Week 5-1

Question 1

Levels of evidence

Answer 1

• Best
  o Physical Evidence (inspection of tangible assets)
  o External Confirmations
  o Inspection of External documentation
  o Recalculations/re-performance
• Good
  o Inspection of internal documentation (strong IC)
  o Analytical procedures (strong IC)
  o Observation
  o Client inquiry done rigorously
• Weak
  o Inspection of internal documentation (poor IC)
  o Analytical tests (poor IC)
  o Client inquiry done informally

Question 2

inquiry

Answer 2

• Inquiry consists of seeking appropriate information of knowledgeable persons within or outside the entity
• Degree of reliability depends on objectivity and knowledge of respondent
• A response from a person within the entity usually requires (independent) corroboration (example: making further
  inquiries)

Question 3

inquiry - evidence

Answer 3

Staggered interviews (start with management then peer then subordinate, they can’t coordinate responses and you find inconsistencies)
- Multiple informal interviews
- Examine documentary data support claims interviewee
- Corroborate

Question 4

Analytical procedures

Answer 4

The diagnostic process of identifying and determining the cause of unexpected fluctuations in account balances and
financial ratio’s

Question 5

Explanation and counter-explanation during analytical reviews – Koonce (1992)

Question 6

Training auditors to perform analytical procedures using metacognitive skills – Plumlee, rixom, rosman (2015)

Answer 6

Introduction
- Increased use of analytical procedures by staff
- But: perform worse than partner/manager (has to do with experience)
- Does metacognition improve performance?

Hypotheses
Divergent metacognition training:
- H1: possible explanations are more unique, refer more to critical facts, contains reasoning for inclusion Supported
Divergent and convergent metacognition training:
- H2: greater list  supported
- H3: more likely identify correct solution Supported
Conclusion
- Solution: cooperation and brainstorm sessions
- Cost: group dynamics

Question 7

Divergent thinking

Answer 7

generate as much explanations for unusual evidence

Question 8

Convergent thinking

Answer 8

evaluate generated explanations (select correct one given the number of explanations)