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ISA 500, Audit Evidence
ISA 500 Audit Evidence states the objective of the auditor, in terms of gathering evidence, is ‘to design and perform audit procedures in such a way to enable the auditor to obtain sufficient appropriate audit evidence. Here on MCQs.club we have prepared useful Multiple-Choice Questions on ISA 500 revised IFAC that fully cover MCQs on ISA 500 Summary Audit Evidence, ISA 500 management expert, ISA 500 MCQs with answers. These MCQ on SA 500 are helpful for Competitive exams, Professional accountancy exams and Business management exams.
- ISA 500 Audit Evidence states the objective of the auditor, in terms of gathering evidence, is:
‘to design and perform audit procedures in such a way to enable the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor’s opinion.’
- The above statement is correct
- The above statement is incorrect
- ISA 500 Audit Evidence allows the auditor to use analytical procedures as a substantive procedure during the final audit to help detect misstatement.
- True
- False
- When determining whether there is enough evidence the auditor must consider:
- The risk of material misstatement
- The materiality of the item
- The nature of accounting and internal control systems
- The results of controls tests
- The auditor’s knowledge and experience of the business
- The size of a population being tested
- The size of the sample selected to test
- The reliability of the evidence obtained.
- All of the above
- (I) (III) (IV) and (VII) only
- (I) (II) and (VII) only
- None
- Appropriateness of evidence breaks down into:
- Reliability
- Relevance
- Both A&B
- None
- Which of the following is correct regarding Reliability of audit evidence?
- Evidence obtained from an independent external source is more reliable than client generated evidence.
- Evidence obtained directly by the auditor is more reliable than evidence obtained indirectly.
- Client generated evidence is the least reliable source of evidence.
- Written evidence is more reliable than oral evidence
- All of the above
- Types of audit procedure to obtain audit evidence include:
- Inspection, Observation, External confirmation
- Recalculation, Re-performance, Analytical and Enquiry
- Both A&B
- None
- Inspection of documents and records:
- May give evidence of rights and obligations, e.g. title deeds.
- May give evidence that a control is operating, e.g. invoices stamped paid or authorised for payment by an appropriate signature.
- May give evidence about cut-off, e.g. the dates on invoices, despatch notes, etc.
- All of the above
- Inspection of tangible assets:
- To obtain evidence of existence of that asset.
- May give evidence of valuation
- Both A&B
- None
- The suitability of analytical procedures as substantive tests depends on:
- The assertion(s) under scrutiny
- The reliability of the data
- The degree of precision possible
- The amount of variation which is acceptable.
- All of the above
- The types of expert an auditor may use include:
- Management’s expert
- Auditor’s expert
- Both A&B
- None
- ISA 500 Audit Evidence provides guidance on what the auditor should consider before relying on the work of a management’s expert. The auditor must:
- Evaluate the competence, capabilities and objectivity of that expert.
- Obtain an understanding of the work of that expert.
- Evaluate the appropriateness of that expert’s work as audit evidence for the relevant assertion.
- All of the above
- Items with specific characteristics may be chosen for testing such as:
- High value items within a population
- All items over a certain amount
- Items to obtain information.
- All of the above
- If audit evidence from one source is inconsistent with that obtained from another source, or the auditor has doubts over the reliability of evidence – consider:
- what additional audit procedures are needed
- the effects on any other aspects of the audit.
- Both A&B
- None
- Which of the following statement is correct?
- An auditor may be able to reach a conclusion based on a smaller quantity of high-quality evidence
- A larger quantity of lower quality evidence may be required to reach the same conclusion.
- Both A&B
- None
- Deciding how much audit evidence will be sufficient, or whether existing audit evidence is sufficient, is a matter of judgement by the auditor. Factors that the auditor will consider are:
- the seriousness of the risk that the financial statements might not give a true and fair view.
- the materiality of the item
- the strength of the internal controls in the client’s accounting systems
- the sampling method that the auditor will use to obtain the audit evidence – the chosen method will affect the size of the audit sample that the auditor requires.
- All of the above
- A number of audit testing procedures are available to the auditor as a means of generating audit evidence. Which of the following is correct?
- more than one procedure may be used in collecting evidence in a particular area.
- not all procedures may be appropriate to a given objective of the audit.
- Both A&B
- None
- If the auditor decides that the evidence obtained is insufficient to reach an opinion, what actions he may take?
- Obtain more evidence
- Discuss the problem with the client’s senior management or the audit committee, so that they are aware of the problem
- Qualify the audit report (as an extreme measure)
- All of the above
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