While auditing Daragon Ltd., the auditor discovered that inventory records were incomplete due to a system outage. The auditor decided to perform physical inventory counts and reconcile them manually with supplier delivery receipts. Which type of audit evidence is the auditor primarily relying on?

• Analytical procedures

• Inspection of records and documents

• External confirmations

• Observation of processes

During the audit of a construction company, the engagement partner reviewed a memo in the working papers describing the rationale behind the decision not to obtain external confirmations for certain receivables. According to PSA 230, what characteristic of audit documentation does this demonstrate?

• Understandability

• Timeliness of documentation

• Completeness

• Justification of departure from standards

An auditor is assessing the reliability of an invoice received directly from a vendor, which supports a large purchase transaction. Under PSA 500, which factor most directly enhances the reliability of this audit evidence?

• The invoice supports a high-value transaction

• The invoice was received after the period-end

• The invoice is an original document obtained directly from the vendor

• The invoice is supported by internal approval stamps

In auditing Quad Com Corp., the auditors from Cuadra, Arago, Ramos, & Macalipay (CRAM) CPAs performed a walkthrough of the client's inventory process and observed discrepancies between physical count and recorded quantities. What is the best classification for this type of audit evidence under PSA

500?

• Documentary Evidence

• Inquiry

• Observation

• Recalculation

1. An auditor discovers that a significant portion of the documentation supporting revenue recognition for a major client is missing from the audit file. The audit team claims that discussions about the issue occurred via phone and were resolved. According to PSA 230, What should the auditor do next?

• 1. Accept verbal explanations and proceed

• 1. Reconstruct missing documentation using staff recollections

• 1. Document a summary of the discussions, including names, dates, and conclusions reached

• 1. Ignore undocumented discussions

While auditing the client's payroll process, the auditor recalculated net pay based on gross pay, tax rates, and deductions provided. Which audit procedure did the auditor perform?

• Analytical review

• Inspection

• Recalculation

• Confirmation

The auditor decided not to retain certain documents in the final audit file because they were considered redundant, although they contained significant audit observations. Which requirement under PSA 230 may be violated in this situation?

• Timeliness

• Confidentiality

• Documentation of significant matters and audit conclusions

• Indexing and referencing

During the audit of Orange Apps, a tech startup, the auditor evaluates fair value measurements for a complex derivative instrument. A specialist is engaged to assist in the audit. Under PSA 500, what should the auditor do in this situation?

• Rely entirely on the specialist's report

• Review the specialist's qualifications and assess the assumptions used

• Disclose the specialist's report in the financial statements

• Issue a qualified opinion based solely on the specialist's findings

The audit team failed to document certain procedures performed during the planning phase, stating they were "common knowledge" among staff. Which principle under PSA 230 does this contradict?

• Sufficiency

• Accuracy

• Completeness

• Clarity

While auditing a large retail client, the auditor received confirmation replies from only 40% of the accounts receivable confirmations sent. What is the most appropriate course of action?

• Accept the confirmations as sufficient audit evidence

• Send additional confirmations or perform alternative procedures

• Disregard confirmations and use analytical procedures instead

• Rely on management's representations