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AUDITING THEORY FUNDAMENTALS OF ASSURANCE ENGAGEMENTS (Multiple Choice Questions) 1.

These are independent professional services that improve the quality of information for decision-making. a. Management consultancy b. Audit services c. Assurance services d. Attestation services 2. Which of the following statements best describes assurance services? a. Independent professional services designed to express an opinion on the fairness of historical financial statements based on the results of an audit. b. Services that requires the preparation of financial statements or the collection, classification, and summarization of other financial information. c. Independent professional services that are intended to enhance the credibility of information to meet the needs of an intended user. d. Independent professional services designed for the improvement of operations, resulting in better outcomes. 3. Which of the following best describes the objective of an assurance engagement? a. To compare the company's information and policies to those of other entities. b. To improve the company's outcomes. c. To enhance the credibility of information in order to improve the likelihood that the information will meet the needs of an intended user. d. None of the above. 4. The degree of certainty that the practitioner has attained and wishes to convey is: a. A conveyance. b. An assertion. c. A declaration. d. An assurance. 5. What level of assurance is provided by the auditor in an audit engagement? a. Positive level of assurance b. High, but not absolute, level of assurance c. Moderate assurance d. High level of assurance 6. The level of assurance provided by an audit of detecting a material misstatement is referred to as: a. Positive assurance. b. High assurance. c. Reasonable assurance. d. Negative assurance. 7. Of a. b. c. d. the following, which is the broadest concept? Internal control audit. Audit of financial statements. Attestation services. Assurance services.

8. In performing attestation services, a CPA will normally: a. Recommend uses for information. b. Improve the quality of information, or its context, for decision makers. c. Perform market analyses and cost estimates. d. States a conclusion about a written assertion. 9. Which of the following is the single feature that most clearly distinguishes auditing, attestation, and assurance: a. CPA's approach to the service. b. Type of service. c. Scope of services. d. Training necessary to perform the service. 10. Which of the following services provides the highest level of assurance to third parties about a company's

AT – Fundamentals of Assurance Engagements (MCQs)

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b. d. 12. Positive assurance engagement b. Two separate parties: a professional accountant and intended users. d. the evaluation or measurement of the subject matter is performed by the responsible party. Reasonable assurance engagement 16. and intended users. Audit. and the subject matter information is in the form of an assertion by the responsible party that is made available to intended users. Assertion-based engagements 13. The responsible party and the intended user may both be within the same organization. Assertion-based assurance engagement c. 18. d. The subject matter information is in the form of an assertion by the responsible party that is made available to the intended users. Absolute assurance engagement 15. What type of assurance engagement is involved when the practitioner expresses a negative form of conclusion? a. b.financial statements? a. c. Which of the following statements concerning the intended user of a professional accountant's report is incorrect? a. b. 14. What type of assurance engagement is involved when the practitioner expresses a positive form of conclusion? a. c. reasonable assurance engagements are called: a. Non-assurance engagements c. 11. Limited assurance engagement c. b. the intended user may be established by law. These engagements are called a. Recurring engagements b. Three separate parties: a practitioner. b. The intended user should never be established by agreement between the practitioner and the responsible party or those engaging or employing the practitioner. In some circumstances. Each of the above provides the same level of assurance. c. Reasonable assurance engagement d. In an assertion-based engagement the responsible party is responsible for the subject matter information (the assertion). d. d. Review engagements. Two separate parties: a professional accountant and a responsible party. a responsible party. Agreed-upon procedures engagements. The subject matter information is provided to the intended users in the assurance report. For assurance engagements regarding historical financial information. Assurance engagements involve: a. a responsible party and intended users. Compilation. The term "practitioner" as used in the Framework for Assurance Engagements is broader than the term "auditor" as used in PSAs and PSREs. In some assurance engagements. Three separate parties: a professional accountant. c. Review. c. except a. The responsible party and intended users may be from different entities or the same entity. and may be responsible for the subject matter. Which of the following statements concerning the assurance engagement’s three party relationships is incorrect? a. AT – Fundamentals of Assurance Engagements (MCQs) Red Sirug Page 2 . An entity's senior management (the responsible party) may engage a practitioner to perform an assurance engagement on a particular aspect of the entity's activities that is the immediate responsibility of a lower level of management (the intended user). Audit engagements. c. Limited assurance engagement d. Compilation engagements. 17. Negative assurance engagement b. The following are characteristics of "direct reporting" assurance engagements. b. Direct reporting engagements d. The practitioner either directly performs the evaluation or measurement of the subject matter or obtains a representation from the responsible party that has performed the evaluation or measurement. The representation of the responsible party that has performed the evaluation or measurement of the subject matter is not available to the intended users.

