7: Information Gathering

Question 1

What are the four qualities of information needed to achieve engagement objectives?

Answer 1

Sufficient
Reliable
Relevant
Useful

Question 2

__________ information is factual, adequate, and convincing so that a prudent, informed person would reach the same conclusions as the auditor.

Answer 2

Sufficient.

Question 3

__________ information is the best attainable information through the use of appropriate engagement techniques.

Answer 3

Reliable.

Question 4

__________ information supports engagement observations and recommendations and is consistent with the objectives for the engagement.

Answer 4

Relevant.

Question 5

__________ information helps the organization meet its goals.

Answer 5

Useful.

Question 6

Determining whether information is adequate for the internal auditor’s purposes is a matter of professional judgment that depends on

Answer 6

The particular situation and
The internal auditor’s training, experience, and other personal traits.

Question 7

How is the sufficiency of information enhanced?

Answer 7

By choosing samples using standard statistical methods.

Question 8

Generally, information obtained from ____[1]____ sources is more reliable than information obtained from ____[2]____ sources.

Answer 8

1. External
2. Internal

Question 9

Information that establishes a fact or conclusion without having to make any assumptions is

Answer 9

Direct evidence.

Question 10

Information that establishes a fact or conclusion that can then lead by inference to another fact is

Answer 10

Circumstantial evidence.

Question 11

Which form of audit evidence relies on the interrelationships among data?

Answer 11

Analytical information.

Question 12

Physical information consists of

Answer 12

The internal auditor’s direct observation and inspection of people, property, or activities, e.g., of the counting of inventory.

Question 13

Testimonial information consists of

Answer 13

Written or spoken statements of client personnel and others in response to inquiries or interview questions.

Question 14

Describe the format of an internal control questionnaire.

Answer 14

An internal control questionnaire is often very structured and detailed and is drafted in a yes/no or short-answer format.

Question 15

List the disadvantages of questionnaires.

Answer 15

*Difficult to prepare.
*Time-consuming to administer.
*Engagement clients may anticipate the preferred responses and therefore may be deceitful or give insufficient consideration to the task.
*Not all circumstances can be addressed.
*Requiring management to fill out a questionnaire is less effective than the auditor completing a questionnaire during a face-to-face interview (in-person or video conferencing).
*Inflexible if they are designed so that a certain response is expected for each question.
*Not easily adapted to unique situations.

Question 16

The four types of interviews are

Answer 16

Preliminary,
Fact-gathering,
Follow-up, and
Exit.

Question 17

Interviews produce which form of audit evidence?

Answer 17

Testimonial information.

Question 18

What is the main purpose of interviews?

Answer 18

To gather facts related to the audit engagement.

Question 19

From what sources do interviews obtain testimonial evidence?

Answer 19

Engagement clients
Other members of the organization who have contact with engagement clients
Independent parties

Question 20

Direct __________ is watching a process or procedure being performed.

Answer 20

Observation.

Question 21

What are rating scales in internal surveys?

Answer 21

Rating scales are used to allow people to rate such things as service. The scale represents a continuum of responses.

Question 22

Observation is most persuasive for the ____[1]____ or ____[2]____ assertion.

Answer 22

Existence
Occurrence