Question 1

Which of the following statements is not a correct statement regarding audit evidence?

Accepted Answer

A)  Evidence obtained from an independent source outside the client organization is more reliable than that obtained from within. 
B)  Documentary evidence is more reliable when it is received by the auditor indirectly rather than directly. 
C)  Documents that originate outside the company are considered more reliable than those that originate within the client's organization. 
D)  External evidence, such as communications from banks, is generally regarded as more reliable than answers obtained from inquiries of the client. 
A)  Evidence obtained from an independent source outside the client organization is more reliable than that obtained from within. 
B)  Documentary evidence is more reliable when it is received by the auditor indirectly rather than directly. 
C)  Documents that originate outside the company are considered more reliable than those that originate within the client's organization. 
D)  External evidence, such as communications from banks, is generally regarded as more reliable than answers obtained from inquiries of the client.

Question 2

When making decisions about evidence for a given audit,the auditor's goal is to obtain a sufficient amount of timely,reliable evidence that is relevant to the information being verified.In addition,the goal of audit efficiency is to gather and evaluate the information:

Accepted Answer

A)  no matter the cost involved in obtaining such evidence. 
B)  even if cost is irrelevant to the auditor, because they bill the client for costs incurred. 
C)  at the lowest possible total cost. 
D)  at the cost suggested in the engagement letter. 
A)  no matter the cost involved in obtaining such evidence. 
B)  even if cost is irrelevant to the auditor, because they bill the client for costs incurred. 
C)  at the lowest possible total cost. 
D)  at the cost suggested in the engagement letter.

Question 3

Which of the following best describes one of the primary objectives of audit documentation?

Accepted Answer

A)  Defend against claims of a deficient audit. 
B)  Provide a basis for reviewing the work of subordinates. 
C)  Provide reasonable assurance that the audit was conducted in accordance with auditing standards. 
D)  Provide additional support of recorded amounts to the client. 
A)  Defend against claims of a deficient audit. 
B)  Provide a basis for reviewing the work of subordinates. 
C)  Provide reasonable assurance that the audit was conducted in accordance with auditing standards. 
D)  Provide additional support of recorded amounts to the client.

Question 4

An example of a supporting schedule is a reconciliation of amounts,which consists of the details that make up a year-end balance.

Accepted Answer

A) True 
 B)False

Question 5

Analytical procedures must be used in the planning and completion phases of the audit.

Accepted Answer

A) True 
 B)False

Question 6

Inspection consists of looking at a process or procedure being performed by others.

Accepted Answer

A) True 
 B)False

Question 7

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 8

The basis for preparing financial statements for companies is the general ledger.As soon as possible the auditor obtains the general ledger accounts of the client and prepares a working trial balance.Discuss the audit documentation in the current file that relates to the working trial balance.Include a description of lead and support schedules in your answer.

Accepted Answer

Lead Schedules-each line item on the wor

Question 9

Audit evidence has two primary qualities for the auditor; relevance and reliability.Given the choices below,which provides the auditor with the most reliable audit evidence?

Accepted Answer

A)  General ledger account balances 
B)  Confirmation of accounts receivable balance received from a customer 
C)  Internal memo explaining the issuance of a credit memo 
D)  Copy of month-end adjusting entries 
A)  General ledger account balances 
B)  Confirmation of accounts receivable balance received from a customer 
C)  Internal memo explaining the issuance of a credit memo 
D)  Copy of month-end adjusting entries

Question 10

Match five of the terms (a-h)with the definitions provided below (1-5):
a.Audit documentation
b.Audit procedures
c.Audit objectives
d.Analytical procedures
e.Budgets
f.Reliability of evidence
g.Sufficiency of evidence
h.Persuasiveness of evidence
________ 1.Use of comparisons and relationships to assess the reasonableness of account balances.
________ 2.Detailed instructions for the collection of a type of audit evidence.
________ 3.The degree to which evidence can be considered believable or trustworthy.
________ 4.Contains all the information that the auditor considers necessary to conduct an adequate audit and to provide support for the audit report.
________ 5.This is determined by the amount of evidence obtained.

Accepted Answer

The answer of Match five of the terms (a-h)with the...

Question 11

Accounts receivable confirmations must be controlled by the client from the time they are prepared until the time they are returned to the auditor.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not one of the four decisions about what evidence to gather and how much of it to accumulate?

Accepted Answer

A)  Which audit procedures to use 
B)  Which accounts must agree to the general ledger 
C)  When to perform the procedures 
D)  What sample size to select for a given procedure 
A)  Which audit procedures to use 
B)  Which accounts must agree to the general ledger 
C)  When to perform the procedures 
D)  What sample size to select for a given procedure

Question 13

An important benefit of industry comparisons is as:

Accepted Answer

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

Question 14

When the auditor foots the journals and the subsidiary ledgers,it is considered reperformance.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is true?

