True

 or  false  
1.    The  auditor  shall  prepare  documenta2on  on  a  
2mely  basis  to  enhance  audit  quality  &  
facilitate  review  &  evalua2on  of  audit  
evidence  obtained  &  conclusions  reached  
before  the  auditor’s  report  is  finalized.  
2.  Audi2ng  firms  commonly  have  a  standardized  
policies  regarding  indexing  systems  of  audit  
working  papers.  

3.  Each  page  of  the  working  paper  does  not  need  

to  be  ini2alled  and  dated,  and  it  is  not  
required  to  keep  copies  of  records  tested.  
4.  In  mee2ng  the  documenta2on  required  by  
PSA  230  &  other  PSAs,  the  auditor  shall  
include  audit  documenta2on  the  names  of  the  
iden2fied  audit  engagement  team  and  the  
nature  of  the  related  party  rela2onships  
4.  In  mee2ng  the  documenta2on  required  by  
PSA  230  &  other  PSAs,  the  auditor  shall  
include  audit  documenta2on  the  names  of  the  
iden2fied  audit  engagement  team  and  the  
nature  of  the  related  party  rela2onships  
5.  In  prac2ce,  the  rule  is,  ‘if  it’s  not  
documented,    it  is  not  done’,  even  if  the  
procedure  has  already  been  performed.  

6.  Documenta2on  includes  the  amounts  and    

the  factors  that  considers  the  
determina2on  of  risk  of  material  
misstatements  for  the  financial  statements  
as  a  whole.  
7.  Audit  programs  and  documenta2on  of  
substan2ve  procedures  is  an  example  of  
permanent  or  con2nuing  files.  

8.  Working  papers  should  clearly  state  

conclusions,  especcially  significant  
judgements,  reached  as  a  result  of  audit  
procedures.  
9.  The  auditor  shall  prepare  documenta2on  
on  a  2mely  basis  to  enhance  audit  quality  
and  facilitate  review  and  evalua2on  of  audit  
evidence  obtained  and  conclusions  reached  
before  the  auditor’s  report  is  finalized.  
10.  Audit  evidence  includes  only  wriNen  
informa2on  used  by  the  auditor  in  arriving  
at  an  opinion  about  the  fairness  of  financial  
statements.  
11.  Inquiries  of  client  personnel  are  not  an  
effec2ve  means  of  evidence  gathering  by  an  
auditor.  

12.  Confirma2ons  are  among  the  most  

expensive  type  of  evidence  to  obtain.  
13.  Cost  should  never  be  a  considera2on  
when  making  decisions  during  the  
preliminary  planning  ac2vi2es.  

14.  Lead  schedules  are  oRen  created  by  

auditors  to  exclude  similar  accounts,  such  
as  all  inventory  accounts  for  further  tes2ng  
and  documenta2on.  
15.    Ordinarily,  audit  documenta2on  can  be  
provided  to  someone  else  only  with  the  
express  permission  of  the  client.  

16.    Walkthrough  tests  should  be  done  every  

audit  year  to  determine  relevance  of  prior  
periods  informa2on  intended  to  be  used  for  
the  current  year.  
17.    A  narra2ve  memorandum  is  a  wriNen  
descrip2on  of  internal  control  about  the  
indica2on  of  relevant  controls  to  ROMM.  

18.    A  flowchart  is  a  series  of  ques2ons  about  

the  controls  in  each  audit  area  to  iden2fy  
control  deficiencies.  
19.    En2ty  level  documenta2on  includes  
inspec2on  of  HR  documents  where  the  
accoun2ng  policies  &  procedures  are  wriNen.  
20.    Review  of  a  copy  of  annual  business  plan,  
which  did  highlight  the  poten2al  for  the  
economy  to  impact  sales,  indicates  that  the  
en2ty  plans  ahead  its  future  courses  of  
ac2ons  to  effec2vely  meet  its  objec2ve  is  an  
example  of  risk  assessment  procedure.  
MULTIPLE  CHOICES  
1.  A  document  that  details  what  the  auditor  will  do  
to  gather  sufficient,  appropriate  evidence  is  the:  

a.  Audit  strategy  

b.  Audit  program  
c.  Audit  procedure  
d.  Audit  risk  model  
2.    Working  papers  that  record  the  procedures  used  
by  the  auditor  gather  evidence  should  be  
a.  Considered  the  primary  support  for  the  F/S  being  
examined  
b.  Viewed  as  the  connec2ng  link  between  the  books  of  
account  &  the  F/S  
c.  Designed  to  meet  the  circumstances  of  the  par2cular  
engagement  
d.  Destroyed  when  the  audited  en2ty  ceases  to  be  a  
client.  
3.  PSA  300  requires  documenta2on  to  include:  
I.  Overall  audit  strategy  
II.  Audit  plan  
III.  Risk  assessment  procedures  (RAP)  
IV.  Any  significant  changes  during  the  audit  engagement  
to  the  overall  audit  strategy  or  audit  plan  
V.  Discussions  &  par2cipa2ons  during  the  engagement  
planning  

