Chapter 7 In-Class Practice

Which of the following is an accurate statement regarding audit evidence?

• Responses to the auditor's questions by client employees are considered highly persuasive evidence.

• Audit evidence should provide an absolute level of assurance

• The auditor uses evidence to determine whether the financial statements are fairly presented

• All evidence must be highly persuasive

Which of the following is not a type of audit evidence?

• Physical examination

• Confirmation

• Documentation

• Financial forecasting

What does the sufficiency of audit evidence refer to?

• The amount of evidence obtained

• The quality of evidence obtained

• The relevance of evidence obtained

• The persuasiveness of evidence obtained

Which of the following is considered the most reliable type of audit evidence?

• Oral representations made by management

• Documents obtained from independent external sources

• Information obtained through the auditor's personal observation

• Documents obtained from internal sources

Which of the following is not one of the decisions about what evidence to gather and how much of it to accumulate to satisfy the audit objectives and support the audit opinion?

• which audit procedures to use

• when to perform the audit program

• when to perform the audit procedures

• what sample size to select for a given audit procedure

Which type of evidence is more reliable?

• Examine duplicate sales invoices when several competent people are checking each other’s work

• Examine documents prepared by a competent person on a one-person staff

Which type of evidence is more reliable?

• Physically examine inventory of parts for the number of units on hand

• Examine them for the likelihood of inventory being obsolete

Which type of evidence is more reliable?

• Discuss the likelihood and amount of loss in a lawsuit against the client with the client’s in-house legal counsel

• Discuss with the CPA firm’s own legal counsel

Which type of evidence is more reliable?

• Examine the client’s bank statements

• Confirm a bank balance

Which type of evidence is more reliable?

• Physically count the client's inventory held by an independent party

• Confirm the count with an independent party