Ordinarily, what source of evidence should least affect audit conclusions?

Which of the following categories of principles is most closely related to gathering audit evidence?

a. Performance.
b. Reasonable assurance.
c. Reporting.
d. Responsibilities.

Performance.

Which of the following is not related to ethical requirements of auditors?

a. Due care.
b. Independence in appearance.
c. Independence in fact.
d. Professional judgment.

Professional judgment.

One of an accounting firm's basic objectives is to provide professional services that conform to professional standards. Reasonable assurance of achieving this objective can be obtained by following

a. Generally accepted auditing standards.
b. Standards within a system of quality control.
c. Generally accepted accounting principles.
d. International auditing standards.

Standards within a system of quality control.

Which of the following best demonstrates the concept of professional skepticism?

a. Relying more extensively on external evidence rather than internal evidence.
b. Focusing on items that have a more significant quantitative effect on the entity's financial statements.
c. Critically assessing verbal evidence received from the entity's management.
d. Evaluating potential financial interests held by auditors in the client.

Critically assessing verbal evidence received from the entity's management.

The primary purpose for obtaining an understanding of the entity's environment (including its internal control) in a financial statement audit is

a. To determine the nature, timing, and extent of substantive procedures to be performed.
b. To make consulting suggestions to the entity's management.
c. To obtain direct sufficient appropriate audit evidence to afford a reasonable basis for an opinion on the financial statements.
d. To determine whether the entity has changed any accounting principles.

To determine the nature, timing, and extent of substantive procedures to be performed.

Ordinarily, what source of evidence should least affect audit conclusions?

a. External documentary evidence.
b. Inquiry of management.
c. Documentation prepared by the audit team.
d. Inquiry of entity legal counsel.

Inquiry of management

The most reliable evidence regarding the existence of newly acquired computer equipment is

a. Inquiry of management.
b. Documentation prepared externally.
c. Evaluation of the client's procedures.
d. Physical observation.

Physical observation.

Which of the following procedures would provide the most reliable audit evidence?

a. Inquiries of the client's internal audit staff.
b. Inspection of prenumbered client purchase orders filed in the vouchers payable department.
c. Inspection of vendor sales invoices received from client personnel.
d. Inspection of bank statements obtained directly from the client's financial institution.

Inspection of bank statements obtained directly from the client's financial institution.

Breaux & Co. CPAs require that all audit documentation indicate the identity of the preparer and the reviewer. This procedure provides evidence relating to which of the following?

a. Independence.
b. Adequate competence and capabilities.
c. Adequate planning and supervision.
d. Gathering sufficient appropriate evidence.

Adequate planning and supervision.

Which of the following concepts is least related to the standard of due care?

a. Independence in fact.
b. Professional skepticism.
c. Prudent auditor.
d. Reasonable assurance.

Reasonable assurance.

The evidence considered most appropriate by auditors is best described as

a. Internal documents such as sales invoice copies produced under conditions of strong internal control.
b. Written representations made by the president of the entity.
c. Documentary evidence obtained directly from independent external sources.
d. Direct personal knowledge obtained through physical observation and mathematical recalculation.

Direct personal knowledge obtained through physical observation and mathematical recalculation.

Auditors' understanding of the internal control in an entity provides information for

a. Determining whether members of the audit team have the required competence and capabilities to perform the audit.
b. Ascertaining the independence in mental attitude of members of the audit team.
c. Planning the professional development courses the audit staff needs to keep up to date with new auditing standards.
d. Planning the nature, timing, and extent of substantive procedures on an audit.

Planning the nature, timing, and extent of substantive procedures on an audit.

Which of the following elements of a system of quality control is related to firms receiving independence confirmations from its professionals with respect to clients?

a.Acceptance and continuance of client relationships and specific engagements.
b. Engagement performance.
c. Monitoring.
d. Relevant ethical requirements.

Relevant ethical requirements.

Which of the following is most closely related to the responsibilities principle?

a. The auditors' responsibility to issue a report as a result of their examination.
b. The requirement that auditors gather sufficient, appropriate evidence upon which to base an opinion on the financial statements.
c. The auditors' compliance with relevant ethical requirements of independence and due care.
d. The auditors' responsibility to plan the audit and properly supervise assistants.

The auditors' compliance with relevant ethical requirements of independence and due care.

Kramer, CPA, consulted an independent appraiser regarding the valuation of fine art for a not-for-profit museum. Consultation with the appraiser in this case would

a. Be considered as exercising proper due care.
b. Be considered a failure to follow generally accepted auditing standards because Kramer should have known how to value fine art before accepting the engagement.
c. Not be considered a violation of generally accepted auditing standards because generally accepted auditing standards does not apply to not-for-profit entities.
d. None of the above.

