Term
Which of the following is generally true about the sufficiency of audit evidence?
A. The amount of evidence that is sufficient varies inversely with the acceptable risk of material misstatement.
B. The amount of evidence concerning a particular account varies inversely with the materiality of the account.
C. The amount of evidence concerning a particular account varies inversely with the inherent risk of the account.
D. When evidence is appropriate with respect to an account it is also sufficient. |
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Definition
| A. The amount of evidence that is sufficient varies inversely with the acceptable risk of material misstatement. |
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Term
Which of the following is a basic approach often used by auditors to evaluate the reasonableness of accounting estimates?
A. Confirmation.
B. Observation.
C. Reviewing subsequent events or transactions.
D. Analyzing corporate organizational structure. |
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Definition
| C. Reviewing subsequent events or transactions. |
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Term
An auditor is performing an analytical procedure that involves comparing a client's account balances over time. This technique is referred to as:
A. Vertical analysis.
B. Horizontal analysis.
C. Cross-sectional analysis.
D. Comparison analysis. |
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Definition
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Term
The auditors use analytical procedures during the course of an audit. The most important phase of performing these procedures is the:
A. Vouching of all data supporting various ratios.
B. Investigation of significant variations and unusual relationships.
C. Comparison of client-computed statistics with industry data on a quarterly and full-year basis.
D. Recalculation of industry date. |
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Definition
| B. Investigation of significant variations and unusual relationships. |
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Term
The auditors must obtain written client representations that normally should be signed by:
A. The president and the chairperson of the board.
B. The treasurer and the internal auditor.
C. The chief executive officer and the chief financial officer.
D. The corporate counsel and the audit committee chairperson. |
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Definition
| C. The chief executive officer and the chief financial officer. |
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