Podcast
Questions and Answers
What does appropriateness in audit evidence refer to?
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?
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?
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?
Which of the following best describes an audit procedure?
Which characteristic of evidence refers to the degree to which it can be considered trustworthy?
Which characteristic of evidence refers to the degree to which it can be considered trustworthy?
What are the two main determinants of the persuasiveness of audit evidence?
What are the two main determinants of the persuasiveness of audit evidence?
What does sufficiency in audit evidence imply?
What does sufficiency in audit evidence imply?
When is an audit usually not completed?
When is an audit usually not completed?
Which of the following is NOT one of the four decisions auditors face regarding evidence gathering?
Which of the following is NOT one of the four decisions auditors face regarding evidence gathering?
The sample size for an audit procedure can only include all items in the population.
The sample size for an audit procedure can only include all items in the population.
What does relevancy of evidence mean in the context of auditing?
What does relevancy of evidence mean in the context of auditing?
The reliability of evidence depends on its ______ and ______.
The reliability of evidence depends on its ______ and ______.
What is the purpose of an audit procedure?
What is the purpose of an audit procedure?
Match the following terms with their definitions:
Match the following terms with their definitions:
What influences the timing decision for an audit?
What influences the timing decision for an audit?
List one of the six characteristics that affect the reliability of evidence.
List one of the six characteristics that affect the reliability of evidence.
Flashcards
Audit Evidence Decisions
Audit Evidence Decisions
Determining the appropriate type and amount of evidence to ensure financial statements are fairly stated.
Audit Procedures
Audit Procedures
Detailed instructions specifying the audit evidence to be gathered during an audit.
Sample Size
Sample Size
The number of items selected for testing from a larger population (all items).
Items to Select
Items to Select
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Timing of Audit Procedures
Timing of Audit Procedures
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Persuasiveness of Evidence
Persuasiveness of Evidence
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Appropriateness (Evidence)
Appropriateness (Evidence)
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Relevance (Evidence)
Relevance (Evidence)
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Reliability (Audit Evidence)
Reliability (Audit Evidence)
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What is the purpose of audit evidence?
What is the purpose of audit evidence?
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Types of Audit Evidence
Types of Audit Evidence
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What are the four decisions about gathering audit evidence?
What are the four decisions about gathering audit evidence?
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How does the timing of an audit affect the evidence?
How does the timing of an audit affect the evidence?
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Relevance (Audit Evidence)
Relevance (Audit Evidence)
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What makes evidence persuasive?
What makes evidence persuasive?
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What are the characteristics of reliable evidence?
What are the characteristics of reliable evidence?
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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.
- Appropriateness: Quality of evidence (relevance and reliability).
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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