Audit Evidence

Question 1

Audit evidence

Answer 1

• obtained from procedures performance during the audit which supports of management assertions are appropriate and allows the practioner to assess whether FS are materially misstated
• audit evidence can support or deny management assertions

Question 2

Practioner objective

Answer 2

• design and perform audit procedures to obtain sufficient audit evidence, to draw conclusions, which the auditor opinion is based on

Question 3

Audit evidence must be…

Answer 3

1) sufficient
AND
2) appropriate
- if sufficient and appropriate evidence is not obtained for ALL accounts, and unqualified opinion cannot be provided

Question 4

Sufficient

Answer 4

• measure of quantity
• higher RMM = more evidence
• balance of quality and quantity

Question 5

Appropriate

Answer 5

• measure of quality
• the higher reliability of procedures and audit evidence is acquired, the more likely the evidence is appropriate

Question 6

Persuasive vs Conclusive

Answer 6

• audit evidence needs to be persuasive but does not need to be conclusive because audit opinion will never be 100% conclusive

Question 7

Reliability of audit evidence affected by

Answer 7

1) internally generated (least persuasive/reliable)
2) externally generate but held by client (somewhat persuasive/reliable)
3) externally generated (most persuasive/reliable)

Question 8

4 types of audit evidence

Answer 8

1) physical evidence (physically examining tangible assets)
2) confirmation evidence (obtain third party communication)
3) documentary evidence (inspecting client internal working paper)
4) analytical evidence (performing calculation ratio)