The following statements relate to the three parties involved in an assurance engagement. c. b. and not subject to different interpretations. Criteria are sufficiently complete when they contribute conclusions that are clear. 25. The practitioner should be competent and independent. 26. this refers to the information obtained by the practitioner in arriving at the conclusions on which the conclusion is based. Completeness b. The practitioner's conclusion is to be contained in a written report. Established criteria are those a. Assurance engagement risk is the risk AT – Fundamentals of Assurance Engagements (MCQs) Red Sirug Page 3 . Neutrality d. Criteria d. Neutral criteria contribute to conclusions that are free from bias. Relevance 24. comprehensive. c. or issued by authorized or recognized bodies of experts that follow a transparent due process are called: a. In all assurance engagements. Which of the following statements concerning the characteristics of suitable criteria is correct? a.d. Suitable criteria are required for reasonably consistent evaluation or measurement of the subject matter of an assurance engagement. General criteria c. The subject matter is the responsibility of either the intended users or the practitioner. c. b. the responsible party is the engaging party. comprehensive. A responsible party is the person who is responsible for the subject matter or the subject matter information. d. where relevant. Generally accepted auditing standards b. Evidence 27. 19. Suitable criteria b. c. Embodied in laws or regulations or issued by authorized or recognized bodies of experts that follow a transparent due process. Relevant criteria allow reasonably consistent evaluation or measurement of the subject matter including. b. Which of the following is not a characteristic of suitable criteria? a. when used in similar circumstances by similarly qualified practitioners. In an assurance engagement. d. A practitioner should not accept an assurance engagement when the subject matter of the engagement requires specialized skills and knowledge beyond those ordinarily possessed by the practitioner. b. a. A practitioner should accept an assurance engagement only if a. The responsible party and the intended user of assurance report should be from different organizations. Not made available to the intended users. i. Assertions c. and not subject to significantly different interpretations. d. b. The practitioner should accept the engagement only if the subject matter is the responsibility of another party c. Which is correct? a. Criteria that are embodied in laws or regulations. The subject matter is in the form of financial information. d. The responsible party may also be one of the intended users. Made available to the intended users. The practitioner should accept the engagement only if the subject matter is identifiable and in the form that can be subjected to evidence gathering procedures. Specifically developed criteria 23. 22. d. Comparability c. presentation and disclosure. The responsible party and the intended users should always be from different entities. Which of the following is not one of the requirements before accepting an assurance engagement? a.. Established criteria d. Reliable criteria contribute to conclusions that are clear. The criteria to be used for a particular engagement can either be established or specifically developed. The criteria to be used are not available to the intended users.e. 20. the party that engages the practitioner 21. Designed for the purpose of the engagement.

