1. Which of the following types of documentary evidence should the auditor consider to be the most reliable?

A. A sales invoice issued by the client and supported by a delivery receipt from an outside trucker.

B. Confirmation of an account payable balance mailed by and returned directly to the auditor.

C. A check, issued by the company and bearing the payees endorsement, that is included with the bank statements mailed directly to the auditor.

D. An audit schedule prepared by the clients controller and reviewed by the clients treasurer.

2. Which of the following statements concerning audit evidence is true?

A. To be appropriate, audit evidence should be either persuasive or relevant, but need not be reliable.

B. The measure of the quantity and quality of audit evidence lies in the auditors judgment.

C. The difficulty and expense of obtaining audit evidence concerning an account balance is a valid basis for omitting the test.

D. A clients accounting records can be sufficient audit evidence to support the financial statements.

3. Which of the following is the least persuasive type of evidence?

A. Vendors invoice

B. Bank statement obtained from the client

C. Computations made by the auditor

D. Prenumbered sales invoices

4. Which of the following presumptions is correct about the reliability of audit evidence?

A. Information obtained indirectly from outside sources is the most reliable audit evidence.

B. To be reliable, audit evidence should be convincing rather than merely persuasive.

C. Reliability of audit evidence refers to the amount of corroborative evidence obtained.

D. Effective internal control provides more assurance about the reliability of audit evidence.

5. The distinction between physical examination of assets and examination of documentations is contingent on the item being examined. If the object being examined has no intrinsic value, the evidence is called

A. physical examination

B. documentation

C. confirmation

D. observation

6. Which of the following is an example of confirmation?

A. The auditor received written notification from the clients company secretary stating that there is no outstanding litigation against the company.

B. By reading a newspaper report, the auditor learns the client is subject to rumors of a hostile takeover bid.

C. The auditor requests the clients bank to state the overdraft facility available to the client.

D. the auditor sends a letter to the clients management asking them to confirm that they are responsible for the preparation of the financial statements.

7. Which of the following is the true?

A. a positive confirmation request is one in which the respondent agrees with the clients recorded balance

B. a negative confirmation request is one in which the respondent disagrees with the clients recorded balance

C. a positive confirmation request is one in which the respondent replies the value of balance is positive.

D. None of the above

8. Which of the following is true?

A. The auditor will normally follow up all positive and negative confirmations not returned

B. The auditor will normally follow up all negative confirmations not returned.

C. The auditor will normally follow up all positive confirmations not returned.

D. None of the above

9. Which of the following is not a primary purpose of audit documentation?

A. To coordinate the audit.

B. To assist in preparation of the audit report.

C. To support the financial statements.

D. To provide evidence of the audit work performed.

10. During an audit engagement, pertinent data are compiled and included in the audit files. The audit files primarily are considered to be

A. a client-owned record of conclusions reached by the auditors who performed the engagement.

B. evidence supporting financial statements.

C. support for the auditors representations as to compliance with auditing standards.

D. a record to be used as a basis for the following years engagement.

11. Although the quantity, type, and content of audit documentation will vary with the circumstances, audit documentation generally will include the

A. copies of those client records examined by the auditor during the course of the engagement.

B. evaluation of the efficiency and competence of the audit staff assistants by the partner responsible for the audit.

C. auditors comments concerning the efficiency and competence of client management personnel.

D. auditing procedures followed and the testing performed in obtaining audit evidence.