Questions 1 and 2 were taken directly from the text and I am aware that the answers are available through an internet search. I want to remind you that searching the internet for the answers and using those answers is a violation of UMUC academic integrity policies. In addition, using any outside source without citation is plagiarism. However, just gaining access to the answers will not satisfy the homework assignment because I have added the requirement that you explain your answers, which cannot be found on the internet and needs to be reasoned out from the material in the chapter. In grading, I will place more emphasis you explanation than your selection of the correct alternative.
1) The following are several multiple choice questions adapted from the CPA exam that concern the persuasiveness of evidence. For each question, selected the best answer and then explain why it is better than all the alternatives. Your explanations should address all the possible alternatives presented in the question.
- Which of the following types of documentary evidence should the auditor considered to be the most reliable and why?
- A sales invoice issued by the client and supported by a delivery receipt from an outside trucker.
- Confirmation of an account payable balance mailed by and returned directly to the auditor.
iii) A check, issued by the company and bearing the payee’s endorsement, that is included with the bank statements mailed directly to the auditor.
- An audit schedule prepared by the client’s controller and reviewed by the client’s treasurer.
Answer:
Explanation:
- Which of the following statements concerning audit evidence is true?
- To be appropriate, audit evidence should be either persuasive or relevant, but need not be reliable.
- The measure of the quantity and quality of audit evidence lies in the auditor’s judgment.
iii) The difficulty and expense of obtaining audit evidence concerning an account balance is a valid basis for omitting the test.
- A client’s accounting records can be sufficient audit evidence to support the financial statements.
Answer:
Explanation:
- Audit evidence can come in different forms with different degrees of persuasiveness. Which of the following is the least persuasive type of evidence?
- Vendor’s invoice
- Bank statement obtained from the client
iii) Computations made by the auditor
- Prenumbered sales invoices
Answer:
Explanation:
- Which of the following presumptions is correct about the reliability of audit evidence?
- Information obtained indirectly from outside sources is the most reliable audit evidence.
- To be reliable, audit evidence should be convincing rather than merely persuasive.
iii) Reliability of audit evidence refers to the amount of corroborative evidence obtained.
- Effective internal control provides more assurance about the reliability of audit evidence.
Answer:
Explanation:
2) The following questions that were adapted from the CPA exam concern audit documentation. For each question, selected the best answer and then explain why it is better than all the alternatives. Your explanations should address all the possible alternatives presented in the question.
- Which of the following is not a primary purpose of audit documentation?
- To coordinate the audit.
- To assist in preparation of the audit report.
iii) To support the financial statements.
- To provide evidence of the audit work performed.
Answer:
Explanation:
- During an audit engagement, pertinent data are compiled and included in the audit files. The audit files primarily are considered to be
- a client-owned record of conclusions reached by the auditors who performed the engagement.
- evidence supporting financial statements.
iii) support for the auditor’s representations as to compliance with auditing standards.
- a record to be used as a basis for the following year’s engagement.
Answer:
Explanation:
3) The following audit procedures were performed in the audit of inventory to satisfy specific balance-related audit objectives as discussed in Chapter 6. The audit procedures assume that the auditor has obtained the inventory count sheets that list the client’s inventory. For each audit procedure, identify what type of evidence it is and what balance-related audit objective(s) it meets. Explain you selection of audit objective(s). Some procedures may meet more than one objective.
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