Generally Accepted Auditing Standards Recognize Two Categories of Evidential Matter

question 42

Multiple Choice

Generally accepted auditing standards recognize two categories of evidential matter: underlying accounting data and corroborating information. In making an audit in accordance with GAAS:

• A) corroborating information is always required, while underlying accounting data may be gathered under certain circumstances.
• B) underlying accounting data must always be gathered, while corroborating information need only be obtained when the accounting records are not reliable.
• C) both categories are required.
• D) the auditor may choose the category to use, and omit the other.
• E) neither category is required.

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Definitions:

Critical Value

The threshold value that a test statistic must exceed to reject the null hypothesis in a statistical test, determined by the significance level of the test.

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true, often denoted by alpha (α) and typically set at 0.05, 0.01, etc.

Sample Observation

An individual data point collected from a sample that is used for analysis and making inferences about the population.

Population Variance

A measure of the dispersion of all data points in a population from the population mean, indicating the diversity within the population.