Question 1

Which of the following are audit procedures used by the auditor to gather evidence?
A)anecdotal procedures
B)inspection
C)analysis
D)investigation
E)confirmation
F)both A and C
G)both B and E

Accepted Answer

Inspection and confirmation are both audit procedures used by auditors to gather evidence. Anecdotal procedures and investigation are not commonly used as formal audit procedures. Analysis may be used as a supporting procedure but is not a standalone procedure used solely to gather evidence. Therefore, options A, C, and F are incorrect.

Question 2

During which stage(s)of the audit are auditors required to perform analytical procedures?
A)Planning stage
B)Testing stage
C)Evaluation stage
D)Final stage
E)Reporting stage
F)both A and D
G)both B and E

Accepted Answer

Auditors are required to perform analytical procedures during the planning stage to assess the risk of material misstatement and to determine the nature, timing, and extent of further audit procedures. They are also required to perform analytical procedures during the final stage to evaluate the overall financial statement presentation and to assess whether the financial statements are consistent with the auditor's knowledge of the entity.

Question 3

In documenting the nature,timing,and extent of audit procedures,the auditor only has to indicate the date the work was reviewed and who performed the audit work.

Accepted Answer

The auditor must document the nature, timing, and extent of audit procedures performed, as well as the results of those procedures. This includes identifying who performed the audit work, when it was performed, and any conclusions reached. The date the work was reviewed is not sufficient documentation.

Question 4

Which of the following is a type of analytical procedure?
A)scanning
B)observation
C)inquiry
D)reperformance

Accepted Answer

Scanning is a type of analytical procedure used in auditing to review accounting data to identify significant or unusual items to test.

Question 5

The auditor's assessment of fraud is part of his or her assessment of the risk of material misstatement and has an impact on the evidence gathered by the audit.

Accepted Answer

The auditor's assessment of fraud is an important part of their overall assessment of the risk of material misstatement. This assessment can impact the nature, timing, and extent of the evidence gathered during the audit. A higher risk of fraud may lead the auditor to gather more evidence or use more specialized techniques to address those risks. It is important for auditors to consider the risk of fraud in every audit engagement, as it can have a significant impact on the audit's effectiveness and the quality of its conclusions.

Question 6

Which of the following are audit procedures used by the auditor to gather evidence?
A)anecdotal procedures
B)interpretation
C)observation
D)investigation
E)confirmation
F)both A and B
G)both C and D
H)Both C and E

Accepted Answer

Observation and confirmation are commonly used audit procedures to gather evidence. Anecdotal procedures may not provide sufficient and reliable evidence, while interpretation is a subjective process and not a direct method of gathering evidence. Investigation may be used in certain situations but is not a primary audit procedure. Thus, the best choice is H, which includes both observation and confirmation as audit procedures used by auditors to gather evidence.

Question 7

The auditing standards describe audit evidence as the "information used by the auditor in arriving at the conclusions on which the auditor's opinion is based."

Accepted Answer

This is a correct definition of audit evidence per the auditing standards.

Question 8

The auditor may consider withdrawing from the engagement if there is a significant risk of material misstatement in the financial statements.

Accepted Answer

If there is a significant risk of material misstatement in the financial statements, it may impact the auditor's ability to issue an opinion, and the auditor may need to withdraw from the engagement to avoid association with misleading financial statements.

Question 9

If the auditor's evidence fails to support an assertion,the auditor then proposes an adjusting entry or modifies the financial statement disclosures so that the financial statements are consistent with the assertion.

Accepted Answer

If the auditor's evidence fails to support an assertion, they should propose an adjusting entry or modify the financial statement disclosures so that the financial statements are consistent with the assertion. This is in accordance with generally accepted auditing standards (GAAS).

Question 10

The auditor is responsible for gathering evidence to determine that there are no material errors in the financial statements.

Accepted Answer

The answer of The auditor is responsible for gathering evidence...

Question 11

The auditor performs analytical procedures to identify changes in the financial statements in the current year compared to the prior year that are
A)inconsistent with the expectations of management
B)inconsistent with other information known to the auditor
C)represent larger fluctuations than the auditor might expect
D)consistent with the prior year
E)inconsistent with the footnotes on subsequent events
F)both A and B
G)both B and C

Accepted Answer

Analytical procedures aim to identify significant changes or fluctuations in financial statement items that are inconsistent with the auditor's expectations based on their understanding of the client's business and the industry in which they operate. Choices B and C accurately describe the purpose of these procedures.

Question 12

When the auditor performs analytical procedures
A)he evaluates the financial statements in the prior year by analyzing relationships between both financial and nonfinancial data.
B)he evaluates the financial statements in the current year by analyzing relationships between both financial and nonfinancial data.
C)he reviews the financial statements in the prior year by evaluating relationships between both financial and nonfinancial data.
D)he reviews the financial statements in the current year by evaluating relationships between both financial and nonfinancial data.

Accepted Answer

Analytical procedures involve evaluating financial information by analyzing the relationships between both financial and nonfinancial data. This is typically done for the current year's financial statements to identify any areas that may need further investigation or to provide assurance on the financial information.

