1. Which of the following best describes the concept of audit evidence?

A. Evidence gathered solely from accounting records

B. Information used by the auditor in forming their opinion on financial statements
C. Evidence obtained from interviews with company management
D. Documentation provided by external stakeholders

Answer: B. Information used by the auditor in forming their opinion on financial statements

2. What is the primary objective of the auditor when gathering evidence?

A. To support management's assertions
B. To enable the auditor to arrive at a conclusion for the audit opinion
C. To minimize audit procedures
D. To identify any potential conflicts of interest

Answer: B. To enable the auditor to arrive at a conclusion for the audit opinion

3. Which of the following is an example of corroborating information?

A. Invoices from suppliers
B. Journal entries in the general ledger
C. Minutes of meetings
D. Bank statements

Answer: C. Minutes of meetings

4. What is the main factor affecting the sufficiency of audit evidence?

A. The complexity of the audit procedures
B. The auditors' assessment of the risk of material misstatement
C. The size of the company being audited
D. The number of audit staff assigned to the engagement

Answer: B. The auditors' assessment of the risk of material misstatement

5. Which term measures the quantity of audit evidence?

A. Sufficiency of audit evidence
B. Appropriateness of audit evidence
C. Relevance of audit evidence
D. Completeness of audit evidence

Answer: A. Sufficiency of audit evidence

6. Appropriateness of audit evidence primarily measures:

A. The relevance of the evidence to the audit objective
B. The quantity of evidence gathered
C. The time taken to collect evidence
 D. The number of audit procedures performed

Answer: A. The relevance of the evidence to the audit objective

7. Which classification of audit evidence generally includes information that contradicts

management's assertions?
A. Underlying accounting data
B. Corroborating information
C. Analytical procedures
D. External confirmations

Answer: A. Underlying accounting data

8. What type of evidence may include information obtained from audit procedures performed
during an audit?
A. Underlying accounting data
B. Corroborating information
C. Documentary evidence
D. External confirmations

Answer: B. Corroborating information

9. Which factor does NOT affect the sufficiency of audit evidence?

A. Auditor's assessment of the risk of material misstatement
B. Quality of the audit evidence
C. Complexity of audit procedures
D. Size of the audit firm

Answer: D. Size of the audit firm

10. What is the primary factor affecting the appropriateness of audit evidence?
A. The quantity of audit evidence
B. The quality of audit evidence
C. The timeliness of audit procedures
D. The cost of obtaining evidence

Answer: B. The quality of audit evidence

1. Which of the following statements accurately describes the sufficiency of audit evidence?
A. It depends solely on the quantity of evidence gathered.
B. It is influenced by the auditor's assessment of the risk of material misstatement.
C. It is determined by the reliability of evidence obtained from external sources.
D. It is not affected by the quality of audit evidence.
 Answer: B. It is influenced by the auditor's assessment of the risk of material misstatement.

2. What factors influence the relevance of audit evidence?

A. Its source and nature
B. Its quantity and timeliness
C. The cost of obtaining evidence
D. The complexity of audit procedures

Answer: A. Its source and nature

3. Which of the following is considered a more reliable source of evidence?

A. External source with effective control
B. Internal source with ineffective control
C. External source indirectly obtained
D. Internal source with effective control

Answer: D. Internal source with effective control

4. When is evidence considered sufficient and appropriate?

A. When it is directly obtained from external sources
B. When it meets the auditor's professional judgement
C. When it is obtained through risk assessment procedures
D. When it aligns with the entity's internal control environment

Answer: B. When it meets the auditor's professional judgement

5. Which audit procedure is designed to evaluate the operating effectiveness of controls?

A. Test of controls
B. Substantive test
C. Analytical procedures
D. Confirmation

Answer: A. Test of controls

6. What does the inspection of tangible assets involve?

A. Re-performing procedures executed by the entity
B. Checking the mathematical accuracy of documents
C. Physically examining assets like cash and inventories
D. Seeking information from knowledgeable persons

Answer: C. Physically examining assets like cash and inventories

7. Which audit procedure involves seeking information from knowledgeable persons within or
outside the entity?
 A. Inquiry
B. Confirmation
C. Re-performance
D. Analytical procedures

