ACC491Audit Evidence

CHAPTER 4

AUDIT EVIDENCE AND AUDIT DOCUMENTATION

Answers to Review Questions

4-1 Auditors typically divide the financial statements into components or segments in order to make the audit more manageable. A component can be a financial statement account or a business (transaction) process. This approach allows the auditor to gather evidence by examining the processing of related transactions through the accounting system from their origin to their ultimate disposition in the accounting journals and ledgers. Thus, the auditor can examine an accounting transaction from the time it is initiated by the entity until its final recording in the financial statement accounts.

4-2 The financial statements contain management's assertions about the various financial statement...