C7P1 Audit Evidence: A Framework

Question 1

State all content information
What is auditing?
6
4
7

Answer 1

1) What is auditing?
2) What are the three (3) questions that need to be answered when planning an audit?
3) What is audit program?
4) What are the cores of the audit?
5) What are the three (3) things the auditor considers when deciding which evidence to gather?
6) What is audit evidence?

1) What may be included as audit evidence?
2) What is appropriateness?
3) What is sufficiency?
4) What are the four (4) sources of evidence when performing an audit?

1) Explain assertion model for financial statements audits.
2) Explain the economics of gathering appropriate, sufficient evidence
3) What are the five (5) factors the auditor needs to evaluate when considering the best approach to gather evidence?
4) What are the four (4) steps in the overall audit process?
5) What is relevance in the context of auditing?
6) What is direct evidence?
7) What is indirect evidence?

Question 2

Fill in the blanks

1) What is —–?
2) What are the three (3) — that need to be — when — an audit?
3) What is audit —?
4) What are the — of the audit?
5) What are the three (3) — the auditor — when deciding which — to —?
6) What is audit —?

Answer 2

1) What is auditing?
2) What are the three (3) questions that need to be answered when planning an audit?
3) What is audit program?
4) What are the cores of the audit?
5) What are the three (3) things the auditor considers when deciding which evidence to gather?
6) What is audit evidence?

Question 3

Fill in the blanks

1) What may be — as audit —?
2) What is —?
3) What is —?
4) What are the four (4) — of —- when performing an audit?

Answer 3

1) What may be included as audit evidence?
2) What is appropriateness?
3) What is sufficiency?
4) What are the four (4) sources of evidence when performing an audit?

Question 4

Fill in the blanks

1) Explain — — for financial statements audits.
2) Explain the — of gathering —, — —
3) What are the five (5) — the auditor needs to — when — the — approach to — evidence?
4) What are the four (4) — in the — audit —-?
5) What is — in the context of auditing?
6) What is — evidence?
7) What is — evidence?

Answer 4

1) Explain assertion model for financial statements audits.
2) Explain the economics of gathering appropriate, sufficient evidence
3) What are the five (5) factors the auditor needs to evaluate when considering the best approach to gather evidence?
4) What are the four (4) steps in the overall audit process?
5) What is relevance in the context of auditing?
6) What is direct evidence?
7) What is indirect evidence?

Question 5

What is auditing?

It is a — of objectively —-, —, and — the — needed to provide —- on the financial statements

Answer 5

It is a process of objectively gathering, evaluating, and documenting the evidence needed to provide assurance on the financial statements

Question 5

What is auditing?

Answer 5

It is a process of objectively gathering, evaluating, and documenting the evidence needed to provide assurance on the financial statements

Question 6

It is a process of objectively gathering, evaluating, and documenting the evidence needed to provide assurance on the financial statements

Answer 6

Auditing

Question 7

What are the three (3) questions that need to be answered when planning an audit?

Answer 7

1) What audit procedures should be performed?

2) How much evidence is needed?

3) When should the audit procedures be performed?

Question 8

What are the three (3) questions that need to be answered when planning an audit?

1) — audit — should be —?

2) How — —- is —?

3) — should the audit — be —?

Answer 8

1) What audit procedures should be performed?

2) How much evidence is needed?

3) When should the audit procedures be performed?

Question 9

What is audit program?

Answer 9

• It details the auditor’s plan to gather, evaluate, and document evidence

Question 10

What is audit program?

• It — the auditor’s — to —, —, and — —

Answer 10

• It details the auditor’s plan to gather, evaluate, and document evidence

Question 11

It details the auditor’s plan to gather, evaluate, and document evidence

Answer 11

Audit program

Question 12

What are the cores of the audit?

Answer 12

• The evidence-gathering process and evidence-evaluation process are the core of the audit; evidence is needed to:

1) Reduce audit risk
2) Support the opinion

Question 13

What are the cores of the audit?

• The — process and — process are the core of the audit; — is needed to:

1) Reduce — —
2) Support the —

Answer 13

• The evidence-gathering process and evidence-evaluation process are the core of the audit; evidence is needed to:

1) Reduce audit risk
2) Support the opinion

Question 14

What are the three (3) things the auditor considers when deciding which evidence to gather?

Answer 14

1) Risk associated with an account balance or other measures of performance

2) Types of evidence available

3) Reliability of alternative sources of evidence

Question 15

What are the three (3) things the auditor considers when deciding which evidence to gather?