Question 13

Which of the following are audit procedures used by the auditor to gather evidence?
A)analytical procedures
B)interpretation
C)observation
D)investigation
E)communication
F)both A and C
G)both D and E

Accepted Answer

Analytical procedures and observation are both audit procedures used by the auditor to gather evidence. Interpretation, investigation, and communication are important aspects of the audit process but are not specifically audit procedures used to gather evidence. Therefore, choices A and C are correct while choices B, D, E, and G are incorrect.

Question 14

Vouching is a relevant procedure for obtaining evidence about the completeness assertion.

Accepted Answer

Vouching is primarily concerned with testing the existence and occurrence assertions by examining supporting documents to verify that transactions have actually occurred and are recorded accurately, rather than focusing on the completeness assertion, which is more about ensuring all transactions that should have been recorded have been.

Question 15

Which of the following are audit procedures used by the auditor to gather evidence?
A)anecdotal procedures
B)inspection
C)analysis
D)inquiry
E)communication
F)both A and C
G)both B and D

Accepted Answer

Inspection and inquiry are the audit procedures used by the auditor to gather evidence. Anecdotal procedures and analysis are not specific audit procedures. Communication is a broad term and may include all audit procedures. Therefore, G is the best choice as it correctly identifies the audit procedures used by the auditor to gather evidence.

Question 16

The auditing standards require the auditor to control the risk of material misstatement due to fraud to an acceptably low level.

Accepted Answer

The auditing standards require the auditor to assess the risk of material misstatement due to fraud and implement procedures to control that risk to an acceptably low level.

Question 17

The management of a company has a unique ability to perpetrate fraud because often internal controls only apply to transactions that occur frequently in a company,such as estimation transactions initiated by management.

Accepted Answer

Management fraud can occur in various aspects, not just in frequent transactions or estimations. It can also involve overriding existing internal controls, making it possible to perpetrate fraud in areas beyond just those transactions that occur frequently.

Question 18

Which of the following are audit procedures used by the auditor to gather evidence?
A)analytical procedures
B)interpretation
C)analysis
D)inquiry
E)communication
F)both A and D
G)both B and C

Accepted Answer

Analytical procedures involve analyzing trends or ratios in financial data, while inquiry involves asking questions of company personnel. Both of these are commonly used audit procedures to gather evidence. Interpretation, analysis, and communication are not specific audit procedures used to gather evidence.

Question 19

The nature of evidence refers to the purpose of the evidence (internal control test or substantive test)and the specific audit procedure used to gather the evidence (inspection,observation,inquiry,confirmation,recalculation,reperformance,or analytical procedure).

Accepted Answer

The statement accurately defines the nature of evidence in an audit.

Question 20

Evidence is important to the audit because the only way the auditor can obtain reasonable assurance that the financial statements are prepared in accordance with the applicable financial reporting framework is
A)when the auditor has sufficient appropriate evidence to reduce the risk of material misstatement to an acceptably low level
B)when the auditor has sufficient appropriate evidence to provide reasonable assurance that the financial statements are fairly presented
C)when the auditor has sufficient appropriate evidence to reduce audit risk to an acceptably low level
D)when the auditor has sufficient appropriate evidence to reduce detection risk to an acceptably low level

Accepted Answer

The answer of Evidence is important to the audit because...

Quiz 5: Audit Evidence and the Auditors Responsibility for Fraud Detection

Which of the following are audit procedures used by the auditor to gather evidence?

During which stage(s) of the audit are auditors required to perform analytical procedures?

In documenting the nature,timing,and extent of audit procedures,the auditor only has to indicate the date the work was reviewed and who performed the audit work.

Which of the following is a type of analytical procedure?

The auditor's assessment of fraud is part of his or her assessment of the risk of material misstatement and has an impact on the evidence gathered by the audit.

Which of the following are audit procedures used by the auditor to gather evidence?

The auditing standards describe audit evidence as the "information used by the auditor in arriving at the conclusions on which the auditor's opinion is based."

The auditor may consider withdrawing from the engagement if there is a significant risk of material misstatement in the financial statements.

If the auditor's evidence fails to support an assertion,the auditor then proposes an adjusting entry or modifies the financial statement disclosures so that the financial statements are consistent with the assertion.

The auditor is responsible for gathering evidence to determine that there are no material errors in the financial statements.

The auditor performs analytical procedures to identify changes in the financial statements in the current year compared to the prior year that are

When the auditor performs analytical procedures

Which of the following are audit procedures used by the auditor to gather evidence?

Vouching is a relevant procedure for obtaining evidence about the completeness assertion.

Which of the following are audit procedures used by the auditor to gather evidence?

The auditing standards require the auditor to control the risk of material misstatement due to fraud to an acceptably low level.

The management of a company has a unique ability to perpetrate fraud because often internal controls only apply to transactions that occur frequently in a company,such as estimation transactions initiated by management.

Which of the following are audit procedures used by the auditor to gather evidence?

The nature of evidence refers to the purpose of the evidence (internal control test or substantive test)and the specific audit procedure used to gather the evidence (inspection,observation,inquiry,confirmation,recalculation,reperformance,or analytical procedure).

Evidence is important to the audit because the only way the auditor can obtain reasonable assurance that the financial statements are prepared in accordance with the applicable financial reporting framework is