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Questions and Answers
Which of the following procedures would provide the most reliable audit evidence?
The most reliable forms of documentary evidence are those documents that are...
Which of the following statements is true regarding observation as an audit technique?
Which of the following presumptions does not relate to the appropriateness of audit evidence?
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Which of the following procedures would provide the most reliable audit evidence?
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Audit documentation that records the procedures used by the auditor to gather evidence should be:
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A client's accounting records can be considered sufficient audit evidence to support the financial statements.
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Which of the following documentation is not required for an audit in accordance with auditing standards?
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An auditor's permanent files most likely include:
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An auditor's working papers will ordinarily be least likely to include documentation showing how the:
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The primary purpose of indexing audit working papers by means of reference numbers is to:
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The audit working paper that reflects the major components of an amount reported in the financial statements is the:
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Which of the following is usually included or shown in the audit documentation?
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Study Notes
Audit Evidence Reliability
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Directly obtained evidence is more reliable than indirect evidence.
- Evidence obtained directly from independent third parties is generally considered more reliable than evidence obtained from the client.
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Evidence from a reliable source is more persuasive.
- Prenumbered documents provide a higher level of assurance because they are less susceptible to manipulation or fabrication.
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Observation as an audit technique is limited to the specific point in time of observation.
- It provides insight into the performance of a process but does not offer ongoing assurance.
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Internal controls provide assurance about the reliability of accounting data and financial statements.
- Strong internal controls reduce the risk of errors and fraud, thereby increasing the reliability of audit evidence.
Audit Evidence
- The more effective internal control, the more assurance it provides about the accounting data and financial statements.
- Observation is a reliable audit procedure, but its usefulness is limited to the point in time at which the observation takes place.
- The most reliable audit evidence comes from inspection of prenumbered client purchase orders filed in the vouchers payable department.
- The most reliable forms of documentary evidence are documents that are internally generated.
- Audit documentation should be designed to meet the circumstances of the particular engagement.
- A client's accounting records cannot be considered sufficient audit evidence to support the financial statements.
Audit Documentation
- Audit documentation must be designed to meet the circumstances of the particular engagement.
- An auditor's permanent files most likely include documentation indicating that the audit work was adequately planned and supervised.
- An auditor's working papers will ordinarily be least likely to include documentation showing how the auditor addressed contradictory or inconsistent evidence.
- The primary purpose of indexing audit working papers is to determine that working papers adequately support findings, conclusions, and reports.
- The audit working paper that reflects the major components of an amount reported in the financial statements is the supporting schedule.
- Audit documentation usually includes analyses, but not analyses that are designed to be a part of, or a substitute for, the client's accounting records.
- Auditors' working papers should not be used to communicate confidential information, such as the auditor's evaluations or the client's confidential information.
- Audit working papers should be prepared in sufficient detail to enable an experienced auditor, having no prior connection with the audit, to understand the work performed and the conclusions reached.
- Auditors should retain audit documentation for at least five years from the date of the audit report.
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Description
Test your understanding of the characteristics that influence the reliability of audit evidence. This quiz covers key concepts such as the importance of direct evidence, reliable sources, observation limitations, and the role of internal controls in enhancing audit assurance. Prepare to deepen your knowledge of audit practices!
