Question 1

Audit documentation should possess certain characteristics. Which of the following is one of the characteristics?

Accepted Answer

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Question 2

Which of the following statements is not correct concerning audit documentation?

Accepted Answer

The answer of Which of the following statements is not...

Question 3

Which of the following statements is correct regarding the costs involved in obtaining evidence?

Accepted Answer

The answer of Which of the following statements is correct...

Question 4

Identify the three common types of confirmations used by auditors. Indicate which type is most reliable and explain your answer. In addition, indicate which type is least reliable and explain your answer.

Accepted Answer

The answer of Identify the three common types of confirmations...

Question 5

Give two examples of relatively reliable documentation and two examples of less reliable documentation. What characteristics distinguish the two?

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Question 6

Discuss the auditor's use of inspection as evidence.

Accepted Answer

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Question 7

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Watch client employees count inventory to determine whether company procedures are being followed.

Accepted Answer

Observation is the audit evidence obtained by watching a process or procedure being performed by others, in this case, watching client employees count inventory to ensure adherence to company procedures.

Question 8

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Count inventory items and record the amount in the audit files.

Accepted Answer

Physical examination involves the auditor directly verifying the existence and condition of a specific asset, such as inventory, through counting, measuring, or testing. Counting inventory items and recording the amount in the audit files is a direct example of physical examination.

Question 9

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Trace postings from the sales journal to the general ledger accounts.

Accepted Answer

Reperformance involves the auditor independently executing procedures or controls that were originally performed as part of the entity's internal control. Tracing postings from the sales journal to the general ledger accounts is an example of reperformance, as the auditor is independently verifying the accuracy and completeness of the entity's recording process.

Question 10

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Calculate the ratio of cost of goods sold to sales as a test of overall reasonableness of gross margin relative to the preceding year.

Accepted Answer

This procedure involves comparing current year figures to those of the previous year to assess the reasonableness of the gross margin. This comparison and analysis of financial information is classified as analytical procedures.

Question 11

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Obtain information about the client's internal controls by asking questions of client personnel.

Accepted Answer

Inquiry of the client involves asking questions to obtain information directly from client personnel, which aligns with the described audit procedure of obtaining information about the client's internal controls.

Question 12

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Trace column totals from the cash disbursements journal to the general ledger.

Accepted Answer

The answer of Below are 12 audit procedures. Classify each...

Question 13

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Examine a piece of equipment to make sure a recent purchase of equipment was actually received and is in operation.

Accepted Answer

Physical examination involves the auditor's direct inspection or count of a tangible asset, which in this case is examining a piece of equipment to verify its existence and operational status.

Question 14

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Compute the total of repairs and maintenance for each month to determine whether any month's total was unusually large.

Accepted Answer

Computing the total of repairs and maintenance for each month to determine whether any month's total was unusually large is an example of analytical procedures. Analytical procedures involve evaluating financial information by studying plausible relationships among both financial and non-financial data.

Question 15

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Compare vendor names and amounts on purchases invoices with entries in the purchases journal.

Accepted Answer

Inspecting documents, such as comparing vendor names and amounts on purchase invoices with entries in the purchases journal, is an example of the inspection type of audit evidence. This involves examining records or documents, whether internal or external, in paper form, electronic form, or other media.

Question 16

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Foot entries in the sales journal to determine whether they were correctly totaled by the client.

Accepted Answer

Recalculation involves verifying the mathematical accuracy of documents or records, which is what foot entries in the sales journal to determine correctness entails.

Question 17

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Make a surprise count of petty cash to verify that the amount of the petty cash fund is intact.

Accepted Answer

Physical examination involves the auditor's direct inspection or count of a tangible asset, such as cash, inventory, or equipment. Making a surprise count of petty cash is a direct inspection of the cash on hand to verify its amount, fitting the definition of physical examination.

Question 18

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Obtain a written statement from the client's bank stating the client's year- end balance on deposit.

Accepted Answer

Obtaining a written statement from the client's bank stating the client's year-end balance on deposit is an example of confirmation. This is because the auditor is seeking direct verification of account balances or other information by requesting a confirmation from a third party, in this case, the bank.

Question 19

Below are 10 documents typically examined during an audit. Classify each document as either internal or external.
-Canceled checks for payments of accounts payable.

Accepted Answer

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Question 20

Below are 10 documents typically examined during an audit. Classify each document as either internal or external.
-Payroll time cards.

Accepted Answer

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Quiz 3: Audit Evidence, Audit Planning, Analytical Procedures, Materiality and Risk

Audit documentation should possess certain characteristics. Which of the following is one of the characteristics?

Which of the following statements is not correct concerning audit documentation?

Which of the following statements is correct regarding the costs involved in obtaining evidence?

Identify the three common types of confirmations used by auditors. Indicate which type is most reliable and explain your answer. In addition, indicate which type is least reliable and explain your answer.

Give two examples of relatively reliable documentation and two examples of less reliable documentation. What characteristics distinguish the two?

Discuss the auditor's use of inspection as evidence.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Watch client employees count inventory to determine whether company procedures are being followed.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Count inventory items and record the amount in the audit files.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Trace postings from the sales journal to the general ledger accounts.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Calculate the ratio of cost of goods sold to sales as a test of overall reasonableness of gross margin relative to the preceding year.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Obtain information about the client's internal controls by asking questions of client personnel.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Trace column totals from the cash disbursements journal to the general ledger.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Examine a piece of equipment to make sure a recent purchase of equipment was actually received and is in operation.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Compute the total of repairs and maintenance for each month to determine whether any month's total was unusually large.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Compare vendor names and amounts on purchases invoices with entries in the purchases journal.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Foot entries in the sales journal to determine whether they were correctly totaled by the client.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Make a surprise count of petty cash to verify that the amount of the petty cash fund is intact.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Obtain a written statement from the client's bank stating the client's year- end balance on deposit.

Below are 10 documents typically examined during an audit. Classify each document as either internal or external. -Canceled checks for payments of accounts payable.

Below are 10 documents typically examined during an audit. Classify each document as either internal or external. -Payroll time cards.