Chap 7 Persuasiveness of evidence Flashcards
T/F If an auditor counts inventory, that evidence is not more reliable than if management gives the auditor its own count amounts
F
The characteristic of reliability and therefore appropriateness Auditor’s direct knowledger” says what?
evidence obtained directly thorugh physical examination, observation, recalculation, and inspection more reliable than info obtained indirectly
if evidence is considered reliable , it is a great help in persuading the auditor that what?
the FSs are fairly stated
T/F evidence does not need to pertain to or be relevant to the audit objective that the auditor is testing before it can be appropriate
F it does need to pertain to or be relevant to the audit objective being tested.
Can appropriateness be improved by selecting a larger sample size or different populations items? why or why not?
No. it can only be improved by selecting audit procedures that are more relevant or provide more reliable evidence
letter written by attorney discussing liekly outcome of outstanding lawsuit is objective/subjective evidence?
subjective
the persuasiveness and cost of all ______ should be considered before selectging the best type of types of evidence
alternatives
confirmation of A/R and bank balances are considered objective/subjective evidence?
objective
appropriateness of evidence is a measure of the quality of evidence, meaning its relevance and reliability in meeting audit objectives for classes of transactions, account balances, and related _____
disclosures
The characteristic of reliability and therefore appropriateness “qualifications of individuals providing the info” says what?
even if independent, the evidence is not reliable unless the individual providing it is qualified to do so
a measure of the quality of evidence, meaning its relevance and reliability in meeting audit objectives for classes of transactions, account balances, and related disclosures. This is known as what?
appropriateness of evidence
evidence for I/S account is more reliable if obtained when?
sample from entire period not just part of period
regarding the items selected from the population, what is considered sufficient? (3)
- samples containing populations items with large dollar values
- items with a high likelyhood of miststatement
- items that are representative of the population
TF/ Most evidence is relevant for more than one, but not all, audit objectives
T
by combining all evidence from the entire audit, the auditor is able to decide when she is persuaded to do what?
issue an audit report
a large sample of evidence provided by an independent party is not persuasive unless it is what?
relevant to the audit objective being tested
appropriatenes of evidence deals only with the ____ ______ selected
audit procedures
what are the 2 determinants of the persuasiveness of evidence?
- appropriateness 2. sufficiency
appropriateness of evidence is a measure of the quality of evidence, meaning its relevance and reliability in meeting audit objectives for classes of transactions, account _____ , and related disclosures
balances
the quantity of evidence obtained determines its ?
sufficiency
The characteristic of reliability and therefore appropriateness “timeliness” says what?
timeliness of audit eveidence refers to either when the evidence is accumulated or to the period covered by the audit
appropriateness of evidence is a measure of the ____ of evidence, meaning its relevance and reliability in meeting audit objectives for classes of transactions, account balances, and related disclosures
quality
depending on the audit objective, sufficiency of evidence is measured primarily either of what 2 things?
- the sample size 2. the number and quality of procedures performed to meet the audit objective
what is appropriateness of evidence?
a measure of the quality of evidence, meaning its relevance and reliability in meeting audit objectives for classes of transactions, account balances, and related disclosures
relevance of evidence can be considered only in terms of _____ audit objectivies. why?
specific. because evidence may be relevant for one audit objective but not for a different one
appropriateness of evidence is a measure of the quality of evidence, meaning its relevance and reliability in meeting audit ____ for classes of transactions, account balances, and related disclosures
objectives
appropriateness of evidence is a measure of the quality of evidence, meaning its relevance and reliability in meeting audit objectives for classes of _____, account balances, and related disclosures
transactions
T/F a large sample of evidence that is relevant but not objective is persuasive
F since not objective means not reliable
The auditors goal is to obtain a sufficient amount of appropriate evidence at the lowest possible total ____
cost
audit standards require the auditor to accumulate what?
sufficient appropriate evidence to support the opinion issued
appropriateness of evidence is a measure of the quality of evidence, meaning its _____ and reliability in meeting audit objectives for classes of transactions, account balances, and related disclosures
relevance
The characteristic of reliability and therefore appropriateness “degree of objectivitiy” says what?
objective evidence is more reliable than evidence that requires considerable judgement to determine whether it is correct
the degree to which evidence can be believable or worthy of trust is called?
the reliability of evidence
the _____ of evidence obtained determines its sufficiency
quantity
if evidence is highly appropriate, it is a great help in persuading the auditor that what?
the FSs are fairly stated
What are the 2 most important factors that determine the appropriate sample size in audits?
- auditors expectations of misstatements 2. effectiveness of the clients internal controls
T/F Individual items tested don’t affect the sufficiency of the evidence
F
T/F most auditors conider samples insufficient that contain only the largest dollar items from a population, unless these items make up a large portion of the total population amount
T
_____ of evidence is a measure of the quality of evidence, meaning its relevance and reliability in meeting audit objectives for classes of transactions, account balances, and related disclosures
appropriateness
audit standards require the auditor to accumulate sufficient appropriate evidence to do what?
support the opinion issued
The characteristic of reliability and therefore appropriateness “effectiveness of client’s internal controlsr” says what?
when more effective , evidence obtained is more reliable
Evidence obtained directly by the auditor may not be reliable if what?
the auditor lacks the qualifications to evaluate the evidence
Reliability and therefore approprateness, depends on what 6 characteristics of reliable evidence?
- Independence of provider-evidence obtained from a source outside the entity is more reliable than that obtained within
- effectiveness of client’s internal controls- when more effective , evidence obtained is more reliable
- Auditor’s direct knowledge- evidence obtained directly thorugh physical examination, observation, recalculation, and inspection more reliable than info obtained indirectly
- qualifications of individuals providing the info- even if independent, the evidence is not reliable unless the individual providing it is qualified to do so
- degree of objectivitiy- objective evidence is more reliable than evidence that requires considerable judgement to determine whether it is correct ex. confirmation of A/R and bank balances more objective where as letter written by attorney discussing liekly outcome of outstanding lawsuit is subjective
- timeliness- timeliness of audit eveidence refers to either when the evidence is accumulated or to the period covered by the audit ex. evidence in blance sheet more reliable if obtained as close to B/S date as possible. ex. evidence for I/S account is more reliable when sample from entire period not just part of period
evidence for B/S is more reliable if obtained when?
as close to B/S date as possible.
The persuasiveness of evidence can be evaluated only aftger considering the combination of what 2 things in addition to the effects of the factors influencing these two things ?
appropriateness sufficiency
The characteristic of reliability and therefore appropriateness “Independence of provider” says what?
evidence obtained from a source outside the entity is more reliable than that obtained within
in making decisions about evidence for a given audit, what 2 things must be considered?
persuasiveness cost
appropriateness of evidence is a measure of the quality of evidence, meaning its relevance and _____ in meeting audit objectives for classes of transactions, account balances, and related disclosures
reliability
an auditor is unlikely to be completely convinced that the opinion is correct because of what two things?
- the nature of audit evidence 2. the cost considerations of doing an audit
even though the auditor is unlikely to be completely convinced that the opinion is correct , the auditor must be persuaded that the opinion is what?
correct with a high level of assurance
What does the reliablility of evidence refer to ?
the degree to which evidence can be believable or worthy of trust
