Audit Evidence

Question 1

Three steps of Audit Evidence

Answer 1

1. sufficient : risk,population size, economic factors
2. appropriate : relevance & reliability-time, objectivity
3. reasonable conclusion

Question 2

least reliable document evidence

Answer 2

internal documents

non circulated documents such as duplicates

Question 3

most reliable document evidence

Answer 3

external documents

directly sent to auditors such as cut of bank statments

Question 4

Subsequent events meaning

Answer 4

responding appropriately to facts made after,during and between auditor report and F.S

Question 5

active duty between reporting date, and audit report issued

Answer 5

material events needs
ask for : Ammended F.S

if not : modify A.R opinion

Question 6

passive duty between audit report issued and F.S Issued

Answer 6

ASK FOR : Ammended F.S

If not released : modify opinion

if released : resign/legal advice

Question 7

Passive duty between F.S Issued and —-

Answer 7

ASK For : new F.S & A.R

otherwise resign /legal advice

Question 8

adjusting events

Answer 8

• tax liability
• allowance for inventory/ recievables
• errors/ fraud with F.S
• purchase/sale of N.C.A determination before Y.E

Question 9

non- adjusting events -

Answer 9

• issue of new shares/loan capital
• change in group composition
• losses of N.C.A for fire or flood
• strikes
• Purchase/Sale of N.C.A

Question 10

inspection

Answer 10

physical inspection of intangible assets

• document and record may give evidence
• confirm sales and purchases

Question 11

observation

Answer 11

looking at the process being performed by others

• segregation of dutys check
• one off event like inventory count

Question 12

computation

Answer 12

checking the mathematical accuracy

• perform independent calculations to match
• deprecation check

Question 13

analytical procedures

Answer 13

ratios and calculations, trends

• average remunition ( average employee wage)
• reasonableness check