Exam 5: Audit Evidence and Documentation

Working papers of continuing audit interest usually are filed with the administrative working papers.

An auditor compared the current-year gross margin with the prior-year gross margin to determine if cost of sales is reasonable.What type of audit procedure was performed?

When performing a financial statement audit,auditors are required to explicitly assess the risk of material misstatement due to:

Assertions that have a meaningful bearing on whether an account balance,transaction class or disclosure is fairly stated are referred to as:

The auditors must obtain written client representations that normally should be signed by:

The inspection of a vendor's invoice by the auditors is:

An auditor is performing an analytical procedure that involves developing common-size financial statements.This technique is referred to as:

A vendor's invoice is an example of documentary evidence created by a third party and held by the client.

To be effective,analytical procedures performed near the end of the audit should be performed by

When the risk of material misstatement for an account is high,the auditors may perform additional substantive procedures to restrict detection risk to a lower level.

Which of the following is a basic approach often used by auditors to evaluate the reasonableness of accounting estimates?

An auditor is performing an analytical procedure that involves comparing a client's account balances over time.This technique is referred to as:

Which of the following groups are not considered a specialist by AICPA Professional Standards:

Failure to detect material dollar errors in the financial statements is a risk which the auditors primarily mitigate by:

An auditor is performing an analytical procedure that involves comparing a client's ratios with other companies in the same industry.This technique is referred to as:

The permanent file section of the working papers that is kept for each audit client most likely contains:

The date on which no information may be deleted from audit documentation is the

In preparing for an audit of the retail footwear division of a major retail organization,the auditor gathered the following information about the organization's stores: All Northeast Southwest Mid-Central Stores Region Region Region \ 736,000 \ 840,000 \ 760,000 \ 630,000 Average sales per store \ 375,000 \ 420,000 \ 325,000 \ 395,000 Average cost of goods sold per store 48 13 18 17 Number of stores 1,800 2,200 1,850 1,550 Average square feet per store \ 137,000 \ 152,000 \ 140,000 \ 122,000 Average sales per full-time employee \ 98,000 \ 102,000 \ 82,000 \ 112,000 Average wage related expense per store \ 35,000 \ 285,000 \ 320,000 \ 115,000 An auditor performs analytical procedures that involve comparing the gross margins of various divisional operations with those of other divisions and with the individual division's performance in previous years.The auditor notes a significant increase in the gross margin at one division.The auditor does some preliminary investigation and also notes that there were no changes in products,production methods,or divisional management during the year.Based on the above information,the most likely cause of the increase in gross margin would be:

An example of an analytical procedure is the comparison of:

In general,which of the following statements is correct with respect to ownership,possession,or access to working papers prepared by a CPA firm in connection with an audit?