Accepted Answer

A)  Evidence must be relevant to all of the audit objectives. 
B)  If evidence is subjective, it cannot be reliable. 
C)  Evidence obtained directly by the auditor may not be reliable if the auditor lacks the qualifications to evaluate the evidence. 
D)  The persuasiveness of evidence can be evaluated after considering its sufficiency. 
A)  Evidence must be relevant to all of the audit objectives. 
B)  If evidence is subjective, it cannot be reliable. 
C)  Evidence obtained directly by the auditor may not be reliable if the auditor lacks the qualifications to evaluate the evidence. 
D)  The persuasiveness of evidence can be evaluated after considering its sufficiency.

Question 16

A benefit obtained from using industry averages is that it provides a(n):

Accepted Answer

A)  benchmark to compare the company's results. 
B)  indication where errors exist in the statements. 
C)  benchmark to be used in evaluating a client's budgets. 
D)  comparison of "what is" with "what should be." 
A)  benchmark to compare the company's results. 
B)  indication where errors exist in the statements. 
C)  benchmark to be used in evaluating a client's budgets. 
D)  comparison of "what is" with "what should be."

Question 17

Physical examination:

Accepted Answer

A)  is a direct means of verifying that an asset really exists. 
B)  is sufficient evidence to verify that the existing assets are owned by the client. 
C)  can be used for both tangible assets and documents. 
D)  is not generally a reliable type of audit evidence. 
A)  is a direct means of verifying that an asset really exists. 
B)  is sufficient evidence to verify that the existing assets are owned by the client. 
C)  can be used for both tangible assets and documents. 
D)  is not generally a reliable type of audit evidence.

Question 18

Which of the following statements regarding the appropriateness of evidence is correct?

Accepted Answer

A)  The effectiveness of a client's internal control has no influence on the reliability of most types of evidence. 
B)  Analytical procedures will be reliable evidence even if the client's internal controls are weak. 
C)  One type of evidence is generally sufficient by itself to provide appropriate evidence. 
D)  The objectivity of evidence obtained through inspection is high. 
A)  The effectiveness of a client's internal control has no influence on the reliability of most types of evidence. 
B)  Analytical procedures will be reliable evidence even if the client's internal controls are weak. 
C)  One type of evidence is generally sufficient by itself to provide appropriate evidence. 
D)  The objectivity of evidence obtained through inspection is high.

Question 19

Audit evidence to support an opinion about the fairness of a client's financial statements consists entirely of written information.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  planning and test of control phases. 
B)  planning and completion phases. 
C)  test of control and completion phases. 
D)  planning, test of control, and completion phases. 
A)  planning and test of control phases. 
B)  planning and completion phases. 
C)  test of control and completion phases. 
D)  planning, test of control, and completion phases.

Exam 7: Nature and Type of Audit Evidence

Which of the following statements is not a correct statement regarding audit evidence?

When making decisions about evidence for a given audit,the auditor's goal is to obtain a sufficient amount of timely,reliable evidence that is relevant to the information being verified.In addition,the goal of audit efficiency is to gather and evaluate the information:

Which of the following best describes one of the primary objectives of audit documentation?

An example of a supporting schedule is a reconciliation of amounts,which consists of the details that make up a year-end balance.

Analytical procedures must be used in the planning and completion phases of the audit.

Inspection consists of looking at a process or procedure being performed by others.

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

Audit evidence has two primary qualities for the auditor; relevance and reliability.Given the choices below,which provides the auditor with the most reliable audit evidence?

Accounts receivable confirmations must be controlled by the client from the time they are prepared until the time they are returned to the auditor.

Which of the following is not one of the four decisions about what evidence to gather and how much of it to accumulate?

An important benefit of industry comparisons is as:

When the auditor foots the journals and the subsidiary ledgers,it is considered reperformance.

Which of the following statements is true?

A benefit obtained from using industry averages is that it provides a(n):

Physical examination:

Which of the following statements regarding the appropriateness of evidence is correct?

Audit evidence to support an opinion about the fairness of a client's financial statements consists entirely of written information.

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

The Assurance Services Market

The Audit Standards Setting Process

Audit Reports

Legal Liability Considerations for Auditors

Ethics and the Audit Profession

Audit Responsibilities and Objectives

Audit Planning

Considering Materiality and Audit Risk

Considering Internal Control

Considering the Risk of Fraud

Implications of Information Technology for the Audit Process

Developing the Overall Audit Plan and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Inventory and Warehousing Cycle

Audit of the Payroll and Personnel Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Audit Completion

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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