a.  I  and  II  only                                              c.    I,  II  and  III  only  
b.  I,  II,  IV  and  V  only                          d.    I,  II  and  IV  only  
4.    Permanent  audit  files  includes  the  following,  except:  

a.  Flowcharts  of  internal  control  

b.  Lead  schedules  and  suppor2ng  detailed  schedules  
c.  Ar2cles  of  incorpora2on  
d.  Debt,  agreements,  pension  contracts,  and  lease  
agreements  
5.  Audit  documenta2on  should  provide  support  for:  

                               Audit  Report                      Financial  Statements  

a.  YES        YES  
b.  NO            NO  
c.  YES          NO  
d.  NO            YES  
6.  Which  of  the  following  is  the  primary  reason  for  
documen2ng  audit  work?  

a.  To  provide  a  stand-­‐alone  medium  that  gives  audit  

conclusions  and  supports  the  opinion  
b.  To  prevent  li2ga2on  by  other  par2es  that  ques2on  the  
audit  performance  
c.  To  give  the  client  a  full  repor2ng  of  all  work  performed  
on  their  behalf  
d.  To  supply  a  point  of  reference  for  all  auditors  
performing  the  work  subsequently  
7.    Which  of  the  following  best  describes  one  of  the  primary  
objec2ves  of  audit  documenta2on?  

a.  Defend  against  claims  of  a  deficient  audit  

b.  Provide  a  basis  for  reviewing  the  work  of  subordinates  
c.  Provide  reasonable  assurance  that  the  audit  was  
conducted  in  accordance  with  audi2ng  standards  
d.  Provide  addi2onal  support  of  recorded  amounts  to  the  
client.  
8.    Audit  documenta2on  

a.  Must  be  in  electronic  form  

b.  Must  be  in  paper  form  only  
c.  Is  not  required,  but  is  strongly  recommended  
d.  May  be  in  paper,  electronic,  or  some  other  form  
9.    Audit  documenta2on  may  be  recorded  on  paper  or  on  
electronic  or  other  media.    Examples  of  audit  
documenta2on  include  the  following,  except:  

a.  Control  manuals  

b.  Audit  programs  
c.  Analyses  
d.  Issues  memoranda  
10.    Permanent  file  of  an  auditor’s  working  papers  most  
likely  would  indicate  copies  of  the
 

a.  Bank  statements  

b.  Debt  agreements  
c.  Lead  schedules  
d.  ANorney’s  leNers  
11.    Which  of  the  following  characteris2cs  are  not  normally  
included  in  good  audit  documenta2on?  

a.  Ini2als  of  the  person  preparing  &  reviewing  the  

document  
b.  An  index  to  beNer  organize  the  working  papers  
c.  A  cross-­‐reference,  which  provides  a  trail  for  the  auditor  
and  the  reviewer  
d.  All  are  included  in  good  audit  documenta2on  
12.    Although  the  quan2ty,  type  &  content  of  working  
papers  will  vary  with  the  circumstances,  the  working  
papers  generally  would  include  the:  

a.  Copies  of  those  client  records  examined  by  the  auditor  
during  the  course  of  the  engagement  
b.  Evalua2on  of  the  efficiency  &  competence  of  the  audit  
staff  assistants  by  the  partner  responsible  for  the  audit  
c.  Audi2ng  procedures  followed  &  the  tes2ng  performed  
in  obtaining  audit  evidence  
d.  Auditor’s  comments  concerning  the  efficiency  and  
competence  of  client  management  personnel.  
13.    Which  of  the  following  is  least  likely  to  be  a  factor  in  
the  auditor’s  decision  about  the  extent  of  the  
documenta2on  of  a  par2cular  audit  area?  

a.  Whether  or  not  the  client  has  an  internal  audit  func2on  
b.  The  risk  of  material  misstatement  
c.  The  extent  of  the  judgment  involved  in  performing  the  
procedures  
d.  The  nature  and  extent  of  excep2ons  iden2fied  
14.    The  auditor  shall  prepare  audit  documenta2on  
sufficient  to  stand  on  its  own  and  enable  an  
experienced  auditor,  having  no  previous  connec2on  
with  the  audit,  to  understand:
 

a.  The  nature,  2ming  &  extent  of  audit  procedures  performed  
b.  The  results  of  audit  procedures,  and  the  audit  evidence  
obtained  
c.  Significant  audit  maNers,  conclusions  reached,  &  
significant  judgments  made.  
d.  All  of  the  above  
15.    Other  purposes  of  audit  documenta2on  are  to:  

