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1. Which of the following is an example of a substantive
audit procedure?
a) Reviewing the client's accounting policies and
procedures manual
b) Obtaining a letter of representation from the client's
management
c) Performing analytical procedures on the client's financial
statements
d) Testing the accuracy and completeness of the client's
sales transactions*
Rationale: Substantive audit procedures are those that
provide evidence about the validity of the assertions in the
financial statements, such as testing transactions, balances,
and disclosures. Option d is a substantive audit procedure
that tests the occurrence, completeness, accuracy, and cutoff assertions for sales. Options a and b are examples of
audit planning procedures, while option c is an example of
a risk assessment procedure.
2. What is the main purpose of audit sampling?
a) To reduce the cost and time of the audit
b) To increase the reliability and validity of the audit
evidence
c) To enable the auditor to draw conclusions about a
population based on a sample*
d) To comply with the auditing standards and regulations
Rationale: Audit sampling is the application of audit
procedures to less than of the items in a population,
such that the auditor can make inferences about the
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