Group 5: Audit Procedures

Correct answer A: Inspection.

Inspection covers records/documents in paper, electronic or other media. The medium or presence of amounts does not change the technique.

Correct answer D: That inspection necessarily establishes ownership and value as well as existence.

Some documents directly evidence asset existence but not necessarily ownership/value. Keep conclusions within the objective supported.

Correct answer A: Existence inspection does not necessarily establish valuation.

Physical inspection can support existence. That evidence is not a substitute for valuation evidence.

Correct answer A: Observation.

Observation watches a process performed by others; independent execution would be reperformance.

Correct answer B: Being observed may affect how the process is performed.

Observation is time-specific and the observer may affect behaviour. Consider relevant other evidence without inferring fraud.

Correct answer A: External confirmation, which need not be confined to balances.

The definition is a direct written response to the auditor from a confirming party. Terms and modifications can be relevant subjects.

Correct answer D: It is useful outside-party inquiry information, not by itself the defined written external confirmation.

Inquiry can be oral and from outside the entity. Defined external confirmation requires a direct written response.

Correct answer A: Confirmation can address absence of conditions as well as account balances.

The module gives absence of a side agreement as a possible confirmation subject. The question does not establish one exists.

Correct answer C: Recalculation.

Recalculation checks mathematical accuracy manually or electronically. It does not automatically validate every input or assumption.

Correct answer A: Reperformance.

Independent execution of the entity procedure is reperformance; preliminary inquiry/inspection can accompany it.

Correct answer C: Arithmetic evidence alone does not establish the reasonableness of all assumptions.

Recalculation has a mathematical-accuracy objective. Inputs and assumptions require evidence appropriate to their own purposes.

Correct answer C: Analytical procedures.

Analytics evaluate plausible relationships among financial/nonfinancial data and investigate inconsistent fluctuations or deviations.

Correct answer D: Yes; inquiry can seek information from knowledgeable financial or nonfinancial persons.

Inquiry includes knowledgeable people inside/outside the entity and formal written or informal oral exchanges. Responses require evaluation.

Correct answer D: Evaluate the responses and determine necessary clarification or additional procedures.

Evaluation is integral to inquiry; responses can differ from other information and call for modified/additional work.

Correct answer C: History of carrying out intentions, reasons for this action and ability to pursue it.

The module identifies history, rationale and ability as relevant information where intent support is limited, not guarantees of future action.

Correct answer B: Inquiry may provide important evidence, even of a misstatement, but the response must be evaluated.

Inquiry can produce new information or error evidence. Evaluate the supplied facts and scope rather than dismissing or overclaiming them.

Correct answer B: No; inquiry alone ordinarily is insufficient for that conclusion.

Inquiry is useful but ordinarily cannot alone support absence of material misstatement or control operating effectiveness.

Correct answer A: Perform procedures establishing its continuing relevance.

Previous evidence may be appropriate in certain circumstances, with procedures establishing continuing relevance to the current purpose.

Correct answer B: Request relevant retention or perform work while the information is available.

Information availability can affect nature/timing. Retention arrangements or earlier work may be needed; unavailable backups cannot be invented.

Correct answer C: Inspection can use electronic records, while actual availability and evidence needs must be assessed.

Inspection permits electronic media. Its suitability and remaining gaps depend on records and the intended objective.

Correct answer C: Risk assessment.

Purpose/context matters. Understanding to identify/assess risks is risk assessment, not automatically another category.

Correct answer D: Test of controls.

Control tests evaluate operating effectiveness in preventing/detecting/correcting material assertion misstatements.

Correct answer B: Substantive test of details.

Substantive procedures detect assertion-level material misstatements. Detail checking is distinct from testing approval operation.

Correct answer C: No; tests of details can cover transactions, balances and disclosures.

The module includes classes of transactions, account balances and disclosures in tests of details. Scope remains purpose-specific.

Correct answer B: Omissions may be absent from that list; relevant unrecorded-liability information is needed.

Direction matters. Subsequent payments, unpaid invoices, supplier statements or unmatched receipts may be relevant to understatement objectives.

Correct answer D: Cut-off.

Collection evidence can relate to existence/valuation but not necessarily cut-off; do not infer all assertions from one source.

Correct answer B: Evaluate the control attribute and substantive amount condition separately.

The same document/technique can support different purposes. Conditions and results must address each objective.

Correct answer D: That inspection of approval alone proves all recorded amounts correct.

Inspection can serve control testing; evidence of authorisation does not automatically provide all substantive assertions.

Correct answer B: The context and actual purpose for which they are applied.

Techniques often work in combination and can serve different audit purposes. Labels or media do not alone decide the category.

Correct answer A: Tests of controls when required/chosen, plus substantive procedures.

Further procedures comprise tests of controls where required or chosen and substantive detail/analytical procedures. This is the basic classification, not all detailed standard rules.