Question 1

Who is responsible for the financial statements?
 What does the term "assertions" mean?
 Identify the assertion categories and the specific assertions for each category.

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Question 2

When using analytical procedures,the auditor first needs to develop an expectation with which to compare recorded results.What is meant by "precision of the expectation," and what factors affect the precision of analytical procedures?

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Question 3

For each of the following categories of analytical procedures,indicate (a)whether an auditor is required to use the procedure and (b)the purpose(s)of the procedure.
Preliminary analytical procedures
Substantive analytical procedures
Final analytical procedures

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Question 4

Discuss the reliability of the types of audit evidence and identify the level of reliability for each type of evidence.

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Question 5

Several factors may influence the reliability of evidence.Identify and describe two of these factors.

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Question 6

Name two account balance management assertions pertaining to inventory and explain why they are considered in an audit.

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Question 7

Auditors obtain evidence about the client's inventory through,among other procedures,observing the counting of inventory.What are some limitations "observation" has as an audit procedure?

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Question 8

Why is appropriateness important for audit evidence?
 What qualities must evidence have to be considered appropriate?

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Question 9

The text discusses three main purposes for performing audit procedures.List and describe these three main categories of audit procedures and describe their purpose.

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Question 10

Sarah is auditing the sales of a new client.In one procedure Sarah performs,she begins with the original sales documents and then searches the accounting records to find the corresponding entry.What test is Sarah performing and what management assertion is she testing?

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Question 11

According to the text,what are the two functions of working papers?

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Question 12

The audit testing hierarchy is considered to be more effective and more efficient.Why?

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Question 13

Stan is auditing First Financial Services and would like to use financial ratios to test the ability of First Financial Services to meet its current obligations.Name two ratios that would help Stan in this task.Indicate how each ratio is calculated and what a high ratio would signify to Stan.

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Question 14

In deciding to implement analytical procedures,what are some factors the auditor will consider in determining a tolerable difference between the expectation and the recorded amount?

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Question 15

For an auditor,how are management assertions useful?

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Quiz 5: Evidence and Documentation

Who is responsible for the financial statements? What does the term "assertions" mean? Identify the assertion categories and the specific assertions for each category.