As audit evidence physical examination and confirmation may only be obtained using
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what is AU 500? Show audit evidence what are the 4 primary requirements of AU 500? obtain sufficient, appropriate audit evidence what are the different types of audit procedures?
risk assessment procedures procedures that give an overall understanding of the client and its industry, including its internal control system risk assessment procedures test the effectiveness of internal controls that we want to rely on during this audit to accomplish our objectives
tests of controls audit procedures we use to find misstatements substantive testing what are the two types of substantive testing? detailed substantive testing confirmation sent to people who owe the client money by the auditor's externally produced/maintained monthly bank statements externally produced/client maintained cancel check produced by client client prepared, externally reviewed, client maintained includes business documents - invoices, PO, receiving reports client prepared, client maintained what are the four types of evaluating the reliability of the evidence? externally produced/maintained what is the weakest type of evaluations for the reliability of evidence? client prepared, client maintained what is the strongest type of evaluations for the reliability of evidence? externally produced/maintained what are the 8 types of evidence? physical examination what is the strongest type of evidence? confirmation evidence what is the weakest type of evidence? inquiries of our client internal to external - going from a reported amount in the accounting system, out to some supporting document vouching external to internal - randomly select some items from a population and go into the accounting records tracing what audit objective does vouching help meet? occurrence what audit objective does tracing help meet? completeness add down a column foot add across a column cross foot what is AU 580? written representations when must the management rep letters be dated? same date on audit report what is AU 585? consideration of omitted procedures what is AU 230? audit documentation AU 230 states that ______ ________ can be used over any medium work papers when the auditors have assembled, for retention, a complete and final document set of work papers document completion date when is the document completion date deadline for AICPA? no later than __________ after the audit report release date 60 days what is the document completion date deadline for PCAOB? no later than __________ after the audit report release date 45 days how long does the AICPA require CPA firms to retain work papers? 5 years how long does the PCAOB require CPA firms to retain work papers? 7 years evaluations of financial information through analysis of plausible relationships among financial and nonfinancial data analytical procedures a measure of the quality of evidence; appropriate evidence is relevant and reliable in meeting audit objectives for classes of transactions, account balances, and related disclosures appropriateness of evidence
record of the audit procedures performed, relevant audit evidence, and conclusions the auditor reached audit documentation detailed instruction for the collection of a type of audit evidence audit procedure list of audit procedures for an audit area or an entire audit; the audit program always includes audit procedures and may also include sample sizes, items to select, and timing of the tests audit program the auditor's receipt of a direct written or electronic response from a third party verifying the accuracy of information requested confirmation a document, such as a vendor's invoice, that has been used by an outside party to the transaction being documented and that the client now has or can easily obtain external document the obtaining of written or oral information from the client in response to specific questions during the audit inquiry the auditor's examination of the client's documents and records to substantiate the information that is or should be included in the financial statements inspection a document, such as an employee time report, that is pre- pared and used within the client's organization internal document the degree to which the auditor is convinced that the evidence supports the audit opinion; the two determinants of persuasiveness are the appropriateness and sufficiency of the evidence persuasiveness of evidence the extent to which evidence is believable or worthy of trust; evidence is reliable when it is obtained reliability of evidence the rechecking of a sample of the computations made by the client, including mathematical accuracy of individual transactions and amounts and the adding of journals and subsidiary records recalculation the auditor's independent tests of client accounting procedures or controls that were originally done as part of the entity's accounting and internal control system reperformance an analytical procedure in which the auditor develops an expectation of recorded amounts or ratios to provide evidence sup- porting an account balance substantive analytical procedure the quantity of evidence; proper sample size sufficiency of evidence symbols used on an audit schedule that provide additional information or details of audit procedures performed tick marks the use of documentation to determine if transactions or amounts are included in the accounting records tracing the use of documentation to support recorded transactions or amounts vouching Which of the following types of documentary evidence should the auditor consider to be the most reliable? 2 Audit evidence can come in different forms with different degrees of persuasiveness. Which of the following is the least persuasive type of evidence? 4 Which of the following presumptions is correct about the reliability of audit evidence? 4 For all audits of financial statements made in accordance with auditing standards, the use of analytical procedures is required to some extent planning stage substantive test completion stage 1 Which of the following situations has the best chance of being detected when a CPA compares 2016 revenues and expenses with the prior year and investigates all changes exceeding a fixed percent? (1) An increase in property tax rates has not been recognized in the company's 2016 accrual. 4 Which of the following would not be considered to be an analytical procedure? 2 Which of the following is not a primary purpose of audit documentation? 3 During an audit engagement, pertinent data are compiled and included in the audit files. The audit files primarily are considered to be 3 Although the quantity, type, and content of audit documentation will vary with the circumstances, audit documentation generally will include the 4 According to PCAOB audit standards, audit
documentation must be retained for 4 Which of the following types of audit evidence is generally the most reliable? 2 An
