Audit Evidence

The principal reason for an independent auditor to gather and evaluate audit evidence is to

• Detect fraud and error

• Form an opinion on the financial statements

• Evaluate management performance

• Evaluate the internal control

Which of the following is not a basic procedure used in an audit?

• Risk assessment procedures

• Substantive procedures

• Test of Controls

• Tests of direct evidence

Three common types of confirmations used by auditors are (1) negative confirmations, (2) blank form positive confirmations, and (3) positive confirmations with information included. Place the confirmations in order or reliability from highest to lowest.

• 1, 2, 3

• . 3,2,1

• . 2,3,1

• A. 3,1,2

Which of the following methods is considered the best combination in obtaining audit evidence assuming documentary evidence is available to the auditor?

• Inquiry and inspection

• Inspection and reperformance

• Inquiry and analytical procedure

• Observation and inquiry

Which of the following audit procedures is used extensively throughout the audit and often is complementary to performing other audit procedures, yet the least reliable?

• Inspection

• Observation

• . Inquiry

• Confirmation

Sufficient appropriate audit evidence depends on

• Auditor’s professional judgment

• User’s view

• Management judgment

• All of the above

Which of the following generalizations in assessing the reliability of audit evidence is incorrect?

• Audit evidence is more reliable when it is obtained from independent sources outside the entity.

• Audit evidence obtained directly by the auditor is more reliable than audit evidence obtained indirectly or by inference.

• Audit evidence is more reliable when it exists in documentary form.

• Audit evidence provided by photocopies is more reliable than that provided by facsimiles.

Which one of the following would be the most persuasive type of evidence?

• Check register

• Bank statement

• Observation of assets

• Inquiry with the in-house attorney

Recalculations of the client’s computations would not include which of the following types of evidence?

• Cut-off

• Footing

• extension

• Cross-footing

An auditor compares year-to-year account balances in order to perform analytical procedures. This is an example of

• Vertical analysis

• Regression analysis

• Trend analysis

• Ratio analysis