Audit Evidence

Of the following, which is the least persuasive type of audit evidence?

• 1. Documents mailed by outsiders to the auditor.

• 1. Correspondence between auditor and vendors.

• 1. Copies of sales invoices inspected by the auditor.

• 1. Computations made by the auditor.

Audit evidence takes different forms and varies in persuasiveness. Which of the following is the least persuasive type of evidence?

• Vendor's invoice.

• Bank statement obtained from the client.

• Computations made by the auditor.

• Written representations

Which of the following statements is generally correct about audit evidence?

• The auditor's direct personal knowledge, obtained through observation and inspection, is more persuasive than information obtained indirectly from independent outside sources.

• To be appropriate, audit evidence must be sufficient.

• Accounting data alone may be considered sufficient appropriate audit evidence to issue an unqualified opinion on financial statements.

• Appropriateness of audit evidence refers to the amount of corroborative evidence to be obtained and is primarily based on the auditor’s professional judgment and skepticism.

Which of the following is not a valid basis for omitting an audit test?

• The difficulty and expense involved in testing a particular item.

• The relative risk involved.

• The degree of reliance on the relevant internal controls.

• The relationship between the cost of obtaining evidence and its usefulness.

Which of the following is a general principle relating to the reliability of audit evidence?

• Audit evidence provided by copies is more reliable than that provided by facsimiles.

• Audit evidence provided by original documents is more reliable than audit evidence generated through a system of effective controls.

• Audit evidence obtained from indirect sources rather than directly is more reliable than evidence obtained directly by the auditor.

• Audit evidence obtained from knowledgeable independent sources outside the client company is more reliable than audit evidence obtained from non-independent sources.

Audit documentation serves mainly to:

• Provide the principal support for the auditor's report.

• Satisfy the auditor's responsibilities concerning the Code of Professional Conduct.

• Monitor the effectiveness of the CPA firm's quality control activities.

• Document the level of independence maintained by the auditor.

The permanent file of an auditor’s working papers generally would not include

• Bond indenture agreements.

• Lease agreements.

• Working trial balance.

• Flowchart of internal control

Which of the following statements is correct regarding an accountant’s working papers?

• The accountant owns the working papers and generally may disclose them as the accountant sees fit.

• The client owns the working papers but the accountant has custody of them until the accountant’s bill is paid in full.

• The accountant owns the working papers but generally may not disclose them without the client’s consent or a court order.

• The client owns the working papers but, in the absence of the accountant’s consent, may not disclose them without a court order.

Audit working papers are indexed by means of reference numbers. The primary purpose of indexing is to

• Permit cross-referencing and simplify supervisory review.

• Support the audit report.

• Eliminate the need for follow-up reviews.

• Determine that working papers adequately support findings, conclusions, and reports.

An audit supervisor reviewed the work performed by the staff to determine if the audit was adequately performed. The supervisor accomplished this by primarily reviewing which of the following?

• Checklists.

• Working papers.

• Analytical procedures.

• Financial statements.