Reference no: EM132461084

Question 1. How do the following terms 'Relevant', 'Reliable' and 'Sufficient' relate to audit evidence? What are examples of each? Why is it important for an internal auditor to apply professional skepticism when evaluating audit evidence?

Question 2. Internal auditing is going to be performing an assurance engagement dealing with controls over ordering, invoicing and collections. Some of the items to be covered in the engagement include:

1. Determine if prices on the invoices are correct
2. Determine if all material shipped has been invoiced
3. Determine why the number and amount of credit memos issued to customers have increased by 20% over the previous year while sales have only gone up by 5%.
4. Determine if volume rebates are authorized and correctly calculated
5. Determine if sales are being made to customers in violation of laws and regulations (e.g. export restrictions).

Question 3. With one of these items, what two tests are the most appropriate to gather the required evidence. Why those test are most appropriate.

Question 4. The quality of an internal auditor's conclusions depend on their ability to gather and evaluate evidence. What are some of the barriers/obstacles to obtaining appropriate and sufficient evidence? How can those barriers be overcome?

Question 5. Manuals, flowcharts and other procedural documentation may not accurately reflect how the process works or may not cover all the significant exception conditions. There are formal systems for getting work done and informal systems. Many times the informal systems are the way most of the work really gets done. People will bypass formal systems if the processes are deemed to be too cumbersome, slow or restrictive From the comment above, what examples relates to inspection and observation.