Topic 4 - Quiz

Which of the following procedures would provide the most reliable audit evidence?

• Inquiries of the client’s internal audit staff held in private. 

• Inspection of prenumbered client purchase orders field in the vouchers payable department 

• Analytical Procedures performed by the auditor on the entity’s trial balance. 

• Inspection of bank statements obtained directly from the client’s financial institution

Which of the following groups is not part of “accounting records” used as an evidence?

• Worksheets, spreadsheets and supporting cost allocations 

• General and Special Journals

• Minutes of the meeting, external confirmation replies and analyst reports

• Related accounting manuals and cost allocations.

Evidence is generally considered appropriate when: 

• It has been obtained by random selection.

• There is enough of it to afford a reasonable basis for an opinion on financial statements

• It has the qualities of being relevant, objective, and free from known bias. 

• It consist of written statements made by managers of the enterprise under audit

Audit procedures fall into three categories. Which of the following is not a category of audit procedures?

• Audit procedures fall into three categories. Which of the following is not a category of audit procedures?

• Test of Controls

• Risk Assessment Procedures

• Substantive Procedures

Non-sampling risk is risk that the auditors conclusion based on a sample may be different from the conclusion reached if the entire population were subjected to the same audit procedure or if the auditor used a sample that was not representative of the population

• True

• False

Risk assessment procedures provide sufficient appropriate audit evidence on which to base an audit opinion

• True

• False

Audit documentation should provide a sufficient and appropriate record of the basis of the auditors report and evidence that the audit was planned and performed in accordance with PSAs and applicable legal and regulatory requirements

• True

• False

Which of the following is not a purpose of audit documentation?

• Assisting the engagement team to plan and perform the audit.

• Enabling the conduct of quality control reviews and inspections in accordance with PSCCQ 1

• Enabling the conduct of external inspections in accordance with applicable legal, regulatory or other requirements.

•  Retaining a record of matters of continuing significance to future audits.

The audit workpapers are owned by the auditor. Such workpapers must have a retention period of a maximum of 5 years.

• True

• False

It is neither necessary nor practicable for the auditor to document every matter considered, or professional judgment made, in an audit. Hence, oral explanations by the auditor may not be used to clarify or explain information contained in the audit documentation.

• True

• False