b. Auditing d. Which of the following statements best describes review services? AT – Fundamentals of Assurance Engagements (MCQs) Red Sirug Page 4 . d. b. Through loss from litigation. reviews. c. compilations. The subject matter of an assurance engagement can take the following forms except a. That the practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated. Control risk 29. Neither A nor B 32. Conclusion d. Criteria. 37. Accounting services 34. c. b. Compilation. 36. The assurance report is often addressed to the intended users which may be: a. Of expressing an inappropriate conclusion when the subject matter information is not materially misstated. professional accountants use standards or benchmarks to evaluate or measure the subject matter of an assurance engagement. Audits. Reviews. Declaration c. Neutrality 31. 30. and compilations. reviews. d. The three commonly-sought types of assurance services are: a. b. d. d. The entity’s internal control. Detection risk c. c. Review c. The party responsible for the subject matter. Attestation b. 35.a. or other events arising in connection with a subject matter reported on. Audits. Both A and B d. Reliability d. Conclusion. Tax services b. except a. This is known as: a. c. and other assurance services. Stating whether anything has come to the auditor's attention that indicates that the financial statements are not presented fairly. c. Inherent risk d. Business risk b. When performing an assurance service. The predominant type of attestation service performed by CPAs is: a. compilations. c. b. Audit. Positive assurance is expressed through: a. Relevance c. Which of the following services provides positive assurance through attestation? a. Sufficiency b. Evaluation of a capital investment proposal. Review. 28. adverse publicity. Management consulting. d. Assertion. PFRS. and other assurance services. Which of the following characteristics is not considered necessary in determining whether the criteria are suitable? a. The following are components of assurance engagement risk. b. Established by agreement between the professional accountant and the responsible party. Performance of an entity that could indicate efficiency and effectiveness. Historical or prospective financial statements. Audits. and other assurance services. 33. Of expressing an inappropriate conclusion when the subject matter information is either materially misstated or not materially misstated.

Unlike consulting services. For assurance engagements which are neither audits nor reviews of historical financial information. Involve monitoring of one party by another. Review engagements focus on providing assurance on the assertions contained in the financial statements of a public company. Which of the following is incorrect regarding a compilation engagement? a. 43. There is confirmation that financial statement assertions are accurate. 46. b. Review engagements focus on providing limited assurance on financial statements of a private company. b. d. Is significantly less in scope than an audit and results in a report which provides positive assurance. Ineffective internal controls may exist. The procedures employed in a compilation engagement enable the accountant to express a moderate level of assurance on the compiled financial information. b. State whether anything has come to the auditor's attention that indicates that the financial statements are not presented fairly. in assurance services: a. A compilation engagement ordinarily entails reducing detailed data to a manageable and understandable form without a requirement to test the assertions underlying that information. d. The engagement ordinarily entails reducing detailed data to a manageable and understandable form. The CPA uses his auditing expertise to collect. Focus on providing advice. The type of assurance that is provided by the CPA on a compilation report is: a. c. Assist the client in the preparation of the financial statements. and summarize financial information. the following standard applies: a. 44. 39. Is similar in scope to an audit and adds similar credibility to the statements. The attest function: AT – Fundamentals of Assurance Engagements (MCQs) Red Sirug Page 5 . II only. Both I and II. Misstated account balances are generally corrected by an independent audit. c. I only. d. d. c. Carry out audit procedures agreed on with the client and other users of report. although not absolute assurance.a. d. d. b. No assurance. Review engagements focus on providing assurance on the internal controls of a public company. 42. c. d. d. Which of the following statements concerning compilation engagement is incorrect? a. PSRSs 45. c. A review of a company's financial statements by a CPA firm: a. b. Users of the compiled financial information derive some benefit as a result of the accountant's involvement because the service has been performed with due professional skill and care. a. 40. c. Neither I nor II. The CPA should exercise due care. the accountant is engaged to use accounting expertise as opposed to auditing expertise to collect. Competing interests may exist between management and the users of statements. b. PSREs c. Assurance services differ from consulting services in that they I. PSAs b. The objective of a review of financial statements is to: a. b. Limited assurance. PSAEs d. The procedures performed do not enable the accountant to express any form of assurance. In a compilation engagement. c. Negative assurance. classify and summarize financial information. Express an opinion on the overall financial statements. Concludes with the issuance of a report expressing the CPA's opinion as to the fairness of the financial statements. 38. II. b. Is designed to provide only moderate assurance. Review engagements focus on providing advice in a three-party contract. Low assurance. c. classify. 41.

