AUDIT EVIDENCE

Which of the following forms of evidence is most reliable?

• Confirmation of accounts receivable balance received from a customer.

• Internal memo explaining the issuance of a credit memo.

• Copy of month-end adjusting entries.

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

• Effectiveness of client internal controls.

• Education of auditor.

• Independence of information provider.

• Timeliness.

Calculating the gross margin as a percent of sales and comparing it with previous periods is what type of evidence

• Reperformance

• Analytical Procedures

• Observation

• Inquiry

Appropriate of evidence is a measure of the:

• quantity of evidence

• quality of evidence.

• sufficiency of evidence.

Two determinants of the persuasiveness of evidence are:

• competence and sufficiency.

• relevance and reliability

• appropriateness and sufficiency.

• independence and effectiveness.

Three common types of confirmations used by auditors are (1) negative confirmations, (2) blank form positive confirmations, and (3) positive confirmations with information included. Place the confirmations in order of reliability from highest to lowest.

• 1, 2, 3.

• 3, 2, 1.

• 2, 3, 1.

An example of an external document is

• purchase order for company purchases.

• bank statements.

• carbon copies of checks.

Which of the following is an example of vouching?

• Trace inventory purchases from the acquisitions journal to supporting invoices.

• Trace selected sales invoices to the sales journal.

• Trace details of employee paychecks to the payroll journal.

Which of the following is not a correct combination of terms and related type of audit evidence?

• Foot – reperformance

• Compare – documentation.

• Vouch – documentation

• Trace – analytical procedures.

To be considered reliable evidence, confirmations must be controlled by:

• a client employee responsible for accounts receivable.

• a client’s internal audit department.

• auditor