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Exam AUD topic 1 question 743 discussion

Actual exam question from AICPA's AUD
Question #: 743
Topic #: 1
[All AUD Questions]

Which of the following presumptions does not relate to the reliability of audit evidence?

  • A. The more effective the internal control structure, the more assurance it provides about the accounting data and financial statements.
  • B. An auditor's opinion, to be economically useful, is formed within reasonable time and based on evidence obtained at a reasonable cost.
  • C. Evidence obtained from independent sources outside the entity is more persuasive than evidence secured solely within the entity.
  • D. The independent auditor's direct personal knowledge, obtained through observation and inspection, is more persuasive than information obtained indirectly.
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Suggested Answer: B 🗳️
Choice "B" is correct. The concept of cost-benefit is embodied in the auditor's opinion which, to be economically useful, is formed within reasonable time and based on evidence obtained at a reasonable cost. The cost-benefit concept, however, bears no relationship to the reliability of audit evidence.
Choice "A" is incorrect. The more effective the internal control structure, the higher level of assurance it provides about the accounting data and financial statements, and the more reliable audit evidence will be.
Choice "C" is incorrect. Evidence obtained from independent sources outside the entity is more persuasive, or reliable, than evidence secured solely within the entity.
Choice "D" is incorrect. The independent auditor's direct personal knowledge, obtained through observation and inspection, is more persuasive (more reliable) than information obtained indirectly.
by gemazyni at April 5, 2025, 5:04 p.m.

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