Management consulting. Audit financial statements. d. Performance measurement b. Which of the following best describes relationships among auditing. Review financial statements. Audit of historical financial statements. Assemble prospective financial statements based on the assumptions of the entity's management without expressing any assurance. Includes the preparation of a written report of the CPA's conclusion. Are two-party contracts. AT – Fundamentals of Assurance Engagements (MCQs) Red Sirug Page 6 . 50. Make recommendation to management. Identify the correct statement. 54. 52. Audit. Issue a written communication expressing a conclusion about the reliability of a written assertion that is the responsibility of another party. Provide tax advice or prepare a tax return based on financial information the CPA has not audited or reviewed. Examination of prospective financial information. d. Agreed-upon procedures. The term "accountant" has been used by Auditing and Assurance Standards Council to refer to a CPA in public practice who is engaged to: a. b. c. Low. Reasonable. c. c. Testify as an expert witness in accounting. attest and assurance services? a. Apply agreed-upon procedures. a. What assurance is provided by the auditor in an agreed-upon procedures engagement? a. A report on factual findings is the end product of the auditor when performing: a. Compile financial statements. d. d. Compilation. Attest is a type of auditing service. Review. 49. Unlike consulting services. b. Agreed-upon procedures engagements. b. Non-assurance engagements include all of the following services. c. Moderate. b. Compilations of financial or other information. Report on the quality of information. Systems design and installation c. Which of the following is an assurance service? a. assurance services: a. 55. b. given certain stipulated facts. except: a. Attestation services. A review provides positive assurance by attesting the reliability of the client's assertions. d. Requires a complete review of all transactions during the period under examination. Management consulting services provide attestation in all cases. d. Personal financial planning 48. Accounting services do not provide attestation. Tax planning d. d. except: a. d. Assurance is a type of attest service. b. 56. d.a. Management and tax consulting. Report on how to use information. An audit provides limited assurance by attesting to the fairness of the client's assertions. 53. An attestation engagement is one in which a CPA is engaged to: a. c. Requires a review of a sample of transactions during the period under examination. b. Auditing is a type of assurance service. Is an essential part of every engagement performed by a CPA. c. c. No assurance. Assurance engagements encompass the following types of services. c. auditing or tax matters. Review engagements. c. b. b. 51. c. b. 47.

Assesses control risk at a low level. Supplies litigation support services. Agreed-upon procedures. In an engagement to perform agreed-upon procedures. c. level of assurance that the information is free of material misstatement. Preparation of tax returns where no conclusion is expressed. Which of the following statements concerning consulting services is incorrect? a. Systems and processes c. Non-assurance engagements include all of the following except a. Business Performance Measurement c. in and of itself. The performance of consulting services for audit clients does not. Suitable criteria AT – Fundamentals of Assurance Engagements (MCQs) Red Sirug Page 7 . b. Behavior d. Provide a high. 59. Consulting services ordinarily involve external reporting. 60. Most CPAs. Historical financial information b. Consulting d. 63. d. d. Which of the following is not an element of assurance engagements? a. Appropriate professional fees 65. c. Review 61. an auditor is engaged to: a. c. Management consulting. In performing an assurance engagement. 58. classify. Objective advisor on the use of information. Provide a moderate level of assurance that the information is free of material misstatement. Auditing b. b. Confidential reviewer. and summarize financial information. Evidence d. but not absolute. Provides management consulting advice. Information System Reliability Service b. including those who provide audit and tax services. Compilation is an example of which one of the following types of services? a. All of the above 66. the CPA acts primarily as a(n): a. 57. Assurance engagements should exhibit the following elements except a. b. Independent practitioner. 62. Which of the following is not an assurance engagement? a. Engagement process d. also provide consulting services to their clients. Which of the following forms may be the subject matter of assurance engagements? a. Management Consulting Service 64. d. Compliance audit. When providing consulting services. b. Auditing and attest services represent two distinctly different types of services. Carry out those procedures of an audit nature to which the auditor and the entity and any appropriate third parties have agreed and to report on factual findings. Use accounting expertise as opposed to auditing expertise to collect. d. c. Expresses a conclusion about an assertion. Subject matter b. A subject matter b. Evidence c. Consulting services differ fundamentally from the CPA's function of attesting to the assertions of other parties. Expert on compliance with industry standards. d.d. impair the auditor's independence. Suitable criteria c. c. a professional accountant typically a. Risk Assessment Service d. b. Accounting c.

