If you find it difficult to answer the questions then read our free summary of ISA 230 Audit Documentation
1. Which of the following is NOT a purpose of audit documentation?
[tippy title=”Making audit engagement efficient” width=”300″]Wrong!
[/tippy]
[tippy title=”To make record of audit activity available to general public” width=”300″]Correct!
[/tippy]
[tippy title=”To supervise junior team members” width=”300″]Wrong!
[/tippy]
[tippy title=”For quality control evaluations” width=”300″]Wrong!
[/tippy]
2. The main purpose of audit file is to provide evidence that:
[tippy title=”Sufficient audit evidence is obtained” width=”300″]Wrong!
[/tippy]
[tippy title=”Engagement letter is duly signed” width=”300″]Wrong!
[/tippy]
[tippy title=”record the interpretations as result of audit procedures” width=”300″]Correct!
[/tippy]
[tippy title=”Help client in borrowings if needed” width=”300″]Wrong!
[/tippy]
3. Audit documentation should be prepared:
[tippy title=”Sufficient audit evidence is obtained” width=”300″]Wrong!
[/tippy]
[tippy title=”after auditor has singed the auditor’s report” width=”300″]Wrong!
[/tippy]
[tippy title=”after financial statements are approved” width=”300″]Wrong!
[/tippy]
[tippy title=”During audit engagement” width=”300″]Correct!
Audit documentation prepared after the engagement is complete will not be as accurate as prepared during the engagement.[/tippy]
4. The way audit documentation is prepared depends upon number of factors.
However, which of the following does not affect the documentation process?
[tippy title=”Audit methodology used” width=”300″]Wrong!
Audit methodology affects the scope and extent of audit documentation. Complex the methodology more documentation is needed[/tippy]
[tippy title=”Risk of material misstatement” width=”300″]Wrong!
Higher the risk of material misstatement more the audit documentation is usually carried out.[/tippy]
[tippy title=”Experience of auditor” width=”300″]Correct!
Nature, scope and extent of audit documentation has nothing to do with the experience of auditor.[/tippy]
[tippy title=”Number of exceptions identified” width=”300″]Wrong!
[/tippy]
5. The audit documentation may be kept in paper form, electronic form or any media deemed fit.
[tippy title=”True” width=”300″]Correct!
[/tippy]
[tippy title=”False” width=”300″]Wrong!
[/tippy]
6. Audit documentation consists of many different types of documents, memos and drafts that were important in conducting audit engagement and includes:
[tippy title=”Duplicates” width=”300″]Wrong!
[/tippy]
[tippy title=”Notes reflecting preliminary thinking” width=”300″]Wrong!
[/tippy]
[tippy title=”Superseded drafts” width=”300″]Wrong!
[/tippy]
[tippy title=”All of the above” width=”300″]Correct!
[/tippy]
7. Oral descriptions if not documented cannot supplement the documented facts, however it can be used:
[tippy title=”to clarify documented information” width=”300″]Correct!
[/tippy]
[tippy title=”to complement hidden information” width=”300″]Wrong!
[/tippy]
[tippy title=”to replace circumstances not present at engagement acceptance time” width=”300″]Wrong!
[/tippy]
[tippy title=”to keep client’s information confidential” width=”300″]Wrong!
[/tippy]
8. If laws and regulations other than ISA 230 Audit Documentation does not require documentation of audit activity then auditor can skip the audit documentation.
[tippy title=”True” width=”300″]Wrong!
If other applicable laws and regulations on audit engagement are silent or provide no guidance on audit documentation even then ISA 230 will be applicable and audit documentation is mandatory.[/tippy]
[tippy title=”False” width=”300″]Correct!
[/tippy]
9. Auditor is neither required nor it is possible that he can document each and every aspect. For example professional skepticism cannot be documented directly can be assessed by:
[tippy title=”By inquiring management if auditor was skeptic” width=”300″]Wrong![/tippy]
[tippy title=”Checking evidence that auditor has applied procedures to confirm evidence provided by management” width=”300″]Correct![/tippy]
[tippy title=”Discussing with those charged with governance if auditor has worked with them” width=”300″]Wrong![/tippy]
[tippy title=”By conducting lie detection test on junior audit team members” width=”300″]Wrong![/tippy]
10. “Completion memorandum” is summary:
[tippy title=”that contains draft of auditor’s report” width=”300″]Wrong![/tippy]
[tippy title=”issued to confirm audit is complete” width=”300″]Wrong![/tippy]
[tippy title=”document sent by management that their work is complete and now auditor can conduct his procedures” width=”300″]Wrong![/tippy]
[tippy title=”about significant matters identified during engagement and how they were resolved” width=”300″]Correct![/tippy]