Audit evidence and procedure part 2

Audit evidence must always be obtained from external sources to be considered reliable.

• True

• False

Observation and inquiry are both considered substantive audit procedures.

• True

• False

The sufficiency of audit evidence refers to the quantity of evidence obtained.

• True

• False

The auditor’s objective is to obtain reasonable assurance that the financial statements are free from material misstatement, which requires obtaining sufficient and appropriate audit evidence.

• True

• False

Audit procedures are only performed during the planning stage of an audit.

• True

• False

Which of the following best describes the appropriateness of audit evidence?

• The amount of audit evidence obtained

• The cost of obtaining audit evidence

• The relevance and reliability of audit evidence

• The source of audit evidence

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

• Evidence obtained directly by the auditor

• Evidence obtained through inquiry with management

• Internally generated documents

• Oral explanations provided by the client’s staff

Which of the following best describes relevant audit evidence?

• Evidence that is obtained from a third party

• Evidence that relates to the assertion being tested

• Evidence that is documented in the audit file

• Evidence that is easy to access and inexpensive to gather

An auditor tests the valuation of inventory by reviewing cost records and comparing them with current market prices. This is an example of:

• Relevant audit evidence for the existence assertion

• Relevant audit evidence for the valuation assertion

• Irrelevant evidence since market prices fluctuate

• Audit evidence for the rights and obligations assertion

Which of the following is least likely to be relevant when testing the completeness of accounts payable?

• Reviewing supplier statements

• Searching for unrecorded liabilities

• Reviewing board meeting minutes

• Examining payments made after year-end