Ch 7 - Audit Evidence Flashcards
any information used by the auditor to determine whether the information being audited is stated in accordance with the established criteria
Evidence
Four Decisions about what evidence to gather and how much of it to accumulate
- Which audit procedures to use
- What sample size to select for a given procedure
- Which items to select from the population
- When to perform the procedures
the detailed instruction that explains the audit evidence to be obtained during the audit.
audit procedure
The decision of how many items to test must be made by the auditor for each audit procedure. The sample size is likely to (vary or stay the same) from audit to audit, depending on client characteristics such as the extent of automated controls and the required level of assurance from the procedure.
vary
The SEC currently requires that all public companies file audited financial statements with the SEC within _____ days of the company’s fiscal year-end depending on the company’s size.
60-90
Audit procedures often incorporate which of the following into the procedure?
a) sample size
b) items to select
c) timing
d) all of the above
d) all of the above
the list of audit procedures for an audit area or an entire audit
audit program
What does the audit program always include?
a list of the audit procedures
What three things does the audit program usually include?
1) sample size
2) items to select
3) the timing of the tests
By combining all evidence from the entire audit, the auditor is able to decide when he or she is __________ to issue an audit report
persuaded
What are two determinants of persuasiveness (both must be met)?
- appropriateness
* sufficiency
A measure of the quality of evidence, meaning its relevance and reliability in meeting audit objectives for classes of transactions, account balances and related disclosures.
Appropriateness of evidence
Appropriateness can be improved by a larger sample size or by different population items.
1) True
2) False
2) False
Evidence must pertain to or be _____ to the audit objective that the auditor is testing before it can be appropriate.
relevant
Refers to the degree to which evidence can be believable or worthy of trust.
reliability
What are six characteristics of reliable evidence?
- Auditor’s direct knowledge
- Degree of objectivity
- Effectiveness of client’s internal controls
- Qualifications of individuals providing the information
- Independence of provider
- Timeliness
Sufficiency of evidence is affected by what two things?
1) adequate sample size
2) selection of proper population items
What are two factors that determine appropriate sample sizes in audits?
- auditor’s expectations of misstatements
2. the effectiveness of the client’s internal controls (bad internal control → increase sample size)
In making decision about evidence for a given audit, both _____and _____ must be considered.
persuasiveness and cost
What are eight types of audit evidence?
- Physical Examination
- Inspection
- Confirmation
- Analytical procedures
- Recalculation
- Reperformance
- Inquiries of the client
- Observation
(PICARRIO)
Physical examination is the inspection or count of _____ _____.
tangible assets
If the object being examined, such as a sales invoice, has no inherent value, the evidence is called _____.
documentation
Receipt of a direct written response from a third party verifying the accuracy of information that was requested by the auditor
Confirmation