Auditing and Assurance Training Audit Evidence and Documentation 2

Question 1

The term 'sufficient appropriate audit evidence' means the auditor has obtained enough evidence that is both:

Accepted Answer

Relevant and reliable to support the opinion

Answer

Sufficiency relates to the quantity of evidence, while appropriateness encompasses both relevance and reliability — together they must be enough to support the audit opinion.

Question 2

Physical inspection of inventory by the auditor is an example of which type of audit evidence procedure?

Accepted Answer

Inspection of tangible assets

Answer

Inspecting tangible assets (like physically counting inventory) is a direct audit procedure providing evidence about the existence and condition of assets.

Question 3

An auditor sends a letter to the client's bank requesting confirmation of balances and loans. This is an example of:

Accepted Answer

External confirmation

Answer

External confirmation involves obtaining responses directly from third parties (such as banks) to verify account balances, terms, or transactions.

Question 4

What is the purpose of an engagement completion document (or closing memorandum) in audit documentation?

Accepted Answer

To summarize significant findings, open issues resolved, and conclusions reached before report issuance

Answer

A completion document summarizes significant matters, confirms that open issues were resolved, and demonstrates the auditor's basis for the overall audit conclusion.

Question 5

Which assertion is most directly tested when an auditor reviews cash receipts after year-end to ensure receivables existed at period end?

Accepted Answer

Existence

Answer

Subsequent cash receipts provide evidence that recorded receivables actually existed as of the balance sheet date.

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Audit Evidence and Documentation 2