Audit Evidence - Part 1

Which one of the following would be considered the most reliable type of audit evidence?

• Purchase orders from vendors.

• Customer accounts receivable files.

• Computerized general ledger.

• Confirmations from banks.

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

• Photocopies.

• Indirectly obtained evidence.

• Observation of assets.

• Inquiry with the in-house attorney.

Which one of the following would be the least reliable type of evidence?

• Confirmations returned by bank directly to the auditor.

• Letters of communication from the Securities Exchange Commission.

• Physical examination of perpetual inventory.

• Evidence from an easily overridden information system.

An example of an external document would include which of the following?

• Vendor invoices.

• Customer orders.

• Confirmation replies from customers.

• All the above.

Which of the following is an example of inspection of documentation?

• Review shipping documents.

• Estimate the expected amount of interest income.

• Observe controls.

• Recalculate the total amount include on a sales invoice.

The process of vouching helps establish which of the following regarding recorded transactions?

• Transactions have been recorded.

• Transactions are complete.

• Transactions are valid.

• Transactions are presented properly.

Footing, cross-footing, and tests of extensions are examples of which approach to gathering evidence?

• Reprocessing.

• Recalculation.

• Vouching.

• Examination of documentation.

Reprocessing of transactions helps establish that all valid items have been recorded. Reprocessing tests which of the following assertions?

• Occurrence.

• Rights.

• Existence.

• Completeness.

External documentation may lack reliability. Which of the following is the most probable reason for that?

• The external party may be competent in performing duties.

• The documentation may be properly understood by the client in the response.

• The auditor may decide not to use the documentation and replace it with other documents.

• The documentation may have been altered if the process is not controlled from inception.

An auditor selects a sample of items recorded and traces them back to the supporting documentation. This is an example of which of the following?

• Directional testing for existence.

• Directional testing for completeness.

• Direct testing for valuation.

• Direct testing for rights.