Inquiry and analytical evidence

Question 1

BEST / GOOD / WEAK analytical and inquiry

Answer 1

related to or GOOD if strong IC or WEAK if poor IC. Inquiry informally or more formal

Question 2

inquiry

Answer 2

inquiry consists of seeking appropriate information of knowledgeable persons within or outside the entity.

Question 3

degree reliability inquiry

Answer 3

depends on objectivity and knowledge of respondent. A response of a person within the entity usually requires (independent) corroboration

Question 3

inquiry - planning

Answer 3

• inquire management
• RMM (due to fraud)
• material errors last year

Question 4

inquiry - evidence

Answer 4

• staggered interviews
• multiple informal interviews
• examine documentary data support claims interviewee
• corroborate

Question 4

analytical procedures

Answer 4

the diagnostic process of identifying and determining the cause of unexpected fluctuations in account balances and financial ratio’s (expectation modelling)

Question 5

examples analytical procedures

Answer 5

• comparative
• ratio analysis
• cash flow analysis
• NFP indicators (non financial performance)
• benchmarking with competitors

Question 6

analytical procedures steps

Answer 6

• planning (required)
• substantive procedures (choice)
• review at end of audit (required)

Question 7

client response

Answer 7

• reasonable given business
• cover magnitude of the discrepancy
• suggest a non-error cause (falsification)

Question 8

metacognition divergent

Answer 8

generate explanation for unusual evidence

Question 9

metacognition convergent

Answer 9

evaluate generated explanations