Week 5

Question 1

Assertions about classes of transactions and events for the period under audit

(income statement)

Answer 1

Occurrence

Completeness

Accuracy

Cut-off

Classification

Question 2

Occurrence

Answer 2

Transactions and events that have been recorded have occurred and pertain to the entity.

Question 3

Completeness

Answer 3

All transactions and events that should have been recorded have been recorded.

Question 4

Accuracy

Answer 4

Amounts and other data relating to recorded transactions and events have been recorded appropriately.

Question 5

Cut-off

Answer 5

Transactions and events have been recorded in the correct accounting period.

Question 6

Classification

Answer 6

Transactions and events have been recorded in the proper accounts.

Question 7

Assertions about account balances at year-end:

balance sheet

Answer 7

Existence

Rights and obligations

Completeness

Valuation and allocation

Question 8

Existence

Answer 8

Assets, liabilities and equity interests exist

Question 9

Rights and obligations

Answer 9

The entity holds or controls the rights to assets, and liabilities are the obligations of the entity.

Question 10

Completeness

Answer 10

All assets, liabilities and equity interests that should have been recorded have
been recorded.

Question 11

Valuation and allocation

Answer 11

Assets, liabilities and equity interests are included in the financial report at
allocation amounts and any resulting valuation or allocation adjustments are
appropriately recorded.

Question 12

Presentation and disclosure assertions explanation

Answer 12

Presentation and disclosure assertions relate to the disclosures themselves, not the underlying asset, liability, equity, revenue or expense items.
‘Classification and understandability’ relates to the classification of the disclosure, not whether the correct account was used for the transaction or event.

Question 13

Assertions about presentation and disclosure:

list

Answer 13

Occurrence, rights and obligations

Completeness

Classification and understandability

Accuracy and valuation

Question 14

Occurrence, rights and obligations

Answer 14

Disclosed events, transactions and other matters have occurred and pertain to the entity.

Question 15

Completeness

Answer 15

All disclosures that should have been included in the financial report have
been included.

Question 16

Classification and understandability

Answer 16

Financial information is appropriately presented and described, and disclosures are clearly expressed.

Question 17

Accuracy and valuation

Answer 17

Financial and other information are disclosed fairly and at appropriate amounts.

Question 18

Types of audit evidence

Answer 18

sufficient appropriate audit evidence

external confirmations

documentary evidence

representations

verbal evidence

computational evidence

physical evidence

electronic evidence.

Question 19

Sufficient appropriate audit evidence:

Answer 19

Auditor must gather sufficient appropriate evidence.
Sufficiency relates to quantity of evidence.
Appropriateness relates to quality of evidence.
Audit risk determines what evidence is required

Question 20

Persuasiveness of audit evidence

Answer 20

Auditor is seeking evidence to corroborate client’s recorded transactions and balances.
Greater corroboration is provided by more persuasive evidence.
Evidence types vary in persuasiveness.

Question 21

Least to most persuasive:

Answer 21

evidence generated internally by client
evidence generated externally, held by client
externally generated evidence send direct to auditor.