Section 4: Audit Evidence

Question 1

AU-C 500

Answer 1

Auditor is reqired to design and perform audit procedures that are appropriate in the circumstances for the purpose of obtaining sufficient appropriate audit evidence

Question 2

Sufficient Audit Evidence

Answer 2

• relates to the extent of testing
• Quantity of evidence obatined
• Must rely on evidence that is persuasive rather than conclusive
• Concerned with the cost/benefit tradeoff

Question 3

Appropriate Audit Evidence

Answer 3

• Quality of audit evidence
  
  • Relevant
  • Reliable/Faithful Representation
    
    • Most Reliable - Directly obtained by auditor
    • Obtained from outsider (bank confirmation)
    • Prepared by outsider but obtained from client (bank statement)
    • Least Reliable - Prepared by client

Question 4

Management Assertions

COCA-CURVE

Answer 4

• Completeness
• Occurrence
• Cutoff
• Accuracy
• Classification
• Understandability
• Rights and Obligations
• Valuation and Allocation
• Existence

Question 5

Analytical Procedures that Compare

CRAFT

Answer 5

• Client v Industry
• Related Accounts
• Actual v Budget
• Financial v Non-Financial
• This Year v Prior Year

Question 6

Management Assertions

Classes of Transactions and Events

CPA-CO

Answer 6

• Completeness
• Period Cutoff
• Accuracy
• Classification
• Occurrence

Question 7

Management Assertions

Account Balances at YE

RACE

Answer 7

• Rights and Obligations
• Allocation and Valuation
• Completeness
• Existence

Question 8

Management Assertions

Presentation and Disclosures

RACU

Answer 8

• Rights and Obligations and Occurrence
• Accuracy and Valuation
• Completeness
• Understandibility and Classifcation