Question 1

A canceled check written by the client, made payable to a local supplier and drawn on the client's bank account is one type of internal document.

Accepted Answer

A) True 
 B)False

Question 2

When the auditor uses tracing as an audit procedure for tests of transactions she is primarily concerned with which audit objective?

Accepted Answer

A)  Occurrence 
B)  Completeness 
C)  Cutoff 
D)  Classification

Question 3

The auditor's results of evidence gathering procedures are contained in audit documentation for the audit. When preparing the requisite audit, documentation should be cognizant of:

Accepted Answer

A)  Documents are kept by the client for easy reference for their accounting staff. 
B)  Audit documents should be considered as a substitute for the clients accounting records. 
C)  Audit documents are designed to facilitate the review and supervision of the work performed by the audit team by a reviewing partner. 
D)  Audit documents are the sole source of evidence that an auditor uses in forming an opinion about the client's financial statements.

Question 4

"The use of comparisons and relationships to assess whether account balances or other data appear reasonable compared to the auditor's expectations" is a definition of:

Accepted Answer

A)  analytical procedures. 
B)  tests of transactions. 
C)  tests of balances. 
D)  auditing.

Question 5

Audit documentation should possess certain characteristics. Which of the following is true regarding those characteristics?

Accepted Answer

A)   
B)   
C)   
D)

Question 6

Confirmations are ordinarily used to verify account balances, but may be used to verify transactions.

Accepted Answer

A) True 
 B)False

Question 7

Determine which of the following is most correct regarding the reliability of audit evidence.

Accepted Answer

A)  Information that is indirectly obtained from external sources is the most reliable audit evidence. 
B)  Reliability of audit evidence is dependent upon the evidence being convincing. 
C)  Reliability of evidence refers to the amount of evidence obtained. 
D)  An effective internal control system provides more reliable audit evidence.

Question 8

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 9

Which of the following is not a characteristic of the reliability of evidence?

Accepted Answer

A)  effectiveness of client internal controls 
B)  education of auditor 
C)  independence of information provider 
D)  timeliness

Question 10

Audit documentation should provide support for:

Accepted Answer

A)   
B)   
C)   
D)

Question 11

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...

Question 12

The auditor is concerned that a client is failing to bill customers for shipments. An audit procedure that would gather relevant evidence would be to:

Accepted Answer

A)  select a sample of duplicate sales invoices and trace each to related shipping documents. 
B)  trace a sample of shipping documents to related duplicate sales invoices. 
C)  trace a sample of Sales Journal entries to the Accounts Receivable subsidiary ledger. 
D)  compare the total of the Schedule of Accounts Receivable with the balance of the Accounts Receivable account in the general ledger.

Question 13

Define the following terms commonly used in audit procedures:
1. Examine
2. Scan
3. Compute
4. Foot
5. Compare
6. Count
7. Vouch

Accepted Answer

The answer of Define the following terms commonly used in...

Question 14

Auditors must make decisions regarding what evidence to gather and how much to accumulate. Which of the following is a decision that must be made by auditors related to evidence?

Accepted Answer

A)   
B)   
C)   
D)

Question 15

Which of the following statements is true?

Accepted Answer

A)  A large sample of highly competent evidence is persuasive if it is relevant to the objective being tested. 
B)  A large sample of evidence that is neither competent nor timely is not persuasive. 
C)  A small sample of only one or two pieces of relevant, competent, and timely evidence lacks persuasiveness. 
D)  The persuasiveness of evidence can be evaluated after considering its sufficiency.

Question 16

An analytical procedure used to test the reasonableness of an account balance occurs when the auditor calculates the expected balance and compares it with the actual balance. The auditor's expected account balance may be determined by:

Accepted Answer

A)  using industry standards. 
B)  using Dun and Bradstreet reports. 
C)  relating it to another account that involves financial statement articulation. 
D)  inquiry of the client.

Question 17

Which one of the following is not one of the primary purposes of audit documentation prepared by the audit team?

Accepted Answer

A)  A basis for planning the audit. 
B)  A record of the evidence accumulated and the results of the tests. 
C)  A basis for review by supervisors and partners. 
D)  A basis for determining work deficiencies by peer review teams.

Question 18

The permanent files included as part of audit documentation do not normally include:

Accepted Answer

A)  a copy of the current and prior years' audit programs. 
B)  copies of articles of incorporation, bylaws and contracts. 
C)  information related to the understanding of internal control. 
D)  results of analytical procedures from prior years.

Question 19

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

The answer of The basis for preparing financial statements for...

Question 20

Given the audit procedures below, which one provides the most reliable evidence?

Accepted Answer

A)  Confirmations 
B)  Recalculation 
C)  Reperformance 
D)  Observations

Exam 7: Audit Evidence

A canceled check written by the client, made payable to a local supplier and drawn on the client's bank account is one type of internal document.

When the auditor uses tracing as an audit procedure for tests of transactions she is primarily concerned with which audit objective?

The auditor's results of evidence gathering procedures are contained in audit documentation for the audit. When preparing the requisite audit, documentation should be cognizant of:

"The use of comparisons and relationships to assess whether account balances or other data appear reasonable compared to the auditor's expectations" is a definition of:

Audit documentation should possess certain characteristics. Which of the following is true regarding those characteristics?

Confirmations are ordinarily used to verify account balances, but may be used to verify transactions.

Determine which of the following is most correct regarding the reliability of audit evidence.

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

Which of the following is not a characteristic of the reliability of evidence?

Audit documentation should provide support for:

The auditor is concerned that a client is failing to bill customers for shipments. An audit procedure that would gather relevant evidence would be to:

Define the following terms commonly used in audit procedures: 1. Examine 2. Scan 3. Compute 4. Foot 5. Compare 6. Count 7. Vouch

Auditors must make decisions regarding what evidence to gather and how much to accumulate. Which of the following is a decision that must be made by auditors related to evidence?

Which of the following statements is true?

An analytical procedure used to test the reasonableness of an account balance occurs when the auditor calculates the expected balance and compares it with the actual balance. The auditor's expected account balance may be determined by:

Which one of the following is not one of the primary purposes of audit documentation prepared by the audit team?

The permanent files included as part of audit documentation do not normally include:

Given the audit procedures below, which one provides the most reliable evidence?