1.1 - Evidence

Question 1

What is the objective of an assurance engagement?

Answer 1

To enable practitioners to express an opinion on whether the subject of the assurance engagement is in accordance with the identified criteria

Question 2

In a low level assurance engagement, how much evidence is required?

Answer 2

Less evidence will be required to support the conclusion

Question 3

Why do auditors gather audit evidence?

Answer 3

To enable them to express an opinion of reasonable assurance on financial statements

Question 4

Define audit evidence

Answer 4

Information used by the auditor in arriving at the conclusions on which the auditor’s opinion is based

Question 5

What does audit evidence include?

Answer 5

Both the information contained within the accounting records underlying the financial statements, and other information gathered by the auditors, such as confirmations from third parties

Question 6

How will auditors often perform their testing and why?

Answer 6

They will often perform their testing on a sample basis, as they are not expected to look at all the information that might exist

Question 7

What are the two types of test auditors can carry out to obtain evidence?

Answer 7

• Tests of controls
• Substantive procedures

Question 8

Define tests of controls

Answer 8

Audit procedures designed to evaluate the operating effectiveness of controls in preventing, or detecting and correcting material misstatements at the assertion level

Question 9

Define substantive procedures

Answer 9

Audit procedures designed to detect material misstatements at the assertion level

Question 10

What do substantive procedures comprise?

Answer 10

• tests of detail (of classes of transactions, account balances and disclosures)
• substantive analytical procedures