I.  Assist    audit  team  plan  and  perform  the  audit  

II. Assist  supervision  and  review  of  audit  work  
III. 
Retain  a  record  for  reference  in  future  audits  
IV. Provide  a  sufficient  and  appropriate  record  of  the  basis  for  
the  auditor’s  report  
V.  Provide  evidence  that  the  audit  was  planned  &  performed  
in  accordance  with  PSAs  &  applicable  legal  &  regulatory  
requirements  
a.  I,  II  and  III  only                                        c.    I,  II  and  IV  only  
b.  I,  IV  and  V  only                                      d.    All  of  the  above  
16.    The  permanent  file  sec2on  of  the  working  papers  that  
is  kept  for  each  audit  client  most  likely  contains
 

a.  A  schedule  of  2me  spent  on  the  engagement  by  each  
individual  auditor  
b.  Correspondence  with  the  client’s  legal  counsel  concerning  
pending  li2ga2on  
c.  Narra2ve  descrip2ons  of  the  client’s  accoun2ng  
procedures  and  internal  controls  
d.  Review  notes  pertaining  to  ques2ons  and  comments  
regarding  the  audit  work  performed  
17.    Which  one  of  the  following  types  of  evidence  does  
not  aid  in  achieving  the  audit  objec2ve  of  
determining  ownership?  

a.  Confirma2on  
b.  Analy2cal  procedures  
c.  Documenta2on  
d.  Inquiries  of  client  
18.    A  document  which  the  auditor  receives  from  the  
client,  but  which  was  prepared  by  someone  outside  
the  client’s  organiza2on,  is  a  (n)
 

a.  Confirma2on  
b.  Internal  document  
c.  Inquiry  
d.  External  document  
19.    Documenta2on  is  a  form  of  evidence  

a.  Used  in  every  financial  statement  audit  

b.  Used  in  most  financial  statement  audits  
c.  Used  on  the  rare  occasions  when  it  is  both  readily  
available  and  less  costly  than  other  procedures  
d.  Used  when  nothing  is  available  that  is  more  
competent  
20.    The  primary  source  of  informa2on  to  be  reported  
about  li2ga2on,  claims  and  assessment  is  the  

a.  Court  records  

b.  Client’s  management  
c.  Client’s  lawyer  
d.  Independent  auditor  
21.    The  daily  entries  in  the  cash  receipts  journal  are  
supported  by  what  type  of  document  

a.  Sales  invoices  

b.  Shipping  documents  
c.  RemiNance  advises  
d.  Credit  memos  
22.    The  document  which  is  used  to  permit  the  
immediate  deposit  of  cash  and  to  improve  the  
control  over  the  custody  of  assets  is  the
 

a.  Credit  memo  

b.  Sales  invoices  
c.  RemiNance  advises  
d.  Cash  receipts  journal  
23.    The  report  which  typically  includes  informa2on  
analyzed  by  key  components  as  sales  person,  
product,  and  territory  is  the  
 

a.  RemiNance  advice  

b.  Summary  sales  report  
c.  Accounts  receivable  master  file  
d.  Monthly  statement  
24.    Documenta2on  may  not  be  deleted  from  the  
working  papers  aRer  the  

a.  Comple2on  of  the  assembly  of  final  audit  file  

b.  Audit  report  delivery  date  
c.  Date  of  the  audit  report  
d.  Final  day  of  fieldwork  
25.    The  current  file  of  the  auditor’s  working  papers  
generally  should  include  

a.  Organiza2on  charts  

b.  A  copy  of  financial  statements  
c.  A  flowchart  of  the  internal  controls  
d.  Copies  of  bond  and  note  indentures  
26.    Standardized  working  papers  are  oRen  used,  
chiefly  because  they  allow  working  papers  to  be  
prepared  more  

a.  Comprehensively  
b.  Neatly  
c.  Accurately  
d.  Efficiently  
27.    Which  of  the  following  statements  is  correct  with  
respect  to  ownership  of  audit  documenta2on?  

a.  The  audit  firm  owns  the  audit  documenta2on  

b.  The  audit  client  owns  the  audit  documenta2on  
c.  The  audit  client  and  audit  firm  jointly  own  the  audit  
documenta2on  
d.  The  law  is  not  explicit  with  respect  to  the  ownership  of  
audit  documenta2on.