M5-Sufficient Appropriate Audit Evidence

Question 1

Confirmations are among the most reliable types of evidence, as they constitute external evidence sent directly to the auditor. (true or false)

Answer 1

true

Question 2

The auditor’s direct personal knowledge (obtained through observation, examination, inspection, or recalculation) is one of the most reliable forms of evidence. (true or false)

Answer 2

true

Question 3

Evidence obtained directly by the accountant (e.g., through physical examination) provides more persuasive evidence than evidence obtained through inquiry, discussion, or analytical procedures, and therefore reduces attestation risk. (true or false)

Answer 3

true

Question 4

External evidence received by the auditor is considered to be highly reliable and valid. (true or false)

Answer 4

true

Question 5

Audit evidence obtained from independent sources outside of the entity is more reliable. (true or false)

Answer 5

true

Question 6

Reliability of audit evidence is enhanced by a satisfactory internal control structure. (true or false)

Answer 6

true

Question 7

In the great majority of cases, the auditor finds it necessary to rely on evidence that is persuasive rather than conclusive. (true or false)

Answer 7

true

Question 8

The measure of the sufficiency of audit evidence lies in the auditor’s judgment. (true or false)

Answer 8

true

Question 9

The concept of cost-benefit is embodied in the auditor’s opinion which, to be economically useful, is formed within reasonable time and based on evidence obtained at a reasonable cost. The cost-benefit concept, however, bears no relationship to the reliability of audit evidence. (true or false)

Answer 9

true

Question 10

The auditor uses tests of controls to evaluate control risk. In situations where there are a number of significant deficiencies in the operation of the client’s internal controls, the auditor would increase the assessment of control risk (and the risk of material misstatement) and revise substantive testing accordingly (for example, by increasing the extent of substantive tests). (true or false)

Answer 10

true

Question 11

The auditor uses their professional judgment to evaluate the sufficiency and appropriateness of audit evidence. (true or false)

Answer 11

true