ACTIVITY CHAPTER 3 PROFE04

Explain the following questions in essay.

1. What is audit evidence?

- Audit evidence is all the information used by the auditor in arriving at the
conclusions on which the opinion is based, and includes the information
contained in the accounting records underlying the financial statements and other
information

2. Discuss the importance of assertions.

- Auditing is not complete without assertions. Because financial statements
cannot be subjected to a lie detector test to determine if they are true or not, other
procedures must be employed to verify their accuracy. Assertions are defined as
"a statement that the speaker believes to be true”.

3. What is segment information?

- Segment information requires the disaggregation of certain significant
elements of an entity's financial statements, such as revenue, operating profit or
loss, identifiable assets, depreciation, and capital expenditures.

4. What is an external confirmation?

- External confirmation is the process of acquiring and analyzing audit
evidence from a third party via a representation of information or an existing
condition in response to a request for information on a specific issue influencing
financial statement claims or related disclosures.

5. What is audit documentation?

- Audit documentation is a written record of the basis for the auditor's
conclusions that supports the auditor's representations, whether or not those
representations are included in the auditor's report.