Accounting Q&A · Auditing · Topic 6
Practise evidence quality, confirmations, vouching and verification. Try each answer before revealing it.
Worked example
An auditor suspects recorded sales may be fictitious. Vouch from sales records to orders and dispatch evidence. Investigate unsupported entries and assess the wider population.
Core concepts
1. What should you know about sufficiency?
The quantity of audit evidence obtained.
2. What should you know about appropriateness?
The quality of evidence, including relevance and reliability.
3. What should you know about vouching?
Start with a recorded item and inspect support, often to test occurrence.
4. What should you know about tracing?
Start with source evidence and follow it into the records, often to test completeness.
5. What should you know about verification?
Assess assertions about a balance, such as existence, rights or valuation.
6. What should you know about inspection?
Examine documents, records or tangible assets.
7. What should you know about observation?
Watch a process being performed.
8. What should you know about recalculation?
Check mathematical accuracy.
9. What should you know about reperformance?
Independently carry out a procedure or control.
10. What should you know about external confirmation?
A response obtained directly by the auditor from a third party.
Case 1
An auditor suspects recorded sales may be fictitious.
11. Which audit concept is central here?
Occurrence.
12. What is the main objective?
Verify selected recorded sales were real.
13. What evidence or procedure would you use?
Vouch from sales records to orders and dispatch evidence.
14. What limitation should you consider?
An invoice generated internally may need corroboration.
15. What should happen next?
Investigate unsupported entries and assess the wider population.
Case 2
Management reports equipment at a remote site.
16. Which audit concept is central here?
Existence and rights.
17. What is the main objective?
Establish the equipment exists and belongs to the entity.
18. What evidence or procedure would you use?
Inspect assets and examine ownership or lease documents.
19. What limitation should you consider?
Physical inspection alone cannot establish ownership.
20. What should happen next?
Reconcile inspected items with the asset register.
Case 3
A debtor does not answer a confirmation request.
21. Which audit concept is central here?
Alternative evidence.
22. What is the main objective?
Address the receivable assertions despite non-response.
23. What evidence or procedure would you use?
Inspect subsequent receipts, invoices and dispatch evidence.
24. What limitation should you consider?
A non-response is neither agreement nor a known misstatement.
25. What should happen next?
Assess whether alternatives adequately address the assessed risk.
Professional standards reference. For statutory duties, confirm the rules in the relevant jurisdiction.