Question 1

An example of an external document that provides reliable information for the auditor is:

Accepted Answer

A)  employees' time reports. 
B)  bank statements. 
C)  purchase order for company purchases. 
D)  carbon copies of checks. 
A)  employees' time reports. 
B)  bank statements. 
C)  purchase order for company purchases. 
D)  carbon copies of checks.

Question 2

A benefit obtained from comparing the client's data with industry averages is that it provides a(n):

Accepted Answer

A)  benchmark to compare the company against industry averages. 
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 against industry averages. 
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 3

Confirmations are among the most expensive type of evidence to obtain.

Accepted Answer

A) True 
 B)False

Question 4

For audit evidence to be compelling to the auditor it must be sufficient and appropriate. Which statement below is not correct regarding the appropriateness of audit evidence?

Accepted Answer

A)  The more effective the internal control system, the more assurance it provides the auditor about the reliability of financial reporting by the client. 
B)  An auditor's opinion, to be economically useful and profitable to the auditing firm needs to be formed within a reasonable time and based on evidence obtained that assures profits for the auditing firm. 
C)  Evidence obtained from independent sources outside the entity is generally more reliable than evidence secured solely within the entity. 
D)  The independent auditor's direct personal knowledge, obtained through inquiry, observation and inspection, is generally more persuasive than information obtained indirectly. 
A)  The more effective the internal control system, the more assurance it provides the auditor about the reliability of financial reporting by the client. 
B)  An auditor's opinion, to be economically useful and profitable to the auditing firm needs to be formed within a reasonable time and based on evidence obtained that assures profits for the auditing firm. 
C)  Evidence obtained from independent sources outside the entity is generally more reliable than evidence secured solely within the entity. 
D)  The independent auditor's direct personal knowledge, obtained through inquiry, observation and inspection, is generally more persuasive than information obtained indirectly.

Question 5

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: (1) physical examination, (2) confirmation, (3) documentation, (4) observation, (5) inquiry of the client, (6) reperformance, and (7) analytical procedure.

Accepted Answer

1. Observation
2. Physical examination
3

Question 6

The two characteristics of the appropriateness of evidence are:

Accepted Answer

A)  relevance and timeliness. 
B)  relevance and accuracy. 
C)  relevance and reliability. 
D)  reliability and accuracy. 
A)  relevance and timeliness. 
B)  relevance and accuracy. 
C)  relevance and reliability. 
D)  reliability and accuracy.

Question 7

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 8

Why is the appropriateness of audit evidence obtained by the auditor important in forming an audit opinion? Describe the qualities information should have to be considered appropriate by the auditor.

Accepted Answer

Appropriateness is a measure of the qual

Question 9

Which of the following statements is not correct?

Accepted Answer

A)  Analytical procedures are used to isolate accounts or transactions that should be investigated more extensively. 
B)  For certain immaterial accounts, analytical procedures may be the only evidence needed. 
C)  In some instances, other types of evidence may be reduced when analytical procedures indicate that an account balance appears reasonable. 
D)  Analytical procedures use supporting documentation to determine which account balances need additional detailed procedures. 
A)  Analytical procedures are used to isolate accounts or transactions that should be investigated more extensively. 
B)  For certain immaterial accounts, analytical procedures may be the only evidence needed. 
C)  In some instances, other types of evidence may be reduced when analytical procedures indicate that an account balance appears reasonable. 
D)  Analytical procedures use supporting documentation to determine which account balances need additional detailed procedures.

Question 10

The primary purpose of performing analytical procedures in the planning phase of an audit is to:

Accepted Answer

A)  help the auditor obtain an understanding of the client's industry and business. 
B)  assess the going concern assumption. 
C)  indicate possible misstatements. 
D)  reduce detailed tests. 
A)  help the auditor obtain an understanding of the client's industry and business. 
B)  assess the going concern assumption. 
C)  indicate possible misstatements. 
D)  reduce detailed tests.

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

An example of a document the auditor receives from the client, but which was prepared by someone outside the client's organization, is a:

Accepted Answer

A)  confirmation. 
B)  sales invoice. 
C)  vendor invoice. 
D)  bank reconciliation. 
A)  confirmation. 
B)  sales invoice. 
C)  vendor invoice. 
D)  bank reconciliation.

Question 13

Match nine of the terms (a-k) with the definitions provided below (1-9):
a. Foot
b. Compute
c. Scan
d. Inquire
e. Count
f. Trace
g. Reperform
h. Read
i. Examine
j. Observe
k. Compare
________ 1. A calculation done by the auditor independent of the client.
________ 2. Addition of a column of numbers to determine if the total is the same as the client's.
________ 3. A comparison of information in two different locations.
________ 4. A use of the senses to assess certain activities.
________ 5. Following details of transactions from original documents to journals.
________ 6. A less detailed examination of a document or record to determine if there is something unusual warranting further investigation.
________ 7. Obtaining information from the client in response to specific questions.
________ 8. A determination of assets on hand at a given time.
________ 9. An examination of written information to determine facts pertinent to the audit.

Accepted Answer

1. b
2. a

Question 14

Audit documentation is the joint property of the auditor and the audit client.

Accepted Answer

A) True 
 B)False

An example of an external document that provides reliable information for the auditor is:

A benefit obtained from comparing the client's data with industry averages is that it provides a(n):

Confirmations are among the most expensive type of evidence to obtain.

For audit evidence to be compelling to the auditor it must be sufficient and appropriate. Which statement below is not correct regarding the appropriateness of audit evidence?

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: (1) physical examination, (2) confirmation, (3) documentation, (4) observation, (5) inquiry of the client, (6) reperformance, and (7) analytical procedure.

The two characteristics of the appropriateness of evidence are:

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

Why is the appropriateness of audit evidence obtained by the auditor important in forming an audit opinion? Describe the qualities information should have to be considered appropriate by the auditor.

Which of the following statements is not correct?

The primary purpose of performing analytical procedures in the planning phase of an audit is to:

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

An example of a document the auditor receives from the client, but which was prepared by someone outside the client's organization, is a:

Audit documentation is the joint property of the auditor and the audit client.

The Demand for Audit and Other Assurance Services

The CPA Profession

Audit Reports

Professional Ethics

Legal Liability

The CPA Profession

Audit Planning and Analytical Procedures

Materiality and Risk

Section 404 Audits of 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

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 and Balances

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

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

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

Filters

Exam 7: Audit Evidence

An example of an external document that provides reliable information for the auditor is:

A benefit obtained from comparing the client's data with industry averages is that it provides a(n):

Confirmations are among the most expensive type of evidence to obtain.

For audit evidence to be compelling to the auditor it must be sufficient and appropriate. Which statement below is not correct regarding the appropriateness of audit evidence?

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: (1) physical examination, (2) confirmation, (3) documentation, (4) observation, (5) inquiry of the client, (6) reperformance, and (7) analytical procedure.

The two characteristics of the appropriateness of evidence are:

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

Why is the appropriateness of audit evidence obtained by the auditor important in forming an audit opinion? Describe the qualities information should have to be considered appropriate by the auditor.

Which of the following statements is not correct?

The primary purpose of performing analytical procedures in the planning phase of an audit is to:

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

An example of a document the auditor receives from the client, but which was prepared by someone outside the client's organization, is a:

Audit documentation is the joint property of the auditor and the audit client.

The Demand for Audit and Other Assurance Services

The CPA Profession

Audit Reports

Professional Ethics

Legal Liability

The CPA Profession

Audit Planning and Analytical Procedures

Materiality and Risk

Section 404 Audits of 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

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 and Balances

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

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

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

Filters