AA D Audit evidence

Which source of evidence is generally the most reliable?

• 1 Evidence obtained directly by the auditor from an independent external source
• 2 A copy document kept in the client's files
• 3 A verbal statement by management
• 4 An unsigned internal memo

Which assertion is tested by inspecting a physical asset?

• 1 Cut-off
• 2 Understandability
• 3 Existence
• 4 Completeness

Which assertion is of most concern for payables?

• 1 Rights
• 2 Completeness
• 3 Occurrence
• 4 Existence

The auditor sends a request for direct confirmation of balances to customers. Which assertion is mainly tested?

• 1 Valuation of inventory
• 2 Completeness of payables
• 3 Existence of receivables
• 4 Cut-off of payroll

Which procedure tests cut-off of inventory?

• 1 Reading the board minutes
• 2 Recalculating depreciation
• 3 Reviewing the audit plan
• 4 Checking goods received and despatch records around the year end

Which is a substantive procedure?

• 1 Reading the engagement letter
• 2 Observing a control being performed as a test of controls
• 3 Recalculating the depreciation charge
• 4 Rotating the audit partner

Which sampling method gives every item an equal chance of selection?

• 1 Judgemental selection
• 2 Systematic sampling
• 3 Block selection
• 4 Random sampling

What is tolerable misstatement in sampling?

• 1 The average error
• 2 The expected error
• 3 The audit fee
• 4 The maximum error the auditor will accept in a population

What is a benefit of using data analytics in audit?

• 1 The auditor can test whole populations and find unusual items
• 2 It removes the need for professional judgement
• 3 It guarantees that there is no fraud
• 4 It is free

The auditor wants to rely on the work of an expert. What must the auditor assess?

• 1 The expert's nationality
• 2 The expert's age
• 3 The expert's competence, capabilities and objectivity
• 4 The expert's fee

Which procedure tests the existence of inventory?

• 1 Reviewing the going concern assessment
• 2 Reviewing the budget
• 3 Reading the board minutes
• 4 Attending the inventory count