- 20 Marks
AA – L2 – Q63 – Audit Evidence
Discuss audit evidence for sales, returns, certificates, building costs, company size, and auditing standards' pros, cons, and statutory impact.
Question
(a)
(i) The file of copy credit sales invoices is the most pertinent evidence which the auditor can obtain of the credit sales figure in the accounts. Required: Explain why this is the case and discuss how the auditor would assess the validity of this evidence.
(ii) A mail order company invoices its customers with up to five ladies’ dresses. Most customers accept and pay for one or two dresses and return the rest. A credit note is then issued. The accounts incorporate a provision for returnable dresses at the year end. The audit is completed very quickly and subsequent events are not usable by the auditor as evidence. What evidence would the auditor regard as valid and pertinent in respect of the provision?
(iii) What factors would influence an auditor in considering the acceptability as evidence of certificates received from third parties?
(iv) A building contracting company has constructed an office block on its own land for its own use. State the evidence the auditor would require on the cost of the building.
(v) Discuss the different forms of audit evidence that would be available to auditors of very small companies and of very large companies.
(b) Discuss the advantages and disadvantages of auditing standards to auditors and the consequences of them being enforceable by statute.
Find Related Questions by Tags, levels, etc.
- Tags: Audit Quality, Auditing Standards, Professional Judgment, Statutory Enforcement
- Level: Level 2
- Topic: Audit Evidence
