I. Evidence should be relevant and reliable to be appropriate. Define the terms “Relevance” and
“Reliability”.
II. For each situation presented below, indicate which means of gathering evidence would be
considered more reliable (#1 or #2) AND indicate a reason from the following list:
A. Independent source of the information (Independence of provider);
B. auditor’s direct knowledge;
C. Knowledgeable source (qualifications of individual providing the information);
D. degree of objectivity versus subjectivity; and
E. Functioning system of internal controls.
DO NOT DISCUSS your answer. CHOOSE ONLY ONE LETTER.
a. The auditor considers evidence relating to 1. The estimate of bad debts expense; or 2. The cost of
land acquired five years ago.
b. 1 The auditor relies on an analysis prepared by the controller of gross margin to sales for the current
and prior periods.; or (2) The auditor calculates gross margin to sales and compares to similar data
for prior periods .
c. Evidence involving audit judgement is considered by a member of the audit team. The individual is
1. An intern; or 2. The audit senior assigned to the engagement.
d. The auditor considers the quantity and valuation of 1. An inventory of cement blocks; or
2. An inventory of precious gems.
e. Auditor tests two segments of the company. (1) In the first segment, employees check another
employee’s work; or (2) In the second segment, no one checks the work of employees.
The reliability of audit evidence depends on its source - internal or external and on its nature - visual, documentary or oral. While the reliability of audit evidence is dependent on the circumstances under which it is obtained, the following generalizations may be useful in assessing the reliability of audit evidence:
a) External evidence (e.g. confirmation received from a third
party) is generally more reliable than internal evidence;(b)
Internal evidence is more reliable when related internal control is
satisfactory;
b) Evidence in the form of documents and written representation is
usually more reliable than oral representations;(d) Evidence
obtained by the auditor himself is more reliable than that obtained
through the entity.
A)2
B)2
C)2
D)1
E)2
I. Evidence should be relevant and reliable to be appropriate. Define the terms “Relevance” and...
asap clearly pls Chapter 5 1. Evidence should be relevant and reliable to be appropriate. Define the terms "Relevance" and "Reliability" II. For each situation presented below, indicate which means of gathering evidence would be considered more reliable (#1 or #2) AND indicate a reason from the following list: A. Independent source of the information (Independence of provider); B. auditor's direct knowledge; C. Knowledgeable source (qualifications of individual providing the information); D. degree of objectivity versus subjectivity; and E. Functioning...
REMOVEDAuditors have a responsibility to remain alert to audit evidence that contradicts other audit evidence obtained. The application of professional skepticism is essential to the critical assessment and questioning of contradictory audit evidence. When the auditor obtains information during the course of the audit that contradicts information obtained from another source, the auditor has a responsibility to resolve the matter and consider its impact on the sufficiency and appropriateness of audit evidence obtained and the effect, if any, on other...
Please list 5 inherent risk related items the assignment requires to list 5 inherent risks from the description of the company that an auditor may take when deciding to accept this new client. Emphasis Heading 1 Heading 2 Heading 3 Heading 4 Description of Southwest Appliance, Inc. History and Corporate Structure Southwest Appliances, Inc. specializes in supplying a relatively small line of high-quality household appliances to residential construction contractors in a large and growing metropolitan area. Southwest has a large...
1. Which of the following matters would an auditor most likely consider to be a significant deficiency to be communicated to the audit committee? A. Management's failure to renegotiate unfavorable long-term purchase commitments.B. Recurring operating losses that may indicate going concern problems.C. Evidence of a lack of objectivity by those responsible for accounting decisions.D. Management's current plans to reduce its ownership equity in the entity. 2. After obtaining an understanding of internal control and arriving at a preliminary assessed level...
Refer to the following financial statements and answer the following questions hints:- 13. cash provided (used) by operating activities, investing activities, and financing activities. 14. cash-based net income. 15. estimate of uncollectible accounts receivable. 16. calculate and interpret accounts receivable ratio (most recent and prior period). hints:- 2:12 PM Wed Apr 15 39%). A 51.04cdn.com PART II NIKE, Inc. Consolidated Statements of Income in mWors, except per share data) Revenues Cost of sales Gross profit Demand creation expense Operating overhead...
Required: 1. What is the amount of Apple’s accounts receivable as of September 30, 2017? 2. Compute Apple’s accounts receivable turnover as of September 30, 2017. 3. How long does it take, on average, for the company to collect receivables for fiscal year ended September 30, 2017? 4. Apple’s most liquid assets include (a) cash and cash equivalents, (b) short-term marketable securities, (c) accounts receivable, and (d) inventory. Compute the percentage that these liquid assets (in total) make up of...