d. c. Assurance engagements performed by professional accountants are intended to enhance the credibility of information. A CPA should not submit unaudited financial statements of a non-public entity to a client or others unless. You need to hire some accountants to prepare your monthly financial statements. b. The preparation of your financial statements is referred to as a(n): a. 72. d. b. 70. All of the above. which manufactures wooden tables. d. All of the above 69. the CPA complies with the provisions applicable to a. Negative assurance is given. There is a positive expression of opinion. as a minimum.67. Review. Audit. There is a potential bias in providing information. Nature and form of the subject matter. AT – Fundamentals of Assurance Engagements (MCQs) Red Sirug Page 8 . b. Unreasonably low professional fee. The inherent limitations of control systems. d. Which of the following statements is true? a. Absolute assurance is not attainable as a result of such factors as: a. The need for assurance services arises because: a. Tax evasion c. Compilation engagements. Electronic databases as well as printed reports.. with the identified suitable criteria. b. d. Tax planning 71. c. in all material respects. 75. d. Nature and form of the criteria applied to the subject matter. c. You own Dude. b. 68. Special report. b. The use of judgment. Nature and extent of the process used to collect and evaluate evidence. followed by making suggestions on the most desirable course of action such as to legally minimize the tax liability while achieving the client’s objectives: a. b. Engagement risk is influenced by the risks associated with the following except a. Assurance engagements. 76. Assurance services involve which of the following? a. Nonfinancial information as well as traditional financial statements. Which of the following statements is true? a. c. Inc. Distribution of a report is always restricted when: a. Tax shelter b. The use of selective testing. Compilation. The term “auditor” is broader in scope compared to the term “practitioner. A review has been performed. 73. b. Audit engagements. Relevance as well as reliability. c. Tax compliance d. Economic transactions are less complex than they were a decade ago. Absolute assurance is attainable owing to the fact that much of the evidence available to the CPA is persuasive rather than conclusive.” d. Assurance engagements do not require independence. The responsible party expresses a conclusion that provides a level of assurance as to whether the subject matter conforms. d. d. The CPA’s conclusion provides a level of assurance about the subject matter. b. 74. c. Most users today have access to the system that generates the financial statements they use. c. Professional standards prohibit CPAs from performing non-assurance engagements. Agreed-upon procedures have been performed. The degree or level of assurance that may be provided by the practitioner is inversely related to the scope of procedures performed and their results. There is a consonance of interests of the preparer and the user of the financial statements. c. c. This tax service includes the determination of the tax consequences of planned or potential transactions. Review engagements.

