Evidence and reporting

Question 1

What types of test are carried out to collect evidence?

Answer 1

Test controls
Substantive procedures - tests of detail and substantive analytical procedures

Question 2

What is tested if controls are strong?

Answer 2

Reduce level of substantive testing and place greater reliance on internal controls

Question 3

What is tested if controls are weak?

Answer 3

More detailed testing required

Question 4

What is sufficient and appropriate?

Answer 4

Sufficient - quantity
Appropriate - quality relevant and reliable

Question 5

Evidence gathering procedures

Answer 5

Analytical procedures
Enquiry
Inspection
Observation
recalcUlation
reperformance
confirmation

Question 6

Assertions about classes of transactions (SPL)

Answer 6

Occurrence, Completeness, Accuracy, Cut-off, Classification, Presentation

Question 7

Assertions about account balances (SFP)

Answer 7

Existence, Rights and obligations, Completeness, Valuation, Accuracy and allocation, Classification, Presentation
(CRAVE)

Question 8

Is an unqualified report good or bad?

Answer 8

Good

Question 9

What is included in the report by exception?

Answer 9

Included if it has NOT happened
Adequate accounting records
FS in agreement with accounting records
Information and explanation received
All time access to books
Details of director’s emoluments and benefits

Question 10

What should the audit report include?

Answer 10

Title
Addressee
Auditor’s opinion
Basis for opinion
Conclusion for going concern
Our approach to the audit - key audit matters and explanation
Our application of materiality
Other info - chairperson’s report etc
Opinion on other matters
Matters to report by exception
Responsibilities of directors
Auditor’s responsibilities
Name and signature of partner
Auditors address
Date

Question 11

Expectation gap examples

Answer 11

Misunderstanding of:
nature of audited FS
type and extent of work done
level of assurance provided