Be considered as exercising proper due care.

Which of the following topics is not addressed in the auditors' report for a public entity?

a. Responsibilities of the auditor and management in the financial reporting process.
b. Absolute assurance regarding the fairness of the entity's financial statements in accordance with GAAP.
c. A description of an audit engagement.
d. A summary of the auditors' opinion on the effectiveness of the entity's internal control over financial reporting.

Absolute assurance regarding the fairness of the entity's financial statements in accordance with GAAP.

Which of the following recognizes that an audit conducted under generally accepted auditing standards may not detect all material misstatements?

a. Absolute assurance.
b. Professional judgment.
c. Reliability of audit evidence.
d. Reasonable assurance.

Reasonable assurance.

Which of the following combinations would provide the auditor the most reliable evidence?

Source of Effectiveness of
Evidence Internal Control

a. internal Most effective
b. internal Less effective
c. external More effective
d. external less effective

external More effective

Which of the following is most closely related to the relevance of audit evidence?

a. Auditors decide to physically inspect investment securities held by a custodian instead of obtaining confirmations from the custodian.
b. In addition to confirmations of accounts receivable, auditors perform an analysis of the aging of accounts receivable to evaluate the collectability of accounts receivable.
c. In response to less effective internal control, auditors increase the number of customer accounts receivable confirmations mailed compared to that in the prior year.
d. Because of a large number of transactions occurring near year-end, auditors decide to confirm a larger number of receivables following year-end instead of during the interim period.

In addition to confirmations of accounts receivable, auditors perform an analysis of the aging of accounts receivable to evaluate the collectability of accounts receivable.

Which of the following statements is not true with respect to the performance principle?

a. Auditors are required to prepare a written audit plan during the planning stages of initial audits but are not required to do so in continuing audits.
b. Audit teams consider materiality in planning the audit, performing the audit, and evaluating the effect of misstatements on the entity's financial statements.
c. In assessing the risk of material misstatements, the audit team considers the effectiveness of the entity's internal controls in preventing and detecting misstatements.
d. Auditors are required to consider both the relevance and the reliability of evidence in evaluating whether the evidence they have gathered is appropriate.

Auditors are required to prepare a written audit plan during the planning stages of initial audits but are not required to do so in continuing audits.

Which of the following is true with respect to PCAOB inspections of accounting firms?

a. All firms performing audits of public companies are required to have annual inspections conducted by the PCAOB.
b. PCAOB inspections review a sample of audits conducted by firms as well as the firm's systems of quality control.
c. All results of PCAOB inspections are made available to the public following the inspection.
d. Firms performing audits of 100 or fewer public entities may elect to have a peer review conducted through the AICPA in lieu of a PCAOB inspection.

PCAOB inspections review a sample of audits conducted by firms as well as the firm's systems of quality control.

The particular and specialized actions that auditors take to obtain evidence during a specific engagement are known as

a. Audit procedures.
b. Audit standards.
c. Interpretive publications.
d. Statements on Auditing Standards.

Audit procedures.

Which of the following combinations of standards and types of audits are most closely related to the activities of the Public Company Accounting Oversight Board?

a. Develop Auditing Standards for the audits of nonpublic entities.
b. Develop Auditing Standards for the audits of public entities.
c. Develop Statements on Auditing Standards for the audits of nonpublic entities.
d. Develop Statements on Auditing Standards for the audits of public entities.

Develop Auditing Standards for the audits of public entities.

Which of the following best describes the general contents of the introductory paragraph of the auditors' report?

a. A description of an audit examination, including the fact that the audit was conducted under standards established by the PCAOB.
b. The auditors' conclusion with respect to the fairness of the entity's financial statements.
c. Statements identifying the responsibility of auditors and management in the financial reporting process.
d. The auditors' conclusion with respect to the effectiveness of the entity's internal control over financial reporting.

Statements identifying the responsibility of auditors and management in the financial reporting process.

Which of the following opinions would be issued if auditors believed that the entity's financial statements were not presented in conformity with GAAP?

A. Adverse opinion.
B. Disclaimer of opinion.
C. Qualified opinion.
D. Unmodified opinion.

Adverse opinion.

Which of the following principles is most closely associated with the auditors' conclusion as to the fair presentation of the entity's financial statements?

A. Communication principle.
B. Performance principle.
C. Reporting principle.
D. Responsibilities principle.

Reporting principle.

What source of evidence should least affect audit conclusions?

Which is the most reliable source of audit evidence?

What type of audit evidence is the weakest?

What is the best type of audit evidence?

Which of the following combinations would provide the auditor the most reliable evidence?

What is sufficient evidence in audit?