Auditing Chapter 6 homework
Sufficiency of evidence
Quantity of evidence
Meaning of evidence
Quality of evidence
Two determinants of the persuasiveness of evidence include which of the following?
Appropriateness and sufficiency.
Competence and sufficiency.
Independence and effectiveness.
Relevance and reliability.
Directional testing involves testing transactions or balances for which type of error?
Neither overstatement nor understatement.
Overstatment
Understatement
Either overstatement or understatement
Which one of the following would be considered the most reliable type of audit evidence?
Customer accounts receivable files.
Confirmations from banks.
Purchase orders from vendors
Computerized general ledger.
Which one of the following would be the most reliable type of evidence?
Inquiry with the in-house attorney.
Indirectly obtained evidence.
Photocopies
Observation of assets
Which one of the following would be the least reliable type of evidence?
Confirmations returned by bank directly to the auditor.
Evidence from an easily overridden information system.
Letters of communication from the Securities Exchange Commission.
Physical examination of perpetual inventory
An example of an external document would include which of the following?
Vendor invoices
Customer orders
Confirmation replies from customers
All of the above
The process of vouching helps establish which of the following regarding recorded transactions?
Transactions are presented properly.
Transactions have been recorded
Transactions are complete
Transactions are valid
Footing, cross-footing, and tests of extensions are examples of which approach to gathering evidence?
Vouching
Recalculation
Examination of documentation
Reprocessing
An audit program provides an effective means for which of the following?
Reviewing the completeness and persuasiveness of procedures performed
Recording the audit work performed and those responsible for performing the work
Organizing and distributing the work
When may audit procedures be performed?
I - on the balance sheet date.
II - prior to the balance sheet date.
III - subsequent to the balance sheet date.
I only
I and III only
II only
I, II, and III
An auditor selects a sample of items recorded and traces them back to the supporting documentation. This is an example of which of the following?
Direct testing for rights
Directional testing for completeness
Directional testing for existence
Direct testing for valuation
Which of the following assertions is the primary assertion that is satisfied by physically observing the client's count of inventory?
Valuation
Completeness
Rights
Existence
When using the audit procedure vouching, the auditor is primarily concerned with which of the following assertions?
Classification
Authorization
The extent of procedures is affected mostly by which of the following factors?
The availability of the client's staff at or near the balance sheet date
The auditors judgement that misstatements are probable in certain balances
The sheer volume of procedures to be applied by the auditor
The time of year in which the client takes a physical inventory in the warehouse
An audit program is created to specify which of the following?
The type of audit opinion to be rendered based upon procedures performed
The audit procedures that will be performed every year for the client
How an auditor should think while performing audit procedures
Audit objectives and procedures to be followed during the audit process
Which one of the following is the primary reason for documenting audit work?
To provide a stand-alone medium that gives audit conclusions and supports the opinion
To prevent litigation by other parties that question the audit performance
To give the client a full reporting of all work performed on their behalf
To supply a point of reference for all auditors performing the work subsequently
To be considered reliable evidence, confirmations must be controlled by which of the following parties?
A client employee responsible for accounts receivable
A client's controller or CFO
A client's internal audit department
An external auditor
Conclusions are typically documented by auditors in which type of work paper?
Audit program
Representation letter
Audit planning memo
Audit memoranda
The processes used by management in developing estimates include which of the following?
Controls over the process
The reliability of underlying data in developing the estimate
Use of outside experts by management (for example, how they were used and their expertise)
Which of the following is the primary source for evidence to corroborate the existence of pending litigation?
Management representation letters
Vendor confirmations
Disclosures in financial statements
Attorney confirmations
Performance of audit procedures at an interim date causes the risk of material misstatement occurring between the interim date and the end of the year to do which of the following?
Decrease
Increase
Become more difficult to ascertain
Remain the same
What is determined to be appropriate and sufficient will be affected by which of the following?
The client's risk of material misstatement
The risk of material weakness in internal controls
Either a or b
None of the above
Audit documentation should contain which of the following?
A heading that includes the name of the audit client, an explanatory title, and the balance sheet date
The initials or electronic signature of the auditor performing the audit test and the date the test was completed
The initials or electronic signature of the manager or partner who reviewed the documentation and the date the review was completed
Which of the following is not an estimate that requires significant auditor judgment and skepticism?
Common stock and related additional paid-in capital
Valuation of goodwill
Allowance for bad debt
Obligations for pension plans
When using confirmations with outside parties, the auditor must assure which of the following about the outside party?
The outside party exists
The outside party is able to respond objectively and independently
The outside party is unbiased in responding
Which of the following characteristics are not normally included in quality audit documentation?
A cross-reference
An assessment of whether the test indicates the possibility of material misstatement in an account
Initials of the person preparing and reviewing the document
All are included in quality audit documentation
A date at which audit evidence is collected earlier than the balance sheet date is referred to as what?
Subsequent date
Cutoff period
Significant date
Interim date
The written record that forms the basis for the auditor’s conclusions is referred to as what?
Audit adjustment
Audit documentation
Accounting records
Footing
The auditor may use analytical procedures during which phase of the audit?
Planning the audit
Substantive testing
Completing the audit