Answer: A. Inquiry

8. What type of audit procedure involves the auditor independently executing controls originally
performed by the entity?
A. Inspection of records/docs
B. Observation
C. Re-performance
D. Recalculation

Answer: C. Re-performance

9. Analytical procedures in auditing involve:

A. Physically examining tangible assets
B. Evaluations of financial information by studying plausible relationships
C. Seeking information from knowledgeable persons
D. Checking the mathematical accuracy of documents

Answer: B. Evaluations of financial information by studying plausible relationships

10. What does recalculation in auditing primarily involve?

A. Checking the mathematical accuracy of documents
B. Physically examining tangible assets
C. Seeking information from knowledgeable persons
D. Evaluating financial information by studying plausible relationships

Answer: A. Checking the mathematical accuracy of documents

1. When conducting test of details, the auditor may choose between:

a) Tests of Transactions and Events (TOTE)
b) Tests of Balances (TOB)

Answer: Both a) and b)

2. Which type of test of details is typically applied to account balances with small volumes of
transactions representing relatively material amounts?
a) Tests of Transactions and Events (TOTE)
b) Tests of Balances (TOB)

Answer: a) Tests of Transactions and Events (TOTE)

3. What is the relationship between detection risk and the assurance provided by substantive
procedures?
a) Direct
b) Inverse
c) Proportional
d) Irrelevant

Answer: b) Inverse

4. If an auditor aims to reduce detection risk, what adjustments should be made to the nature of
audit procedures?
a) Apply less effective procedures
b) Apply more effective procedures

Answer: b) Apply more effective procedures

5. What adjustment should be made to the timing of audit procedures if detection risk needs to
be reduced?
a) Apply procedures closer to year-end
b) Apply procedures on several dates

Answer: a) Apply procedures closer to year-end

6. When detection risk is lower than the minimum acceptable level, what adjustment should be
made to the extent of substantive procedures?
a) Increase the extent of procedures to gather more evidence
b) Reduce the extent of procedures

Answer: a) Increase the extent of procedures to gather more evidence

7. Which of the following is not a specific procedure that may be applied as substantive
procedures?
a) Inspection
b) Confirmation
c) Evaluation
d) Analytical procedures

Answer: c) Evaluation

8. What is external confirmation in auditing?

a) Obtaining evidence directly from the audited entity
b) Obtaining evidence from internal documents
c) Obtaining evidence from a third party in written or electronic form
 d) Obtaining evidence from observations made during the audit

Answer: c) Obtaining evidence from a third party in written or electronic form

9. When would an auditor typically use external confirmation?

a) When internal controls are ineffective
b) When there is a high risk of material misstatement
c) When audit evidence needs to be obtained directly from management
d) When verifying the accuracy of financial statements with third parties

Answer: d) When verifying the accuracy of financial statements with third parties

10. Which aspect of substantive procedures will the chapter primarily focus on?
a) Inspection and observation
b) Inquiry and recalculation
c) Confirmation and analytical procedures
d) Timing and extent adjustments

Answer: c) Confirmation and analytical procedures

1. Which type of external confirmation request requires the confirming party to respond only if
they disagree with the information provided?
a) Positive Confirmation Request
b) Negative Confirmation Request
c) Non-Response
d) The Exception

Answer: b) Negative Confirmation Request

2. What does a non-response to a positive confirmation request indicate?

a) The confirming party agrees with the information provided.
b) The confirming party disagrees with the information provided.
c) The confirming party failed to respond or fully respond.
d) The confirming party provided additional requested information.

Answer: c) The confirming party failed to respond or fully respond.

3. When evaluating the results of individual external confirmation requests, what action should
the auditor take if they identify factors that raise doubts about the reliability of the response?
a) Accept the response without further investigation
b) Obtain further audit evidence to resolve doubts
c) Disregard the response and seek confirmation from another party
d) Document the doubts and proceed with the audit process
 Answer: b) Obtain further audit evidence to resolve doubts

4. What is the primary purpose of analytical procedures in auditing?

a) To obtain external confirmation from third parties
b) To identify exceptions in confirmation responses
c) To evaluate financial information by analyzing relationships
d) To categorize the results of external confirmation requests

Answer: c) To evaluate financial information by analyzing relationships

5. In what scenario would the auditor investigate exceptions identified in confirmation

responses?
a) When the confirming party agrees with the information provided
b) When the auditor deems the response unreliable
c) When the confirming party fails to respond to the request
d) When the response indicates a difference between requested and provided information