auditor most likely would apply analytical procedures in the overall review stage of an audit to 1 Calculate the ratio of sales commission expense to sales as a test of sales commissions Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. analytical procedures Review the accounts receivable with the credit manager to evaluate their collectibility Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. inquiries of client Compare a duplicate sales invoice with the sales journal for customer name and amount. Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. inspection Obtain a written statement from a bank stating that the client has $15,671 on deposit and liabilities of $500,000 on a demand note Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. confirmation Add the sales journal entries to determine whether they were correctly totaled Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. recalculation Count a sample of inventory items and record the amount in the audit files. Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. physical examination Obtain a letter from the client's attorney addressed to the CPA firm stating that the attorney is not aware of any existing lawsuits. Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. confirmation Extend the cost of inventory times the quantity on an inventory listing to test whether it is accurate Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. recalculation Obtain a letter from an insurance company to the CPA firm stating the amount of the fire insurance coverage on buildings and equipment Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. confirmation
Examine an insurance policy stating the amount of the fire insurance coverage on buildings and equipment Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. inspection Calculate the ratio of cost of goods sold to sales as a test of overall reasonableness of gross margin relative to the preceding year Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. analytical procedures Obtain information about internal control by requesting the client to fill out a questionnaire Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. inquiries of client Trace the total in the cash disbursements journal to the general ledger Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. reperformance Watch employees count inventory to determine whether company procedures are being followed Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. observation Examine a piece of equipment to make sure that a major acquisition was actually received and is in operation Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. physical examination Examine corporate minutes to determine the authorization of the issue of bonds Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. inspection Obtain a letter from management stating that there are no unrecorded liabilities Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. inquiries of client Review the total of repairs and maintenance for each month to determine whether any month's total was unusually large. Classify the item according to the eight types of audit evidence: (1) physical examination, (2) confirmation, (3) inspection, (4) analytical procedures, (5) inquiries of the client, (6) recalculation, (7) reperformance, and (8) observation. analytical procedures Trace from receiving reports to vendors' invoices and entries in the acquisitions journal identify the type of audit evidence used and the transaction-related audit objective or objectives satisfied by each audit procedure inspection, completeness Add the sales journal for the month of July and trace amounts to the general ledger identify the type of audit evidence used and the transaction-related audit objective or objectives satisfied by each audit procedure recalculation, posting and summarization Examine expense voucher packages and related vendors' invoices for approval of expense account classification identify the type of audit evidence used and the transaction-related audit objective or objectives satisfied by each audit procedure inspection, classification Observe opening of cash receipts to determine that cash receipts are promptly deposited and recorded identify the type of audit evidence used and the transaction-related audit objective or objectives satisfied by each audit procedure observation, timing and completeness Ask the accounts payable clerk about procedures for verifying prices, quantities, and extensions on vendors' invoices identify the type of audit evidence used and the transaction-related audit objective or objectives satisfied by each audit procedure inquiries of client, accuracy Vouch entries in sales journal to sales invoices and related shipping documents. identify the type of audit evidence used and the transaction-related audit objective or objectives satisfied by each audit procedure inspection, occurrence Should focus on enhancing the auditor's understanding of the client's business and the transactions and events that have occurred since the last audit date select the stage of audit that this statement most accurately is in Planning the audit planning the audit Should focus on identifying areas that may represent specific risks relevant to the audit select the stage of audit that this statement most accurately is in Planning the audit planning the audit Require documentation in the working papers of the auditor's expectation of the ratio or account balance select the stage of audit that this statement most accurately is in Planning the audit substantive testing Do not result in detection of misstatements select the stage of audit that this statement most accurately is in Planning the audit statement is not correct concerning analytical procedures Designed to obtain evidential matter about particular assertions related to account balances or classes of transactions select the stage of audit that this statement most accurately is in Planning the audit substantive testing Generally use data aggregated at a lower level than the other stages select the stage of audit that this statement most accurately is in Planning the audit substantive testing Should include reading the financial statements and notes to consider the adequacy of evidence gathered select the stage of audit that this statement most accurately is in Planning the audit overall review Not required during this stage select the stage of audit that this statement most accurately is in Planning the audit substantive testing Involve reconciliation of confirmation replies with recorded book amounts select the stage of audit that this statement most accurately is in Planning the audit statement is not correct concerning analytical procedures Use the preliminary or unadjusted working trial balance as a source of data select the stage of audit that this statement most accurately is in Planning the audit planning the audit What is physical examination in audit evidence?Auditors gather physical evidence to verify whether certain assets exist or to confirm the asset's condition. Physical examination is also the primary source of audit evidence used primarily for any fixed assets, such as the usage of machinery or supplies.
What is audit evidence and how can it be obtained?A11 Some audit evidence is obtained by performing audit procedures to test the accounting records, for example, through analysis and review, reperforming procedures followed in the financial reporting process, and reconciling related types and applications of the same information.
What are the 4 types of audit evidence?The auditor can obtain different types of audit evidence, including physical examination, documentation, analytical procedure, observations, confirmations, inquiries, etc. The type and amount are dependent on the type of organization that is being audited and the required audit scope.
What information can be used as audit evidence?Audit evidence consists of both information that supports and corroborates management's assertions regarding the financial statements or internal control over financial reporting and information that contradicts such assertions.
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