SA 500 Series

What is the primary concern addressed by SA 501 regarding litigation claims and assessments?

• Existence

• Valuation and allocation

• Rights and obligations

• Completeness

What is the auditor's responsibility regarding the reliability of audit evidence?

• Ensure absolute certainty in all audit evidence

• Obtain only evidence from external sources

• Evaluate the reliability of audit evidence

• Rely solely on management representations

Which of the following is NOT a type of audit evidence mentioned in SA 500?

• Inspection

• Observation

• Inference

• Confirmation

In an initial audit engagement, what is the primary objective of the auditor concerning opening balances?

• To ensure that opening balances are restated to conform to the auditor's preferred accounting principles.

• To verify the accuracy of opening balances to provide a clean opinion on the financial statements.

• To ensure that opening balances do not contain misstatements that materially affect the current period's financial statements.

• To rely solely on the client's representations without independently assessing opening balances.

What is the primary objective of SA 505 - External Confirmations?

• To provide assurance on the accuracy of financial statements

• To obtain evidence directly from third parties to support management's assertions

• To detect fraud and errors in financial statements

• To confirm the internal control systems of the audited entity

What is the primary purpose of using analytical procedures in an audit, according to SA 520?

• To identify significant risks and assess internal controls.

• To gather evidence about the accuracy of specific account balances.

• To assess the reasonableness of financial information and enhance the overall understanding of the business.

• To replace substantive procedures for efficiency and cost-effectiveness.

Which of the following is a limitation of external confirmations, as highlighted by SA 505?

• They provide conclusive evidence for all assertions.

• They may be subject to manipulation by management.

• They are more cost-effective than other audit procedures.

• They are only applicable to small-sized entities.

What is the primary purpose of audit sampling, as emphasized in SA 530?

• To examine 100% of the population for maximum assurance.

• To provide a basis for drawing conclusions about a population from testing a sample.

• To reduce the auditor's responsibility for the overall audit opinion.

• To replace substantive testing with more cost-effective methods.

In the context of SA 501, what is the auditor's responsibility regarding property, plant, and equipment?

• Evaluate the company's investment strategy

• Assess the fair value of property, plant, and equipment

• Consider the appropriateness of the company's accounting policies

• Determine the existence and condition of property, plant, and equipment

According to SA 500, which of the following is a type of external evidence?

• Confirmations received from third parties

• Client's internal records

• Minutes of board meetings

• Oral representations from management