10 Questions
An auditor's questioning mind is essential in the audit process because it enables them to gather conclusive evidence.
True
RIORICA is an acronym that represents the different types of evidence an auditor can gather during an audit.
False
Analytical procedures are used to examine financial ratios and identify unusual transactions.
True
Client testimony is considered a reliable source of evidence because clients have no incentive to mislead auditors.
False
An auditor's independence is essential to ensure that the audit is conducted without bias.
True
Sufficient evidence is more important than appropriate evidence in an audit.
False
The audit objective is to express an opinion on the financial statements.
True
Only external evidence is considered reliable in an audit.
False
Competence is not essential for an auditor to be considered independent.
False
Relevance is not a factor in determining the quality of evidence in an audit.
False
Study Notes
Audit Procedures and Evidence
- An audit program includes nature, timing, and extent of audit procedures for a given audit
- Audit procedures are performed at different times, such as monthly or at the end of the year
Persuasiveness of Evidence
- The persuasiveness of evidence is determined by two factors: appropriateness and sufficiency
- Appropriateness depends on relevance and reliability of evidence
- Relevance of evidence is related to the audit objective, such as verifying the existence of cash
- Reliability of evidence is dependent on the independence of the provider and the credibility of the individual providing the evidence
Characteristics of Persuasive Evidence
- Persuasive evidence is not conclusive, but rather reasonable assurance
- Human limitations and cost-benefit considerations contribute to the limitations of evidence
- Appropriateness and sufficiency are both necessary for persuasive evidence
Types of Audit Evidence
- There are eight types of evidence used in auditing: reperformance, inquiry, observation, recalculation, inspection, confirmation, analytical procedures, and client testimony
- Each type of evidence is used to gather sufficient and appropriate evidence to support the audit opinion
- Types of evidence can be categorized into oral evidence, physical evidence, and other forms of evidence
Competence and Independence
- Auditors must be competent and independent to obtain sufficient and appropriate audit evidence
- Competence includes knowledge of auditing standards, criteria, and types and amounts of evidence required
- Independence ensures that the auditor is free from bias and conflict of interest
Test your understanding of audit procedures, including the timing and extent of audits, and the characteristics that determine the persuasiveness of evidence. Covers audit programs and standards.
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