Audit evidence questions

AUDIT EVIDENCE QUESTIONS

Richard Clarke Academy aCOWtancy.com


QUESTION 1
How much evidence
should be
collected?



ANSWER
‣
SUFFICIENT & APPROPRIATE
‣
to draw a reasonable conclusion
‣
on which to base an opinion



QUESTION 2
What will increase
the reliability of
evidence?



ANSWER
‣
EFFECTIVE CONTROLS
‣
External rather than internal



QUESTION 3
Specifically why
gather evidence?



ANSWER
‣
UNDERSTAND THE ENTITY
‣
Assess controls
‣
Detect misstatements



QUESTION 4
What are the 7
ways of gathering
evidence?



ANSWER
‣
Inspection
‣
Observation
‣
External conﬁrmation
‣
Re-calculation
‣
Re-performance
‣
Analytical Procedures
‣
Inquiry


QUESTION 5
What are analytical
procedures?



ANSWER
‣
Analysis of trends & expectations
‣
Expected ratios



QUESTION 6
Are analytical
procedures enough
on their own?



ANSWER
‣
No
‣
Must corroborate other evidence



QUESTION 7
When are analytical
procedures
compulsory?



ANSWER
‣
Planning (risk assessment)
‣
Review



QUESTION 8
At the planning
stage what
limitations may
there be with AP?


ANSWER
‣
Prior to year end often
‣
Draft or projected ﬁgures



QUESTION 9
Do management
representations
offer high or low
reliability?


ANSWER
‣
Low
‣
Only use if no other evidence



QUESTION 10
What should we
definitely get
management
representations on?


ANSWER
‣
They approve FS
‣
Controls are in place
‣
Misstatements are immaterial



QUESTION 11
When using experts
who has
responsibility for
their work?


ANSWER
‣
External Auditor still



QUESTION 12
What must we
consider when
using the expert?



ANSWER
‣
Competence
‣
Objectivity
‣
Scope
‣
Evidence



QUESTION 13
What must be
agreed in writing
before using the
expert?


ANSWER
‣
Objective
‣
Scope
‣
Responsibilities
‣
Communication
‣
Conﬁdentiality



QUESTION 14
What must be
considered when
the experts work is
given to us?


ANSWER
‣
Consistency with other evidence
‣
Assumptions used
‣
Source data and methods used



QUESTION 15
Is there a reference
to the expert’s
work in the audit
report?


ANSWER

‣
No



QUESTION 16
When considering
using internal
auditor’s work -
what must you
know about them?


ANSWER
‣
Status in company
‣
Scope of their work
‣
Competence
‣
Due professional care



QUESTION 17
How can the
internal audit and
their work be
reviewed?


ANSWER

‣
Have they been trained?
‣
Have they been supervised?
‣
Sufficient, appropriate evidence?



QUESTION 18
Another auditor
should be able to
do what by looking
at your working
papers?


ANSWER

‣
Re-perform the work



QUESTION 19
How can you check
if all related parties
have been
identified?


ANSWER
‣
Check management procedures
‣
Inquire of management
‣
Shareholder records
‣
Tax returns
‣
Minutes
‣
Ask other auditors


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