and III 79. Compliance with regulation a. c. Obtaining more evidence may compensate for its poor quality. b. The practitioner is not allowed to use the work of persons from other professional disciplines. c. a. II and III only d. The use of selective testing. as appropriate. 81. Either I or II d. b. Responsible party c. d. The practitioner should consider materiality and assurance engagement risk when planning and performing an assurance engagement. Sufficiency is the measure of the quantity of evidence. the evaluation or measurement of the subject matter against criteria is performed by the a. Internal controls III. Intended users b. PSAEs b. Those persons who are to perform the engagement should collectively possess the necessary professional competence. Appropriateness is the measure of the quality of evidence. I and II only b. The following statements relate to the performance of an assurance engagement other than an audit or review of historical financial information covered by PSAs and PSREs. except a. Practitioner d. in the audit of historical financial information? a. In assertion-based assurance engagements. PSREs c. 78. The reliability of evidence is influenced not by its nature but by its source.77. An engagement conducted to provide a moderate level of assurance that the subject matter is plausible in the circumstances. Assurance engagement include the following. The practitioner may not have the required assurance knowledge and skills to gather and evaluate evidence. d. Historical or prospective financial information II. II. c. c. b. An engagement to perform agreed-upon procedures. 84. Which of the following statements is true concerning evidence in an assurance engagement? a. The fact that much of the evidence available to the practitioner is persuasive rather than conclusive. An engagement conducted to provide a high level of assurance that the subject matter conforms in all material respects with identified suitable criteria. The responsible party or the engaging party imposes a restriction that prevents the practitioner from obtaining evidence required to reduce assurance engagement risk to the appropriate level. Which is incorrect? a. An engagement in accordance with the Philippine Standard on Assurance Engagement(s). The use of judgment in gathering and evaluating evidence and forming conclusions based on that evidence. that is. Which of the following standards are to be applied. PSRSs AT – Fundamentals of Assurance Engagements (MCQs) Red Sirug Page 9 . b. Reducing assurance engagement risk to zero is very rarely attainable or cost beneficial as a result of the following factors. AASC 80. I only b. The subject matter of an assurance engagement may include I. I. 83. II. Circumstances prevent the practitioner from obtaining evidence required to reduce assurance engagement risk to the appropriate level. d. I and III only c. except a. PSAs d. its reliability and persuasiveness. An unqualified conclusion is not appropriate for either reasonable or limited assurance engagement when: I. II only c. d. The assurance report should be in writing and should contain a clear expression of the practitioner's conclusion about the subject matter information. Neither I nor II 82.

d. and computation. if the practitioner has become aware that information coming to his/her attention may be materially misstated. 87. Assurance engagements dealing with historical financial information. Confirmation and tests of controls d. Carry out additional or more extensive procedures as are necessary to achieve limited assurance.85. b. Review engagements only. Compilation engagements and agreements to apply agreed-upon procedures to information. c. Downgrade the engagement to a compilation and issue the appropriate report. Perform a complete audit and issue a modified auditor's report. the practitioner should obtain sufficient appropriate evidence primarily through a. All services that fall under the AASC's engagement standards. A practitioner's review of an entity's financial statements does not provide assurance that he/she will become aware of all significant matters that would be disclosed in an audit. PAEPs d. PREPSs b. the practitioner should a. Reviews of any historical financial information of an audit client. Which of the following standards are to be applied to compilation engagements and engagements to perform agreed-upon procedures to information? a. a. as amended by the AASC in February 2008. PSRE 2400 (Engagements to Review Financial Statements). Assurance engagements dealing with subject matters other than historical financial information. The audit or review of historical financial information. Reviews of historical financial or other information of an audit client. The audit of historical financial information. on the basis of procedures which do not provide all the evidence that would be required in an audit. 89. b. b. Assurance engagements dealing with subject matters other than historical financial information. b. Inquiry and confirmation b. confirmation. d. c. in all material respects. 90. Inquiry and analytical procedures 92. The Philippine Standards on Review Engagements (PSREs) are to be applied in a. However. and of responses to inquiries by obtaining corroborating evidence through inspection. c. tests of records. The review of historical financial information. The objective of a review of financial statements is to enable a practitioner to state whether. PSREs 86. d. c. The Philippine Standards on Assurance Engagements (PSAEs) are to be applied in a. PAPSs c. applies to a. PRSPSs 91. d. Withdraw immediately from the engagement. c. PSAs c. 88. b. The Philippine Standards on Quality Control (PSQCs) are to be applied to a. observation. b. PSAEs d. 93. A review ordinarily involves an assessment of accounting and internal control systems. These statements are issued by the AASC to provide interpretive guidance and practical assistance to auditors in the implementation of PSAs and to promote good practice. Reviews of historical financial or other information by a practitioner other than the entity's auditor. PSRSs b. d. AT – Fundamentals of Assurance Engagements (MCQs) Red Sirug Page 10 . Analytical procedures and substantive tests of details of transactions and account balances c. in accordance with an identified financial reporting framework. Compilation and review engagements only. Which is incorrect? a. The following statements relate to a review of financial statements. Assurance engagements only. anything has come to the practitioner's attention that causes the practitioner to believe that the financial statements are not prepared. For the purpose of expressing negative assurance in the review report. The review of both historical and prospective financial information. Reviews of any historical financial information by a practitioner other than the entity's auditor.