1) — associated with an — — or other — of —

2) Types of — —

3) — of alternative — of evidence

Answer 15

1) Risk associated with an account balance or other measures of performance

2) Types of evidence available

3) Reliability of alternative sources of evidence

Question 16

What is audit evidence?

Answer 16

It is all the information used by auditors in arriving at the conclusions on which the audit opinion is based.

Auditors spend most of their time obtaining and evaluating evidence concerning the assertions contained in financial statements and reports on internal control.

Question 17

What is audit evidence?

It is all the — used by auditors in arriving at the —- on which the audit opinion is —.

Auditors spend most of their time — and — evidence concerning the — contained in financial statements and reports on — —.

Answer 17

It is all the information used by auditors in arriving at the conclusions on which the audit opinion is based.

Auditors spend most of their time obtaining and evaluating evidence concerning the assertions contained in financial statements and reports on internal control.

Question 18

It is all the information used by auditors in arriving at the conclusions on which the audit opinion is based.

Auditors spend most of their time obtaining and evaluating evidence concerning the assertions contained in financial statements and reports on internal control.

Answer 18

Audit evidence

Question 19

What may be included as audit evidence?

Answer 19

1) Includes both internally generated and external information.

2) Includes information that both may support, or contradict, management’s assertions

3) Is influenced by management actions, e.g., not producing requested documentation or not producing such documentation in a timely manner

4) Can be developed using outside experts

5) Can be obtained through other procedures the auditor normally performs (analysis of risk in deciding whether to accept or continue a client, previous year’s audit data, and quality of a company’s control system reflecting accuracy of internal processing)

Question 20

What may be included as audit evidence?

1) Includes both — generated and — information.

2) Includes — that both may —, or —, management’s —

3) Is — by management —, e.g., not producing requested documentation or not producing such documentation in a timely manner

4) Can be — using outside —-

5) Can be — through other — the auditor normally performs (analysis of — in deciding whether to — or — a client, previous year’s audit —, and — of a company’s — system reflecting accuracy of internal processing)

Answer 20

1) Includes both internally generated and external information.

2) Includes information that both may support, or contradict, management’s assertions

3) Is influenced by management actions, e.g., not producing requested documentation or not producing such documentation in a timely manner

4) Can be developed using outside experts

5) Can be obtained through other procedures the auditor normally performs (analysis of risk in deciding whether to accept or continue a client, previous year’s audit data, and quality of a company’s control system reflecting accuracy of internal processing)

Question 21

What is appropriateness?

Answer 21

It is the measure of the quality of audit evidence; that is, its relevance and its reliability in providing support for the conclusions on which the auditor’s opinion is based.

Question 22

What is appropriateness?
- It is the measure of the — of audit evidence; that is, its — and its — in providing support for the — on which the auditor’s opinion is —.

Answer 22

It is the measure of the quality of audit evidence; that is, its relevance and its reliability in providing support for the conclusions on which the auditor’s opinion is based.

Question 23

It is the measure of the quality of audit evidence; that is, its relevance and its reliability in providing support for the conclusions on which the auditor’s opinion is based.

Answer 23

Appropriateness

Question 24

What is sufficiency?

Answer 24

It is the measure of the quantity of audit evidence. The quantity of the audit evidence needed is affected by the auditor’s assessment of the risks of material misstatement and also by the quality of such audit evidence.

Question 25

What is sufficiency?
- It is the measure of the — of audit evidence. The — of the audit evidence — is affected by the auditor’s — of the — of material misstatement and also by the — of such audit evidence.

Answer 25

It is the measure of the quantity of audit evidence. The quantity of the audit evidence needed is affected by the auditor’s assessment of the risks of material misstatement and also by the quality of such audit evidence.

Question 26

It is the measure of the quantity of audit evidence. The quantity of the audit evidence needed is affected by the auditor’s assessment of the risks of material misstatement and also by the quality of such audit evidence.

Answer 26

Sufficiency

Question 27

What are the four (4) sources of evidence when performing an audit?

