ISA 500 – Audit Evidence Online Test

ISA 500 – Audit Evidence Practice Questions
To know correct answers of the quiz with explanations simply hover or click the multiple choices under each question. For “fill in the blanks” style questions simply hover mouse pointer above the blank or click it.

If you find it difficult to answer the questions then read our free summary of ISA 500 – Audit Evidence

1. Auditor’s judgement whether sufficient appropriate audit evidence is obtained is NOT affected by:


[tippy title=”Nature of audit procedure” width=”300″]Wrong!
External auditors’ duty is to express opinion on the financial statement and not of detecting fraud[/tippy]

[tippy title=”Client’s response time” width=”300″]Correct!
[/tippy]

[tippy title=”Assertion to be checked” width=”300″]Wrong!
[/tippy]

[tippy title=”Cost-benefit analysis” width=”300″]Wrong!
[/tippy]

2. Whether sufficient appropriate audit evidence is obtained is judged by [tippy title=”_____________” width=”300″]applying professional judgement of auditor
[/tippy]


 

3. Obtaining sufficient appropriate audit evidence is necessary to:


[tippy title=”issue unmodified report” width=”300″]Wrong!
[/tippy]

[tippy title=”express in the form auditor’s report” width=”300″]Wrong!
[/tippy]

[tippy title=”enhance user confidence on financial statements” width=”300″]Wrong!
[/tippy]

[tippy title=”obtain reasonable assurance” width=”300″]Correct!
[/tippy]

 

4. Audit evidence is primarily gathered by applying audit procedures however, it can be collected from other sources. Which of the following other sources can be provide audit evidence? [Multiple options are correct]


[tippy title=”Minutes of meeting and information from management’s expert” width=”300″]Correct!
[/tippy]

[tippy title=”letter from incoming auditor” width=”300″]Wrong!
[/tippy]

[tippy title=”Accounting records of client and previous audit” width=”300″]Correct!
[/tippy]

[tippy title=”Accounting records of competitor” width=”300″]Wrong!
[/tippy]

 

5. Absence of information also amounts to audit evidence


[tippy title=”True” width=”300″]Correct!
[/tippy]

[tippy title=”False” width=”300″]Wrong!
[/tippy]

 

6. Auditor is inspecting if sales records are accurate. Which of the following procedures is appropriate?


[tippy title=”compare sales invoices with goods received note” width=”300″]Wrong!
This confirms if all the orders are met and dispatched to customers[/tippy]

[tippy title=”compare sales invoices with the amount of sales recorded in the ledger” width=”300″]Correct
[/tippy]

[tippy title=”compare sales invoices with sales order” width=”300″]Wrong!
This confirms if the invoices are accurate and as per the customer’s order[/tippy]

[tippy title=”compare sales invoices with the cash receipt” width=”300″]Wrong!
This confirms if all the invoices are paid or not[/tippy]

 

7. Auditor intends to check whether controls on procurement activity are effective from raising purchase order to payment of goods bought. What do you think which of the following procedure is most suitable?


[tippy title=”Reconfirmation” width=”300″]Wrong!
[/tippy]

[tippy title=”Reperformance” width=”300″]Correct!
[/tippy]

[tippy title=”Inquiry” width=”300″]Wrong!
[/tippy]

[tippy title=”Recalculation” width=”300″]Wrong!
[/tippy]

 

8. Sufficiency of audit evidence DOES NOT depend on:


[tippy title=”Auditor’s experience” width=”300″]Correct!
Auditor’s experience or inexperience cannot be substitute by more or less amount of audit evidence. Same way just because of having more experience does not mean that auditor requires less audit evidence[/tippy]

[tippy title=”Reliability of audit evidence obtained” width=”300″]Wrong!
Sufficiency depends on evidence obtained and its reliability. Evidence from less reliable source require more evidence.[/tippy]

[tippy title=”Reliability of audit evidence obtained” width=”300″]Wrong!
Sufficiency depends on evidence obtained and its reliability. Evidence from less reliable source require more evidence.[/tippy]

[tippy title=”Level of risk identified by the auditor” width=”300″]Wrong!
Sufficiency has strong connection with expected risks. Higher the risk of material misstatement more the evidence needed.[/tippy]

 

9. Auditor is inspecting documents of lease contracts. About which of the following assertion auditor may gather audit evidence?


[tippy title=”Accuracy” width=”300″]Wrong!
Accuracy deals with calculations and amounts. To check if transactions are recorded correctly auditor shall inspect books of accounting[/tippy]

[tippy title=”Existence” width=”300″]Wrong!
To confirm this assertion auditor should be inspecting the presence of asset rather than documents[/tippy]

[tippy title=”Rights and obligations” width=”300″]Correct!
[/tippy]