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- 15 Marks
AA – May 2016 – L2 – Q1a – Audit and Assurance Evidence
This question discusses the assessment of the validity and pertinence of different forms of audit evidence and auditing standards.
Question
(a) ‘Audit evidence must be reviewed critically with respect to its validity and pertinence as evidence before it is permitted to influence the mind of the auditor with respect to the assertion at issue’.
(i) An Auditor is considering using a copy of credit sale invoices on a file as evidence for the credit sales figure in the accounts. How would he assess the validity and pertinence of this file as audit evidence? (3 marks)
(ii) A mail order company invoices its customers with up to five ladies’ dresses. Most customers accept and pay for one or two dresses and return the rest. A credit note is then issued. The accounts incorporate a provision for returnable dresses at the year end. The audit is completed very quickly and post-balance sheet events are not usable by the auditor as evidence. What evidence would the auditor regard as valid and pertinent in respect of the provision? (3 marks)
(iii) What factors would influence an auditor in considering the acceptability as evidence of certificates received from third parties? (3 marks)
(iv) A building contracting company has constructed an office block on its own land for its own use. State the evidence the auditor would require on the cost of the building. (3 marks)
(v) Discuss the different forms of audit evidence that would be available to auditors of very small companies and of very large companies. (3 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Audit evidence, Audit Procedures, Audit Standards, Pertinence, Validity
- Level: Level 2
- Topic: Audit and Assurance Evidence
- Series: MAY 2016
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- 15 Marks
AA – May 2016 – L2 – Q1a – Audit and Assurance Evidence
This question discusses the assessment of the validity and pertinence of different forms of audit evidence and auditing standards.
Question
(a) ‘Audit evidence must be reviewed critically with respect to its validity and pertinence as evidence before it is permitted to influence the mind of the auditor with respect to the assertion at issue’.
(i) An Auditor is considering using a copy of credit sale invoices on a file as evidence for the credit sales figure in the accounts. How would he assess the validity and pertinence of this file as audit evidence? (3 marks)
(ii) A mail order company invoices its customers with up to five ladies’ dresses. Most customers accept and pay for one or two dresses and return the rest. A credit note is then issued. The accounts incorporate a provision for returnable dresses at the year end. The audit is completed very quickly and post-balance sheet events are not usable by the auditor as evidence. What evidence would the auditor regard as valid and pertinent in respect of the provision? (3 marks)
(iii) What factors would influence an auditor in considering the acceptability as evidence of certificates received from third parties? (3 marks)
(iv) A building contracting company has constructed an office block on its own land for its own use. State the evidence the auditor would require on the cost of the building. (3 marks)
(v) Discuss the different forms of audit evidence that would be available to auditors of very small companies and of very large companies. (3 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Audit evidence, Audit Procedures, Audit Standards, Pertinence, Validity
- Level: Level 2
- Topic: Audit and Assurance Evidence
- Series: MAY 2016
Report an error