Answer: d) When the response indicates a difference between requested and provided
information

6. Which category of response to an external confirmation request requires the auditor to

perform alternative audit procedures?
a) A response without exception
b) A response deemed unreliable
c) A non-response
d) A response indicating an exception

Answer: c) A non-response

7. What is the distinguishing feature of a positive confirmation request?

a) It requires the confirming party to respond only if they disagree with the information.
b) It requests the confirming party to provide additional information beyond agreement.
c) It provides confirmation without exceptions.
d) It relies solely on non-responses for audit evidence.

Answer: a) It requires the confirming party to respond only if they disagree with the
information.

8. When would the auditor categorize a response as "deemed unreliable"?

a) When the confirming party agrees with the information provided
b) When the confirming party fails to respond
c) When factors raise doubts about the response's reliability
d) When the response indicates exceptions
 Answer: c) When factors raise doubts about the response's reliability

9. Which type of confirmation request typically involves investigating exceptions?

a) Positive Confirmation Request
b) Negative Confirmation Request
c) Non-Response
d) The Exception

Answer: a) Positive Confirmation Request

10. What action should the auditor take if they receive a response indicating an exception?
a) Accept the response without further investigation
b) Investigate exceptions to determine if they are indicative of misstatements
c) Disregard the response and proceed with the audit process
d) Document the exception and seek confirmation from another party

Answer: b) Investigate exceptions to determine if they are indicative of misstatements

1. During the planning phase, what is the main objective of using analytical procedures?
a) To identify specific risks relevant to the audit
b) To design and perform effective audit procedures
c) To assist in arriving at overall conclusions about the financial statements
d) To review the consistency of relationships between accounts

Answer: a) To identify specific risks relevant to the audit

2. In which phase of the audit process are analytical procedures primarily used to assist in
responding to assessed risks of material misstatement?
a) Planning
b) Substantive testing
c) Review
d) Additional specific considerations

Answer: b) Substantive testing

3. What is the primary outcome required during the review phase when using analytical
procedures?
a) Identification of items that may represent specific risks
b) Determination of whether additional procedures are needed
c) Arrival at overall conclusions about the financial statements
d) Corroboration of management responses

Answer: c) Arrival at overall conclusions about the financial statements

4. When considering additional specific considerations for selected items, what is the
corresponding objective of attending physical inventory counting?
a) To ensure the existence and condition of the inventory segment
b) To verify the presentation and disclosure of segment information
c) To assess the reasonableness of estimates and adequacy of disclosure
d) To confirm the accuracy of accounting estimates

Answer: a) To ensure the existence and condition of the inventory segment

5. Which PSA (Public Sector Accounting Standard) pertains to the existence and condition of
the Inventory Segment?
a) PSA 501
b) PSA 540
c) PSA 510
d) PSA 520

Answer: a) PSA 501

6. What is the main objective of auditing accounting estimates according to PSA 540?
a) To ensure the existence and condition of the inventory segment
b) To assess the presentation and disclosure of segment information
c) To review the reasonableness of estimates and adequacy of disclosure
d) To identify specific risks relevant to the audit

Answer: c) To review the reasonableness of estimates and adequacy of disclosure

7. During which phase of the audit process might analytical procedures assist in identifying
fluctuations or relationships that are inconsistent and require further investigation?
a) Planning
b) Substantive testing
c) Review
d) Additional specific considerations

Answer: b) Substantive testing

8. What is the outcome required when using analytical procedures during the planning phase?
a) Arrival at overall conclusions about the financial statements
b) Identification of items that may represent specific risks
c) Corroboration of management responses
d) Verification of accounting estimates

Answer: b) Identification of items that may represent specific risks

9. What is the primary objective of using analytical procedures during the review phase?
 a) To identify specific risks relevant to the audit
b) To assist in arriving at overall conclusions about the financial statements
c) To determine whether additional procedures are needed
d) To corroborate management responses

Answer: b) To assist in arriving at overall conclusions about the financial statements

10. According to the information provided, which phase of the audit process primarily focuses on
the reasonableness of estimates and adequacy of disclosure?
a) Planning
b) Substantive testing
c) Review
d) Additional specific considerations

Answer: c) Review