This action might not be possible to undo. Are you sure you want to continue?
Statements of Financial Accounting Standards Board. Philippine Standards on Auditing. Interpretations of Rules of Conduct. Statements on Quality Control Standards.
2. Generally Accepted Auditing Standards (GAAS) and Philippine Standards on Auditing (PSA) should be looked upon by practitioner as
A. B. C. D.
Ideals to work for, but which are not achievable. Maximum standards which denote excellent work. Minimum standards of performance which must be achieved on each audit engagement. Benchmarks to be used on all audits, reviews, and compilations.
3. An auditor who accepts an audit engagement, but does not possess the industry expertise of the business
entity, should A. B. C. D. Engage financial experts familiar with the nature of the business entity. Obtain a knowledge of matters that relates to the nature of the entity’s business. Refer a substantial portion of the audit to another CPA who will act as the principal auditor. First inform the client management that an unqualified opinion cannot be issued.
4. Which of the following statements best describes the primary purpose of Philippine Standards on Auditing? A. They are guides intended to set forth auditing procedures that are applicable to a variety of situations. B. They are procedural outlines which are intended to narrow down the areas of inconsistency and divergence of auditor’s opinion. C. They are authoritative statements, enforced through the Code of Professional Conduct, that are intended to limit the degree of the auditor’s judgment. D. They are interpretations which are intended to clarify the meaning of “generally accepted auditing standards”. 5. An auditor need not abide by a Philippine Standard on Auditing if the auditor believes that A. B. C. D. The amount is insignificant. The requirement of the PSA is impractical to perform. The requirement of the PSA is impossible to perform. Any of the given three choices is correct.
6. Auditing standards are A. B. C. D. Statutory in nature. Rules imposed by the Securities and Exchange Commission. Rules imposed by the PICPA. General guidelines to help the auditor.
Page 1 of 6
7. Though PSAs do not provide “hard and fast rules” , they provide subjective guidance which allow the auditors to: A. B. C. D. Tailor their audit to procedures requested by management. Only apply those standards that are important to the audit. Accurately interpret the profession’s Code of Professional Conduct. Use adequate professional judgment when applying the standards.
8. Every independent audit engagement involves both auditing standards and auditing procedures. The relationship between the two may be illustrated by how they apply from engagement to engagement. The best representation of this application is that, from one audit engagement to the next,
A. Both auditing standards and auditing procedures are applied uniformly.
B. Auditing standards are applied uniformly but auditing procedures may vary. C. Auditing standards may vary but auditing procedures are applied uniformly. D. Auditing standards are applied uniformly but auditing procedures are optional. 9. Philippine Financial Reporting Standards (PFRS) are distinguished from generally accepted auditing standards (GAAS) in that: A. PFRS are the principles for presentation of financial statements and underlying transactions, while GAAS are the standards that the auditors should follow when conducting an audit. B. PFRS are the principles auditors follow when conducting an audit, while GAAS are the standards for presentation of financial statements and underlying transactions. C. PRFS are promulgated by the SEC, while GAAS are promulgated by the FRSC. D. When PFRS are violated, sufficiently strong GAAS may make up for most PFRS deficiencies. 10. The Philippine Standards on Auditing issued by the Auditing and Assurance Standards Council (AASC) A. B. C. D. Are interpretations of generally accepted auditing standards. Are the equivalent of laws for audit practitioners. Must be followed in all situations. Are optional guidelines which an auditor may choose not to follow when conducting an audit.
11. Competence as a certified public accountant includes all of the following except A. B. C. D. Having the technical qualifications to perform an engagement. Possessing the ability to supervise and evaluate the quality of staff work. Warranting the infallibility of the work performed. Consulting other if additional technical information is needed.
12. In any case in which the incoming accountant is not qualified to perform the work, a professional obligation exists to A. B. C. D. Acquire the required level of knowledge and skills. Recommend someone else who is qualified to perform the work. Decline the engagement. Any of the given choices.
Page 2 of 6
13. Ultimately, the decision about whether or not an auditor is independent must be made by the A. B. C. D. Auditor Audit committee Client Public
14. To be independent, the auditor: A. B. C. D. Cannot place any reliance on the client’s verbal and written assertions. Is responsible only to third-party users of the financial statements. Cannot perform any other professional services for an audit client. Must be impartial when dealing with the client.
15. What is the meaning of the generally accepted auditing standard that requires that the auditor be independent? A. B. C. D. The auditor must be without bias with respect to the client entity. The auditor must adopt a critical attitude during the audit. The auditor’s sole obligation is to third parties. The auditor may have a direct ownership interest in the client’s business if it is not material.
16. Which of the following is not required by the Generally Accepted Auditing Standard that states that due professional care is to be exercised in the performance of the audit? A. B. C. D. Observance of the standards of field work and reporting. Critical review of the audit work performed at every level of supervision. Degree of skill commonly possessed by others in the profession. Responsibility for losses because of errors of judgment.
17. The standard of due audit care requires the auditor to A. Apply judgment in a conscientious manner, carefully weighing the relevant factors before reaching a decision. B. Ensure that the financial statements are free from error. C. Make perfect judgment decisions in all cases. D. Possess skills clearly above the average for the profession. 18. Which of the following mostly describes the function of AASC? A. To promulgate auditing standards, practices and procedures that shall be generally accepted by the accounting profession in the Philippines. B. To monitor full compliance by all auditors to PSAs. C. To assist the Board of Accountancy in conducting administrative proceedings on erring CPAs in audit practice. D. To undertake continuing research on both auditing and financial accounting in order to make them responsive to the needs of the public.
