Audit Evidence Practice Questions

What is audit evidence according to PSA 500?

• Information used by the auditor to arrive at conclusions on the audit opinion.

• Information used by the auditor to prepare financial statements.

• Information used by the auditor to calculate tax liabilities.

• Information used by the auditor to assess employee performance.

Which of the following is NOT a component of audit evidence as per PSA 500?

• Accounting records.

• Other information obtained by the auditor.

• Employee performance reviews.

• Analytical data.

What does "sufficient appropriate audit evidence" mean?

• Evidence that is both quantitative and qualitative.

• Evidence that is sufficient in quantity and appropriate in quality.

• Evidence that is only quantitative.

• Evidence that is only qualitative.

Which factor affects the reliability of audit evidence?

• The auditor's personal opinion.

• The source and nature of the evidence.

• The financial performance of the entity.

• The number of employees in the entity.

What is the difference between external and internal sources of audit evidence?

• External sources are less reliable than internal sources.

• External sources are more reliable than internal sources.

• Internal sources are always more reliable than external sources.

• Internal sources are irrelevant to audit evidence.

Why is evidence obtained directly by the auditor considered more reliable?

• It is based on inference.

• It is obtained through indirect methods.

• It is observed or inspected directly by the auditor.

• It is prepared by the client.

What does PSA 500 emphasize about accounting records as part of audit evidence?

• Accounting records alone are sufficient for audit evidence.

• Accounting records must be corroborated by evidence from other sources.

• Accounting records are irrelevant to audit evidence.

• Accounting records are the only source of audit evidence.

What is the role of professional judgment in determining sufficient appropriate audit evidence?

• To determine the quantity and quality of evidence needed.

• To ignore the risk assessment process.

• To rely solely on weak evidence.

• To avoid gathering evidence from multiple sources.

Which type of evidence is considered more reliable according to the text?

• Oral representations

• Written or documentary form

• Photocopies of documents

• Digital scans

Why are original documents preferred over copies in audit procedures?

• Copies are easier to handle.

• Originals are more reliable and ensure authenticity.

• Originals are less expensive to obtain.

• Copies are always accurate.