Chap9 theory

Question 1

ISA 501

Auditor required to obtain sufficient appropriate evidence re - 3

Answer 1

1 LITIGATION & CLAIMS- completeness of
Inspect legal exp a/c
Review mins of board meetings
Enquire management & in-house legal team
2 INVENTORY- existence & condition

Attend inventory count- 
Evaluate management instructions
Observe count procedures 
Perform test counts
Inspect inventory

• perform procedures on final inventory records to ensure they reflect actual count results

3 presentation & disclosure of segmental info

Question 2

Sufficient evidence
- define
Affected by?

Answer 2

= Quantity
A needs enough evidence

Affected by:
Risk & materiality of balances
Quality of evidence

Question 3

Appropriate evidence means?

Answer 3

1RELEVANT to fs assertion being tested

2 RELIABLE

Indep ext generated

Written
Original
Obtained directly by auditor
Effective controls improve reliability of E

Question 4

1 audit procedures are designed to…
2 evidence gathered must be s& approp to…

3 if @ review stage senior audit staff….

Answer 4

Assessment of risk @ planning stage

Reduce assessed risk to acceptable level

Deem risk of misstatement not reduced to acceptable level, more evidence will be required