Answer 27

What are the four (4) sources of evidence when performing an audit?
- That assurance is gained through the gathering of evidence related to:

1) Knowledge of the client, its business, and its industry – gathered from previous audit work, client risk analysis, and client acceptance analysis

2) Outside information – gathered by the audit team itself using market data or through independent analyses by specialists

3) Accounting systems – gathered through direct tests of account balances and transactions, along with analytical analysis

4) The quality of internal control – gathered through an evaluation of the design of internal controls and the operation of those controls

Question 28

What are the four (4) sources of evidence when performing an audit?
- That — is gained through the — of evidence related to:

1) — of the —, its —, and its — – gathered from — audit —, client — —-, and client —- analysis

2) — information – gathered by the — team itself using — data or through independent — by —

3) Accounting — – gathered through direct — of — — and —, along with —- analysis

4) The — of internal — – gathered through an — of the — of internal — and the — of those —

Answer 28

What are the four (4) sources of evidence when performing an audit?
- That assurance is gained through the gathering of evidence related to:

1) Knowledge of the client, its business, and its industry – gathered from previous audit work, client risk analysis, and client acceptance analysis

2) Outside information – gathered by the audit team itself using market data or through independent analyses by specialists

3) Accounting systems – gathered through direct tests of account balances and transactions, along with analytical analysis

4) The quality of internal control – gathered through an evaluation of the design of internal controls and the operation of those controls

Question 29

Explain assertion model for financial statements audits.

Answer 29

The auditor gathers evidence to evaluate the management assertions embodied in the financial statements and individual accounts

Question 30

Explain assertion model for financial statements audits.

• The auditor — —- to — the management —- embodied in the financial statements and — accounts

Answer 30

The auditor gathers evidence to evaluate the management assertions embodied in the financial statements and individual accounts

Question 31

Explain the economics of gathering appropriate, sufficient evidence

Answer 31

Explain the economics of gathering appropriate, sufficient evidence
- Because each audit is unique, there is no set amount or type of evidence that must be gathered.

Question 32

Explain the economics of gathering appropriate, sufficient evidence

• Because each audit is —, there is — set amount or — of evidence that must be gathered.

Answer 32

Explain the economics of gathering appropriate, sufficient evidence
- Because each audit is unique, there is no set amount or type of evidence that must be gathered.

Question 33

What are the five (5) factors the auditor needs to evaluate when considering the best approach to gather evidence?

Answer 33

When considering the best approach to gather evidence, the auditor needs to consider factors affecting the reliability of the financial data:

1) Management integrity
2) Client economic risk
3) Quality of client’s information system
4) Client’s internal controls
5) Current market conditions and competitor actions

Question 34

What are the five (5) factors the auditor needs to evaluate when considering the best approach to gather evidence?
- When considering the — approach to — evidence, the auditor needs to consider — affecting the — of the financial data:

1) Management —
2) Client — —
3) — of client’s — system
4) —- internal —
5) — market — and competitor —

Answer 34

When considering the best approach to gather evidence, the auditor needs to consider factors affecting the reliability of the financial data:

1) Management integrity
2) Client economic risk
3) Quality of client’s information system
4) Client’s internal controls
5) Current market conditions and competitor actions

Question 35

What are the four (4) steps in the overall audit process?

Answer 35

1) Understand the client and industry
2) Assess environment risk
3) Test details of transactions and/or account balances
4) Assess adequacy of evidence

Question 36

What are the four (4) steps in the overall audit process?

1) — the client and —
2) — — risk
3) — — of — and/or — —
4) — adequacy of —-

Answer 36

1) Understand the client and industry
2) Assess environment risk
3) Test details of transactions and/or account balances
4) Assess adequacy of evidence

Question 37

What is relevance in the context of auditing?

Answer 37

• It deals with the logical connection with, or bearing on, the purpose of the audit procedure as related to the underlying assertion being tested.

Question 38

What is relevance in the context of auditing?

• It deals with the — — with, or bearing on, the — of the audit procedure as — to the underlying — being tested.

Answer 38

What is relevance in the context of auditing?
- It deals with the logical connection with, or bearing on, the purpose of the audit procedure as related to the underlying assertion being tested.

Question 39

It deals with the logical connection with, or bearing on, the purpose of the audit procedure as related to the underlying assertion being tested.

Answer 39

Relevance

Question 40

What is direct evidence?

Answer 40

It is evidence that is directly relevant to the assertion

Question 41

What is direct evidence?

• It is evidence that is — relevant to the assertion

Answer 41

What is direct evidence?
- It is evidence that is directly relevant to the assertion

Question 42

It is evidence that is directly relevant to the assertion

Answer 42

Direct evidence

Question 43

What is indirect evidence?

Answer 43

It often requires more inferences and the logic for the conclusion relies on more complex inferences

Question 44

What is indirect evidence?

It often — more —- and the logic for the conclusion relies on more — inferences

Answer 44

What is indirect evidence?
- It often requires more inferences and the logic for the conclusion relies on more complex inferences

Question 45

• It often requires more inferences and the logic for the conclusion relies on more complex inferences

Answer 45

indirect evidence