Exam 9: Audit Evidence

Which of the following forms of evidence would be least persuasive in forming the auditor's opinion?

Mary is entering a fictitious transaction in the sales data entry system to see if the system will reject the order for a client that is already exceeding its credit limit. Mary is using

An example of an external document is

Gina is performing the audit of the payables section of Reno Inc. She wants to confirm the payables from an independent source. Which of the following actions would achieve this?

The working papers prepared during the engagement are the property of the

For some audit objectives and in some circumstances, analytical procedures may be the most effective procedure to apply. The objectives that most likely would benefit from the use of analytical review with respect to the allowance for uncollectible accounts would be

Evidence is generally considered appropriate when

Although considerable evidence is obtained from the client through inquiry, it usually cannot be regarded as conclusive because

How frequently does the auditor make a decision with respect to the sample size to be selected?

"The detailed instructions for the collection of a particular type of audit evidence" is the definition of a(n)

Audit evidence can come in different forms with different degrees of persuasiveness. Which of the following is the least persuasive type of evidence?

Following are examples of evidence that could be collected during an audit of financial statements. 1. Duplicate copies of sales invoices 2. Inspection of new $100 000 cutting machine 3. Bank confirmation 4. Remittance advices 5. Vendors' invoices 6. Standard letter from lawyer to auditor 7. Auditor inventory count sheets 8. Shipping documents 9. Payroll cheques 10. Long-term debt agreements review notes 11. Auditor interest expense calculation worksheet 12. Observation by auditor of computer error message (invalid supplier number) 13. Gross margin calculation 14. Interview notes from interview with credit manager Required: Classify each type of evidence as to its reliability (1 - high, 2 - moderate, 3 - low). Justify your classification.

Evidence is usually more persuasive for balance sheet accounts when it is obtained

There are six factors that affect the reliability of audit evidence. One factor is the independence of the provider (i.e., evidence obtained from a source outside the client company is more reliable than that obtained within). Identify and discuss the remaining five factors that affect the reliability of evidence.

When a higher than normal ratio of long-term debt to net worth is coupled with a lower than average ratio of profits to total assets, the company

Evidence can be obtained from others or provided by the auditor who has good knowledge of each industry but is not an expert. Which of the following types of evidence is considered to be most reliable?

An example of an internal document is

An abnormal fluctuation in gross profit that might suggest the need for extended audit procedures for sales and inventories would most likely be identified in the planning phase of the audit by the use of

Inspection of assets is not a sufficient form of evidence when the auditor wants to determine the

The auditor's decisions regarding evidence accumulation can be broken into five subdecisions. One decision relates to determining the nature of the audit procedure to be used to collect the evidence; i.e., "which audit procedures to use." Identify and discuss the remaining four audit evidence decisions that the auditor makes.