1.

All the information used by the auditor in arriving at the conclusion on which the audit
opinion is based is called
a. Audit information
b. Audit evidence
c. Accounting records
d. Corroborating information
2. An entity’s accounting records generally include the records of initial entries and supporting
records including
a. Confirmation from third parties
b. Information obtained by the auditor from such audit procedures as inquiry, observation
and inspection
c. Worksheets and spreadsheets supporting cost allocation
d. Other information developed by or available to the auditor to permit him to reach
conclusion through valid reasoning
3. Audit evidence comprises
 Information that supports and corroborates managements assertions
 Any information that contradicts managements assertions
a. I only
b. II only
c. Neither I nor II
d. Both I and II
4. As defined in PSA 500, ______ is an individual or organization possessing the expertise in a
field other than accounting or auditing, hose work in that filed is used by the entity to ssist
the entity in preparing the financial statements
a. Auditor’s expert
b. Management expert
c. Auditor’s internal expert
d. Auditor’s external expert
5. If a management expert’s work is used to prepare the information to be used as audit
evidence, the auditor shall
 Evaluate the competence, capabilities, and objectivity of the management’s expert
 Obtain an understanding of the work of the management’s expert
 Evaluate the appropriateness of the management’s expert’s work as audit evidence
for the relevant assertion
a. I and II only
b. I and III only
c. II and III only
d. I,II and III
6. Which of the following statements concerning the management’s expert’s competence,
capabilities and objectivity is correct?
a. Objectivity relates to the objectivity of the management’s expert to exercise the
competence in the circumstances
b. Competence relates to the possible effects the bias conflict of interest or influence of
others may have on the professional or business judgment of the management’s expert
c. Capability relates to the nature and level of expertise of the management’s expert
d. The management’s expert’s competence, capabilities , and objectivity are important
factors in relation to the reliability of any information prepared by management’s expert
7. Audit evidence is information used to draw reasonable conclusion on which to base the
auditor’s opinion. Audit evidence is obtained by performing
 Risk assessment procedures
 Further audit procedures
a. I only
b. II only
c. Either I or II
d. Both I and II
8. Which of the following statements concerning audit evidence is correct?
a. Appropriateness is the measure of the quantity of the audit evidence
b. Sufficiency is the measure of the quality of the audit evidence, that is, its relevance and
reliability
c. The quantity of audit evidence needed is affected by its quality and risk misstatement
d. The sufficiency and appropriateness of the audit evidence are not interrelated
9. Which of the following statements concerning audit evidence is correct?
a. An audit usually involves the authentication of documentation
b. A given of set of procedures may provide audit evidence that is relevant to certain
assertion , but not others.
c. Audit evidence obtained from an independent external source is always reliable
d. An entity’s accounting records can be sufficient audit evidence to support the financial
statements
10. Which of the generalizations does not relate to the reliability of audit evidence?
a. Audit evidence is more reliable when it is obtained from independent sources outside
the entity
b. Audit evidence obtained directly by the auditor is more reliable than audit evidence
obtained indirectly or by inference
c. Audit evidence that is generally internally is more reliable when the related controls
imposed by the entity are affective
d. An auditor’s opinion to be economically useful, is formed within a reasonable time and
based on audit evidence obtained at a reasonable cost
11. Which of the following statements concerning audit evidence is false?
a. The auditor uses professional judgment and exercises professional skepticism is
evaluating the quantity and quality of audit evidence, an thus its sufficiency and
appropriateness , to support the audit opinion
b. The audit ordinarily finds it necessary to rely on audit evidence that is persuasive rather
than conclusive
c. In forming an audit opinion, the auditor does not examine all the information available
because conclusions ordinarily can be reached by using sampling approaches and other
means of selecting items for testing
d. The difficulty and expense in obtaining audit evidence concerning an account balance is
valid basis for omitting the test
12. Which of the following would least likely affect the appropriateness of evidence available to
an auditor?
a. The sampling method employed by the auditor to obtain a sample of such evidence
b. The relevance of such evidence to the financial statement assertion is being audited
c. The relationship of the preparer of such evidence to the entity being audited
d. The timeliness of such evidence
13. Which of the following forms of documentary evidence would be considered the most
reliable by an auditor
a. Internally generated
b. Prenumbered
c. Easily duplicated
d. Authorized by a responsible official
14. The auditor should apply analytical procedures
 As risk assessment procedures
 As substantive procedures
 In the overall review at the end of the audit
a. I and II only
b. II and III only
c. I and III only
d. I,II,III
15. Analytical procedures include the consideration of comparisons of the entity’s financial
information with
 Comparable information for prior periods
 Anticipated results of an entity
 Similar industry information
a. I and II only
b. Ii and III only
c. I and III only
d. I,II,III
16. Which of the following should be considered by the auditor when designing and performing
analytical procedures as substantive procedures?
 The suitability if using substantive analytical procedures given the assertions
 The reliability of the data, whether internal or external , from which the expectation
of recorded amounts or ratios is developed
 Whether the expectation is sufficiently precise to identify a material misstatement
at the desired level of assurance
 The amount of any difference of recorded amounts from expected values that is
acceptable
a. I,II and III only
b. I,III and IV only
c. II,III and IV only
d. I,II,III,IV
17. The following statements relate to the use of analytical procedures as substantive
procedures. Which is false?
a. Substantive analytical procedures are applicable when there is only a small volume of
transaction
b. The application of substantive analytical procedures is based on the expectation that
relationship among data exist and continue in the absence of known conditions to the
contrary
c. The presence of transactions among data provides evidence as to the completeness,
accuracy, and occurrence of transactions captures in the information produced by the
entity’s information system
d. Reliance on the results of substantive analytical procedures will depend on the auditor’s
assessment of the risk that analytical procedures may identify relationships as expected
when , in fact, a material misstatement exists
18. Which of the following should be considered by the auditor in determining the suitability of
substantive analytical procedures given the assertions?
 The assessment of the risk of material misstatement
 Any tests of details directed towards the same assertion
a. I only
b. II only
c. Both I and II
d. Neither I nor II
19. The reliability of data is influences by its source and by its nature and is dependent on the
circumstances under which it is obtained. Which of the following should the auditor
consider in determining whether data is reliable for purpose of designing substantive
analytical procedures?
 Source of the information available
 Comparability of the information available
 Nature and relevance of the information available
 Control over preparation of the information
a. I,III, and IV only
b. II,III and IV only
c. I,II and III only
d. I,II,III,and IV
20. According to PSA 520, when analytical procedures identify significant fluctuations or
relationship that are inconsistent with other relevant information or that deviate from
predicted amounts, the auditor should investigate and obtain adequate explanations and
appropriate corroborative audit evidence. The auditor’s investigation of unusual fluctuations
and relationships ordinarily begins with inquiries with management, followed by
 Corroboration of managements responses
 Consideration of the need to apply other procedures based on the audit of such
inquiries, if management is unable to provide an explanation or if the explanation is
not considered adequate
a. I only
b. II only
c. Both I and II
d. Neither I nor II