Rate this paper
  • Currently rating
  • 1
  • 2
  • 3
  • 4
  • 5
4.00 / 4
Paper Topic:

Audit Evidence & Planning the Audit

p Audit Evidence Planning the Audit

Ch 5 : Audit Evidence and Documentation

Concerning retention of working s , the Sarbanes-Oxley Act

has no provisions

requires permanent retention

requires retention for at least seven years

requires retention for a period of four years or less

An auditor is performing an analytical procedure that involves developing common-size financial statements . This technique is referred to as

vertical analysis

horizontal analysis

cross-sectional analysis

comparison analysis

The independent auditor has set the audit risk at 5 . He had determined inherent risk

to be 100 . Given that the auditor has now set substantive testing risk at 10 , his final assessment of control risk is 5

20

50

200

Which of the following statements is generally correct about the appropriateness of audit evidence

The auditor 's direct personal knowledge , obtained through observation and inspection , is more persuasive than information obtained indirectly from independent outside sources

To be appropriate , audit evidence must be either valid or relevant , but need not be both

Accounting data alone may be considered sufficient appropriate audit evidence to issue an unqualified opinion on financial statements

Appropriateness of audit evidence refers to the amount of corroborative evidence to be obtained

An independent auditor finds that the Simmer Corporation occupies office space , at no charge , in an office building owned by a shareholder . This finding indicates the existence of

management fraud

related party transactions

window dressing

weak internal control

Which of the following is generally true about the sufficiency of audit evidence

The amount of evidence that is sufficient varies inversely with the appropriateness of the evidence

The amount of evidence concerning a particular account varies inversely with the materiality of the account

The amount of evidence concerning a particular account varies inversely with the inherent risk of the account

When evidence is appropriate with respect to an account , it is also sufficient

Confirmation would be most effective in addressing the existence assertion for the

addition of a milling machine to a machine shop

payment of a payroll during regular course of business

inventory held on consignment

granting of a patent for a special process developed by the organization

The inspection of a vendor 's invoice by the auditors is

direct evidence about the occurrence of a transaction

physical evidence about the occurrence of a transaction

documentary evidence about the occurrence of a transaction

part of the client 's accounting system (CPA , adapted ) As the acceptable level of detection risk decreases , an auditor may

reduce substantive testing by relying on the assessments of inherent risk and control risk

postpone the planned timing of substantive tests from interim dates to the year-end

eliminate the assessed level of inherent risk from consideration as a planning factor

lower the assessed level of control risk from the maximum level to below the maximum (CPA , adapted ) The existence of audit risk is recognized by the statement in the auditor 's standard report that the

auditor is responsible for expressing an opinion on the financial statements , which are the responsibility of management

financial...

Not the Essay You're looking for? Get a custom essay (only for $12.99)