AUD THEORY REVIEW 11-18-24

Which of the following forms of evidence would be most reliable?

• an insurance policy in the client's file

• the file copy of purchase requisition

• the file copy of a receiving room report

• the file copy of sales invoices

Which one of the following forms of evidence would be least reliable?

• monthly bank statement

• positive confirmation of customer's balance

• a letter from the client's attorney stating that there are no known lawsuits pending against the client

• client's file copy of a purchase requisition

Evidence obtained directly by the auditor is more competent than information obtained indirectly. Which of the following is not an example of the auditor's direct knowledge about an evidence?

• physical examination

• observation

• computation

• inquiry

When the auditor is gathering evidence, he will conclude that if the source of information is independent, the evidence will

• be reliable

• not be reliable

• be reliable if the provider has no reason to be biased

• not be reliable unless the provider is qualified to do so

Evidence obtained directly by the auditor will not be reliable if

• it is provided by the client's attorney

• the auditor lacks the qualifications to evaluate the evidence

• it is impossible for the auditor to obtain additional corroborating evidence

• the client denies its veracity

evidence is usally more persuasive for balance sheet accounts when it is obtained

• from various times throughout the client's year

• only from transactions occurring on the balance sheet date

• as close to the balance sheet date as possible

• from the time period when transactions in that account were most numerous during the fiscal period

For income statement accounts, evidence is more persuasive if there is a sample from

• the entire period under audit

• the period closest to the end of the fiscal period

• at least three months of the fiscal year

• December, since this would include large holiday sales

Which of the following statements is not true?

• a large sample of highly competent evidence is not persuasive unless it is relevant to the objective being tested

• a large sample of evidence that is neither competent nor timely is not persuasive

• a small sample of only or two pieces of relevant, competent, and timely evidence lacks persuasiveness

• the persuasiveness of evidence can be evaluated after consider its competence and its sufficiency

Generally, what source of evidence would most persuasively support audit conclusions?

• external

• inquiry

• oral

• informal

Observation though considered a reliable audit procedure, has limited usefulness. However, it is used in a number of different audit situations. Which of the following statements is true regarding observation as audit technique?

• it is the most effective audit methodology to use in filling out internal control questionnaires

• it is the most persuasive technique to learn how transactions are really processed during the period under audit

• it is rarely sufficient to satisfy any audit assertion other than existence

• it is the most persuasive audit technique for determinin if fraud ahs really occurred