Chapter 7 Audit Evidence

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Auditing and Assurance Services, 14e (Arens)
Chapter 7 Audit Evidence

Learning Objective 7-1

1)There are no questions for this Learning
Objective. Answer:

Learning Objective 7-2

1)Auditors must make decisions regarding what evidence to gather and how much to
accumulate. Which of the following is a decision that must be made by auditors
related to evidence?
A)
Sample size Timing of audit procedures
Yes Yes

B)
Sample size Timing of audit procedures
No No

C)
Sample size Timing of audit procedures
Yes No

D)
Sample size Timing of audit procedures
No Yes

Answer: C
Terms: Decision to be made by auditors related to evidence
Diff: Easy
Objective: LO 7-2
AACSB: Reflective thinking skills




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2)Audit procedures are concerned with the nature, extent, and timing in gathering
audit evidence. Which, of the following, is true as to the timing of audit procedures?
A)
Prior to the fiscal year-end of Subsequent to the fiscal year -end
the client of the client
Yes Yes

B)
Prior to the fiscal year-end Subsequent to the fiscal year
of -end
the client of the client
No No

C)
Prior to the fiscal year-end Subsequent to the fiscal year
of -end
the client of the client
Yes No

D)
Prior to the fiscal year-end Subsequent to the fiscal year
of -end
the client of the client
No Yes

Answer: A
Terms: Timing of audit procedures
Diff: Easy
Objective: LO 7-2
AACSB: Reflective thinking skills

Learning Objective 7-3

1)Audit evidence has two primary qualities for the auditor; relevance and reliability.
Given the choices below which provides the auditor with the most reliable audit
evidence?
A) general ledger account balances
B) confirmation of accounts receivable balance received from a customer
C) internal memo explaining the issuance of a
credit memo D) copy of month-end adjusting
entries
Answer: B
Terms: Audit evidence qualities of relevance and reliability
Diff: Easy
Objective: LO 7-3
AACSB: Analytic skills




2
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2)Which of the following is not a characteristic of the reliability of
evidence? A) effectiveness of client internal controls
B) education of auditor
C) independence of information
provider D) timeliness
Answer: B
Terms: Characteristic of reliability of evidenc
Diff: Easy
Objective: LO 7-3
AACSB: Reflective thinking skills

3)The auditor must gather sufficient and appropriate evidence during the course of the
audit. Sufficient
evidence must:
A) be well documented and cross-referenced in the audit
documents. B) be based on sources that are external to
company.
C) provide evidence that prove or disprove an audit
objective/assertion. D) be persuasive enough to enable the
auditor to issue an audit report. Answer: D
Terms: Sufficient evidence
Diff: Easy
Objective: LO 7-3
AACSB: Reflective thinking skills

4)Audit evidence obtained directly by the auditor will not be reliable if:
A) the auditor lacks the competence to evaluate the evidence.
B) it is provided by the client's attorney.
C)the client denies its veracity.
D)it is impossible for the auditor to obtain additional corroboratory
evidence. Answer: A
Terms: Audit evidence obtained directly by auditor
Diff: Easy
Objective: LO 7-3
AACSB: Reflective thinking skills

5)Appropriateness of evidence is a measure
of the: A) quantity of evidence.
B) quality of evidence.
C) sufficiency of
evidence. D) meaning
of evidence. Answer:
B
Terms: Appropriateness of evidence
Diff: Easy
Objective: LO 7-3
AACSB: Reflective thinking skills




3
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6)Which of the following statements regarding the relevance of
evidence is correct? A) To be relevant, evidence must pertain to the
audit objective of the evidence.
B) To be relevant, evidence must be persuasive.
C) To be relevant, evidence must relate to multiple audit objectives.
D) To be relevant, evidence must be derived from a system including effective
internal controls. Answer: A
Terms: Relevance of evidence
Diff: Easy
Objective: LO 7-3
AACSB: Reflective thinking skills

7)Two determinants of the persuasiveness of evidence are:
A) competence and sufficiency.
B) relevance and reliability.
C)appropriateness and sufficiency.
D)independence and
effectiveness. Answer: C
Terms: Determinants of persuasiveness of evidence
Diff: Easy
Objective: LO 7-3
AACSB: Reflective thinking skills

8)The two characteristics of the appropriateness of
evidence are: A) relevance and timeliness.
B) relevance and
accuracy. C) relevance
and reliability. D)
reliability and accuracy.
Answer: C
Terms: Appropriateness of evidence
Diff: Easy
Objective: LO 7-3
AACSB: Reflective thinking skills

9)Which of the following forms of evidence would be least persuasive in forming the
auditor's opinion about marketable securities and other investments held by the
company?
A) Responses to auditor's questions by the president and controller regarding the
investments account. B) Correspondence with a stockbroker regarding the quantity of
client's investments held in street name by the broker.
C) Minutes of the board of directors authorizing the purchase of stock as an
investment. D) The auditor's count of marketable securities.
Answer: A
Terms: Least persuasive form of evidence
Diff: Moderate
Objective: LO 7-3
AACSB: Reflective thinking skills




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