AUDIT EVIDENCE
1. Of the following, which is the least persuasive type of audit evidence? a) Bank statements obtained from the client b) Documents obtained by auditor from third parties directly. c) Carbon copies of sales invoices inspected by the auditor d) Computations made by the auditor
2. Which of the following statements is, generally, correct about the reliability of audit evidence? a) To be reliable, evidence should conclusive rather than persuasive b) Effective internal control system provides reliable audit evidence c) Evidence obtained from outside sources routed through the client d) All are correct.
3. In an audit of financial statements, substantive tests are audit procedures that __ a) may be eliminated for an account balance under certain conditions b) are designed to discover significant subsequent events c) will increase proportionately when the auditor decreases the assessed level of control risk d) may be test of transactions, test of balance and analytical procedures
4. The nature, timing and extent of substantive procedures is related to assessed level of control risk a) randomly b) disproportionately c) directly d) inversely
5. Which of the following factors is most important in determining the appropriations of audit evidence? a) The reliability of audit evidence and its relevance in meeting the audit objective b) The objectivity and integrity of the auditor c) The quantity of audit evidence d) The independence of the source of evidence
6. When is evidential matter, generally, considered sufficient? a) When it constitutes entire population b) When it is enough to provide a basis for giving reasonable assurance regarding truthfulness c) When it is objective and relevant d) When auditor collects and evaluates it independently
7. Which of the following is not a corroborative evidence? a) Minutes of meetings b) Confirmations from debtors c) Information gathered by auditor through observation d) Worksheet supporting consolidated financial statements
8. Which of the following statements is not true with respect to management representations obtained as per AAS11? a) Authenticated copy of relevant minutes of meetings may be regarded as management representation b) It should always be in working c) It may be dated prior to the report date d) It should be addressed to the auditor
9. What would most appropriately describe the risk of incorrect rejection in terms of substantive testing? a) The auditor concludes balance is materially correct when in actual fact it is not b) The auditor concludes that the balance is materially misstated when in actual fact it not c) The auditor has rejected an item for sample which was material d) None of the above
10.Which of the following affects audit effectiveness? a) Risk of over reliance b) Risk of incorrect rejection c) Risk of incorrect acceptance d) Both (a) and (c)
11.What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing? a) The auditor has ascertained that the balance is materially correct when in actual fact it is not b) The auditor concludes the balance is materially misstated when in actual fact is not c) The auditor has rejected an item from sample which was not supported by documentary evidence d) He applies random sampling on data which is inaccurate and inconsistent