Sufficiency of audit evidence depends, among other things, on the “risk of misstatement”.Which of the following would increase this risk, and so indicate that more evidenceshould be collected for “sufficiency”?
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1 .An auditor is auditing the financial statements of Aloe Co. Aloe uses a service provider toprocess its payroll. The auditor of the service provider recently issued a report on the design,implementation and effectiveness of the service provider’s internal controls.Which of the following procedures should the auditor of Aloe perform with respect tothe assurance report issued by the service provider’s auditor?
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2 .It is common practice for the auditor of a service company to provide a Type 1 or Type 2report to be used by the auditors of that service company’s clients.What is the main difference between a Type 1 and Type 2 report?
A Details of the controls tested during the service provider’s annual audit B A separate assurance report on the effectiveness of the service provider’s internalcontrol function C Details of any modification made to the auditor’s report on the financial statements D Details of the controls tes...
3 .Which of the following is the LEAST persuasive method of gathering evidence?
A Inspection of a supplier’s invoice B Reperformance of a depreciation calculation undertaken by the reporting accountant C Inspection of a sales invoice produced by the client
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A Valuation and allocation B Existence C Completeness
5 .During the course of an audit, the auditor may use the following documents:(1) An analysis of repairs expenditure for tax purposes(2) An aged debt listing(3) Suppliers’ statement reconciliationsWhich of these are acceptable if prepared by the client as a basis for further auditwork?
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7 .In order to detect an understatement of sales, which of the following procedures wouldbe most effective?
A Select sales delivery notes and check the details with the related sales invoices B Select sales invoices and check the details with the related sales orders C Select sales invoices and check the details with the related sales delivery notes D Select sales orders and check the details with the rel...
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9 .Which of the following types of evidence would an auditor be most likely to examine todetermine whether internal controls are operating as designed?
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