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Exam 5: Audit Evidence

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Question 31

Multiple Choice

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Which of the following statements regarding using the work of another auditor is correct?

A) The group engagement partner will spend more time reviewing the component auditor's work when the component is at risk of material misstatement.
B) The group engagement partner will spend more time reviewing the component auditor's work if the component auditor has a good reputation.
C) The group engagement partner will spend less time reviewing the component auditor's work when the component is at risk of material misstatement.
D) The component auditor sets out the work to be conducted by the group engagement partner.

E) A) and D)
F) A) and B)

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Question 32

Multiple Choice

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Dean Tomaszczyk was training junior audit staff and mentioned the importance of third party documentation. Which of the following are not external confirmations?

A) supplier invoices
B) bank confirmations
C) payable confirmations
D) receivable confirmations

E) A) and B)
F) A) and C)

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Question 33

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Indicate whether you agree or disagree with the following statements and explain your reasoning. a) Mona Harmon has just completed a risk assessment and has identified key risk factors at Bonavista Emergis. When asked by one of her staff members "What's next?", she replies: "Now that we have identified the risks, its time to perform some planning in order to obtain sufficient appropriate audit evidence." b) Teresa Dziuba was assigned to the Heathcliff Energy audit. She was ensuring that when recognizing revenues, all transactions and events that should have been recorded have been recorded. She was testing the occurrence assertion. c) Steve Slopak, the group partner was reviewing the work of Manny Fernandez on the Lake Shore Gold account. Manny asked Steve for an explanation on how audit risk would affect his work. Steve answered: "Audit risk affects the quantity and quality of evidence gathering." d) Frank Tutino, CPA made the following true statement: "The appropriateness of audit evidence refers to its relevance and reliability." He then added: "Reliable information is logically connected to an assertion" "Relevant information reflects the true state of the information"

Delaney Humphrey was explaining the importance of documentary evidence. Which assertion was she referring to when she obtained details of the price paid for inventory and Traced it to the supplier's invoice to verify the amount recorded?

Negative confirmations ask the recipient to reply only if they disagree with the information provided.

The decision of what constitutes sufficient appropriate audit evidence is a matter for professional judgment.

Evan Contador was reviewing ways of obtaining electronic evidence at Enbridge Inc. He was considering the different sources of evidence that might qualify and be defined as electronic Evidence. Which elements are considered electronic evidence?

Nicholas Doulas, the partner-in-charge of the Fairfax Financial Holdings audit wrote a management representation letter. It would have included:

Why do auditors inspect records and documents?

Olga Chevalier, CPA was reviewing presentation and disclosure assertions for Athabasca Oil Sands. Which one of the following would not be a presentation and disclosure assertion?

Auditors use a re-performance procedure:

If the component auditor cannot access sufficient evidence, the engagement partner will:

Correspondence with the client's lawyers is an example of externally generated evidence sent directly to the auditor.

Describe the major evidence gathering procedures most often used by auditors.

Observation is an evidence gathering procedure that involves checking the mathematical accuracy of client records.

Fran Zora has been auditing Manitoba Telecom Services for the past five years. She has gathered a lot of externally generated evidence because of its persuasiveness and reliability as Evidence. Which one of the following evidences lacks trustworthiness and independence from The client?

Assessing an expert's report involves the auditor:

Steven Marinaro, CPA is performing complex calculations to help him determine reserves in the Alberta Oil Sands. Which of the following evidence gathering procedures will Steve use When using the work of another auditor?

Which of the following statements regarding a legal representation letter is incorrect?