Audit evidence is critical for validating the ___ of financial statements.

Accuracy

True or False: Audit evidence obtained from internal sources is always more reliable than external sources.

False; external sources are typically preferred due to perceived lack of bias.

What are the characteristics that make audit evidence reliable?

Reliability is influenced by documentation quality, control effectiveness, and the source of the evidence.

Fill in the blank: The ___ of audit evidence refers to the extent of its relevance and direct connection to the audit objective.

Nature

Describe the role of physical observations in gathering audit evidence.

Physical observations involve on-site inspections to validate both tangible and intangible assets, ensuring accuracy in auditing.

True or False: Recalculations are a method used by auditors to verify recorded transactions against financial statements.

True

What assertion relates to the completeness of recorded transactions in financial statements?

The completeness assertion ensures that all transactions that should be recorded in a given period are indeed recorded.

Explain the importance of original audit evidence documents.

Original documents are considered more reliable than duplicates because they reduce the risk of alteration and misrepresentation.

What is the significance of evaluating audit evidence during the audit process?

Evaluating audit evidence ensures that the quality and quantity of information are sufficient to form accurate audit opinions.

Fill in the blank: The assertion of ___ confirms that assets, liabilities, and equity interests exist as reported.

Existence

True or False: Analytical procedures are used by auditors to assess financial statements without comparing them to non-financial data.

False; analytical procedures involve using both financial and non-financial data for assessment.

What types of documents are included as audit evidence?

Audit evidence can include financial documents like invoices, bank statements, payroll listings, and confirmation documents.

Fill in the blank: The ___ of audit evidence is determined by its capacity to support conclusions drawn by the auditor.

Sufficiency