A4 - Audit Evidence

Question 1

What is the purpose of substantive procedures?

Answer 1

To detect material misstatement in the financial statements

Question 2

What is the hierarchy of audit evidence?

Answer 2

A E I O Auditor’s direct knowledge and observation External evidence Internal evidence Oral evidence

Question 3

What are the standard auditing procedures?

Answer 3

FIVE CARROT CARS

Footing, crossfooting and recalculation

Inquiry

Vouching

Examination/inspection

Confirmation

Analytical procedures

Reperformance

Reconciliation

Observation

Tracing

Cutoff review

Auditing related accounts simultaneously

Representation letter

Subsequent events review

Question 4

T/F: Income statement accounts tend to be more predictable than balance sheet accounts, and therefore are better candidates for analytical procedures

Answer 4

True

Question 5

What is the objective of tests of details of transactions performed as substantive tests?

Answer 5

To detect material misstatements in the financial statements

Question 6

What are the relevant assertions for account balances?

Answer 6

CVER

Completeness

Valuation, allocation and accuracy

Existence and occurance

Rights and obligations

Question 7

What are the relevant assertions for transactions and events?

Answer 7

COVEU

Completeness

CutOff

Valuation, allocation and accuracy

Existence and occurance

Understantability and classification

Question 8

What are the relevant assertions for presentation and disclosure?

Answer 8

CVRU

Completeness

Valuation, allocation and accuracy

Rights and obligations

Understandability (of footnotes) and classification