied when the evidence is

Identify and explain the three determinants of the persuasiveness of evidence.

The two most important factors that determine the appropriate sample size in audits are

A major benefit of computerized analytical procedures is the

Most auditors prefer to replace external confirmation with analytical procedures whenever possible because the

An aspect of analytical procedures is referred to as "attention-directing" when it highlights

Inquiry is a valuable technique during the planning phase of the audit because it

The Bank of New Haven relies heavily on computers to calculate the settlements of amounts due to other banks. Given that the process is highly automated, the auditor would not be able to obtain sufficient evidence with substantive procedures. The auditors of the Bank of New Haven should

Those procedures specifically outlined in an audit program are primarily designed to

Which of the following characteristics of samples would make the sample more sufficient?

Which of the following types of evidence is most appropriate in the audit of fixed assets?

The most common statistical technique for analytical procedures is

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

If most companies in the industry use FIFO inventory valuation and straight-line depreciation, and the audit client uses LIFO and double-declining balance, comparisons of client and industry data

Identify the characteristics that working papers should have. For each characteristic, briefly explain why it is important.

Which of the following is the best example of objective evidence?

The decision of how many items to test must be made by the auditor for each audit procedure. The sample size for any given procedure

Last year, the client's internal controls were weak. This year, the internal controls are stronger. This means that information recorded on internal documentation is

The working papers contain data useful for evaluating the adequacy of the audit scope and the fairness of the financial statements. This data helps the auditor to conclude whether

The audit working papers serve as a record of the evidence accumulated and the results of the audit tests. This helps to demonstrate that the audit was

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Legal Liability

Professional Judgment and Ethics

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters