Audit Evidence and Procedures Quiz

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Questions and Answers

What does appropriateness in audit evidence refer to?

The number of items selected for testing

The specific procedures outlined for the audit

The relevance and reliability of evidence (correct)

The timing of when the audit is completed

Which of the following factors does NOT affect the timing decision of an audit?

When the client needs the audit completed

The auditor's belief in when evidence will be most effective

Availability of audit staff

Client's financial performance over the past year (correct)

What must an auditor determine after selecting the sample size for an audit procedure?

The type of audit program to implement

When to perform the audit procedures

The audit opinion to issue

Which items to select from the population (correct)

Which of the following best describes an audit procedure?

The detailed instructions on gathering evidence Signup and view all the answers

Which characteristic of evidence refers to the degree to which it can be considered trustworthy?

Reliability Signup and view all the answers

What are the two main determinants of the persuasiveness of audit evidence?

Appropriateness and Sufficiency Signup and view all the answers

What does sufficiency in audit evidence imply?

The amount of evidence gathered is adequate to support the audit opinion Signup and view all the answers

When is an audit usually not completed?

Until several weeks or months after the end of the audit period Signup and view all the answers

Which of the following is NOT one of the four decisions auditors face regarding evidence gathering?

What is the cost of the audit? Signup and view all the answers

The sample size for an audit procedure can only include all items in the population.

False Signup and view all the answers

What does relevancy of evidence mean in the context of auditing?

Evidence must pertain to or be relevant to the audit objective being tested. Signup and view all the answers

The reliability of evidence depends on its and .

quality; characteristics Signup and view all the answers

What is the purpose of an audit procedure?

To provide detailed instructions for obtaining audit evidence Signup and view all the answers

Match the following terms with their definitions:

Appropriateness = Quality of evidence related to audit objectives Sufficiency = Quantity of evidence gathered Relevance = Pertinence of evidence to the audit objective Reliability = Trustworthiness of the evidence Signup and view all the answers

What influences the timing decision for an audit?

When the client needs the audit to be completed Signup and view all the answers

List one of the six characteristics that affect the reliability of evidence.

Independence of provider, effectiveness of internal controls, etc. Signup and view all the answers

Study Notes

Audit Evidence

Evidence is information used by auditors to determine if audited information meets established criteria.

Audit Evidence Decisions

Auditors decide on appropriate types and amounts of evidence needed to confirm financial statement accuracy.
Four decisions include:
- Choosing audit procedures
- Determining sample size for a procedure
- Selecting items from the population
- Timing decisions for procedures

Audit Procedures

Detailed instructions explaining the audit evidence to be gathered during an audit.
Procedures should be sufficiently specific for auditors to follow.

Sample Size

Sample size for audit procedures can vary greatly, from a single item to the entire population being tested.
Determined after selecting a specific procedure.

Items to Select

Auditors select specific items from the population after determining the sample size for the audit procedure.

Timing

Audit of financial statements typically covers a year.
Timing of the audit might be affected by when clients need the audit, availability of audit staff, and when auditors believe evidence will be most effective.

Persuasiveness of Evidence

Sufficient appropriate evidence is required to support audit opinions.
Persuasiveness is determined by:
- Appropriateness: Quality of evidence (relevance and reliability).
  - Relevance: Evidence must pertain to the specific audit objective.
  - Reliability: Believability and trustworthiness of evidence. Reliability factors include independence of provider, evidence from auditor's direct knowledge, objectivity of evidence, effectiveness of internal controls of the client, qualifications of the individual providing the information, and timeliness of the information.
- Sufficiency: Quantity of evidence. Measured by sample size, and is primarily important for some audit objectives.

Combined Effect

Persuasiveness of evidence is evaluated by combining appropriateness and sufficiency, considering the various factors affecting each.
A large, irrelevant sample isn't persuasive; a small sample of highly relevant evidence can also be insufficient.

Persuasiveness and Cost

Auditors aim to obtain sufficient appropriate evidence at the lowest cost possible.
Cost is not a valid reason for omitting a necessary procedure or not getting a sufficient sample size.

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Description

Test your knowledge on audit evidence and the decision-making process involved in selecting audit procedures. This quiz covers essential concepts such as sample size determination, item selection, and timing decisions critical for ensuring financial statement accuracy.