Deck 7: Audit Evidence: A Framework

Question 1

Analytical procedures are a type of substantive evidence and the results form part of the auditor's documentation.

Answer 1

True

Question 2

The auditing standards do not require the auditor to document the nature, timing and extent of audit procedures.

Answer 2

False

Question 3

Which of the following would not be considered part of the audit documentation?

A) evidence of planning including the audit program
B) the client's trial balance and any recommended audit adjustments to it
C) results of analytical procedures and tests of clients records
D) copies of rough notes and suggestions

Answer 3

copies of rough notes and suggestions

Question 4

Examining the repairs and maintenance expense account may uncover costs that should have been capitalised. Which management assertion is the auditor testing?

A) rights
B) completeness
C) existence
D) valuation

Question 5

Which of the following type(s) of evidence is considered substantive evidence?

A) tests of controls
B) analytical procedures
C) direct tests of account balances and transactions
D) both analytical procedures and direct tests of account balances and transactions

Question 6

In evaluating cost of evidence, which of the following phases of the audit usually has the lowest cost?

A) test transactions and account balances
B) understanding of client and industry
C) assessing risk of material misstatement
D) both test transactions and account balances and understanding client and industry

Question 7

Auditors have traditionally focused most audit procedures on the direct tests of assets and liability account balances, as opposed to examining transactions during the year, because:

A) there are usually fewer items in ending balances
B) less reliable evidence usually exists for ending balances
C) there is a preference to focus on transactions in account balances
D) there are usually more items in ending balances