Page 3 of 6
19. The Philippine Standards on Auditing issued by AASC A. Apply to independent examination of financial statements of any entity when such an examination is conducted for the purpose of expressing opinion. B. Must not apply to other related activities of auditors. C. Need to be applied on all audit-related engagements. D. Require that in no circumstances would an auditor may judge it necessary to depart from a PSA, even though such a departure may result to more effective achievement of the objective of an audit. 20. Which of the following is not required by the Generally Accepted Auditing Standard that states that due professional care is to be exercised in the performance of the audit? A. B. C. D. Observance of the standards of field work and reporting. Critical review of the audit work performed at every level of supervision. Degree of skill commonly possessed by others in the profession. Responsibility for losses because of errors of judgment.
21. The attainment of professional competence can be fulfilled by a combination of: I. Period of work experience II. High standard of professional education III. High standard of general education IV. Training and examination in professionally relevant subjects What should be the logical pattern of the foregoing development for a professional accountant? A. III, II, IV, I B. III, I, II, IV C. II, III, IV, I D. II, III, I, IV
22. A professional accountant should comply with relevant laws and regulations and should avoid any
action that discredits the profession. This is fundamental principle of: A. B. C. D. Objectivity Professional competence and due care Professional behavior Integrity
23. It is essential that users of the audited financial statements regard CPA firms as A. B. C. D. Competent Unbiased Technically proficient All of the given choices
Page 4 of 6
24. Which of the following is least likely an indication that the CPA violates the Integrity principle? The CPA is associated with reports or information that:
A. The CPA issues qualified opinion due to scope limitation because he fails to arrive at a clear-cut
conclusion. B. Contains a materially false or misleading statement. C. Omits or obscure information required to be included when such omission or obscurity would make the information misleading. D. Contains statements or information furnished recklessly. 25. Which of the following is the least required in attaining professional competence? A. B. C. D. High standard of general education. Specific education, training and examination in professionally relevant subjects. Period of meaningful work experience. Continuing awareness of development in the accountancy profession.
26. Which of the following is incorrect regarding confidentiality? A. Professional accountants have an obligation to respect the confidentiality of information about a client’s or employer’s affairs acquired in the course of professional services. B. The duty of confidentiality ceases after the end of the relationship between the professional accountant and the client or employer. C. Confidentiality should always be observed by a professional accountant unless specific authorization has been given to disclose information or there is a legal or professional duty to disclose. D. Confidentiality requires that a professional accountant acquiring information in the course of performing professional services neither uses nor appear to use that information for personal advantage or for the advantage of a third party. 27. Which of the following will least likely impair independence? A. An immediate family member of a member of the assurance team is a director, an officer or an employee of the assurance client in a position to exert direct and significant influence over the subject matter of the assurance engagement. B. A member of the assurance team participates in the assurance engagement while knowing, or having reason to believe, that he or she is to, or may, join the assurance client in the future. C. A partner or employee of the firm serves as an officer or as a director on the board of an assurance client. D. A partner or employee of the firm or a network firm serves as Company Secretary for an audit client, the duties and functions undertaken are limited to those of a routine and formal administrative nature as such as the preparation of minutes and maintenance of a statutory returns.
28. Which of the following relationships is most likely to impair a CPA’s independence with respect to a
particular audit client on which the CPA works as a member of the engagement team? A. A close relative has a material investment in that client of which CPA is not aware. B. A cousin has an immaterial investment in that client of which the CPA is not aware. C. The CPA’s father is the president of the audit client.
Page 5 of 6
D. The CPA’s spouse participated in a savings plan sponsored by the client. 29. Which of the following is not likely to create a threat to independence? A. The total fees generated by an assurance client represent a large proportion of a firm’s total fees. B. Fees due from an assurance client for professional services remain unpaid for a long time. C. A firm obtains an assurance engagement at a significantly lower fee level than that charged by the predecessor firm, or quoted by other firms. D. A court or other public authority is the one that established the fees. 30. According to Philippine Standards o Auditing, because there are inherent limitations in an audit that affect the auditor’s ability to detect material misstatements, the auditor is: A. B. C. D. Neither a guarantor nor an insurer of financial statements. A guarantor but not an insurer of the statements. An insurer but not a guarantor of the statements. Both a guarantor and an insurer of the financial statements.
31. The objective of an ordinary examination by the independent auditor is the expression of an opinion on the: A. B. C. D. Accuracy of the financial statements. Balance sheet and income statement. Fairness of the presentation of the financial statements. Quality of the decision process of the management.
32. An audit made in accordance with Philippine Standards on Auditing generally should A. Be expected to provide assurance that noncompliance with laws and regulations will be detected if the internal control is effective. B. Be relied upon to disclose indirect-effect noncompliance with laws and regulations. C. Encompass a plan to search actively for noncompliance with laws and regulations which relate to operating aspects. D. Not be relied upon to provide assurance that all noncompliance with laws and regulations will be detected.
Page 6 of 6
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.