I. II. and III 99. Contains basic principles. The following contain basic principles. Obtain a general knowledge of the business and operations of the entity. I and II only b. Negative Assurance Expressed" c. An auditor may accept an engagement to perform specified procedures on the specific subject matter of specified elements. or items of a financial statement if a. but it does not provide all of the evidence that would be required in audit. II and III only c. reviews. and PSRSs) 101. d. "Compiled without Audit or Review" d. accounts. 98. PSAEs d. "Unaudited" b. The financial statements are prepared in accordance with a special purpose framework. The following statements relate to a review of interim financial information performed by the entity's independent auditor. except Framework for Assurance Engagements Philippine Standards on Quality Control Code of Ethics for Professional Accountants in the Philippines AASC's Engagement Standards (PSAs. d. 95. I and III only d. A review of interim financial information does not provide a basis for expressing an opinion whether the financial information is presented fairly. "Refer to Compilation Report" 97. The Philippine Framework for Assurance Engagements a. Similar to a financial statement audit. c. a. AT – Fundamentals of Assurance Engagements (MCQs) Red Sirug Page 11 . d. including its internal control. b. d. c. PSAs b. "Compiled.c. sufficient to plan and conduct the engagement. Assess internal controls. c. The report does not list the procedures performed. b. PSRSs 100. the auditor should have an understanding of the entity and its environment. except a. b. in all material respects. a review of interim financial information is designed to obtain reasonable assurance that the interim financial information is free from material misstatement. a. 94. as it relates to the preparation of both annual and interim financial information. A single financial statement. except a. Use of the report is restricted. in accordance with an applicable financial reporting framework. consistent with the concepts in the Framework. CPAs in public practice who perform assurance engagements are governed by the following. When performing a compilation engagement. In a review of interim financial information. c. Make inquiries of management to assess the reliability and completeness of the information provided. The level of assurance provided in a review report is less than that given in an audit report. PSREs c. A review comprises inquiry and analytical procedures are designed to review the reliability of an assertion that is the responsibility of one party for use by another party. for the performance of assurance engagements. essential procedures. An engagement to perform agreed-upon procedures may involve the auditor in performing certain procedures concerning I. b. PSAEs. III. the accountant is required to a. Verify matters and explanations. and related guidance for the performance of assurance engagements. b. PSREs. Provides a frame of reference for CPAs in public practice when performing audits. 96. d. Each page of the financial information compiled by the accountant should include the following reference. Which is incorrect? a. II. essential procedures and related guidance. Individual items of financial data. A review of interim financial information may bring significant matters affecting the interim financial in formation to the auditor's attention. and compilations of historical financial information. A complete set of financial statements. The auditor is also the entity's continuing auditor.

The subject matter of an assurance engagement may take many forms such as data. The CPA is independent with respect to the client. 102. 111. a. classify and summarize financial information. systems and processes or behavior. The report on an agreed-upon procedures engagement should contain: AT – Fundamentals of Assurance Engagements (MCQs) Red Sirug Page 12 . Forecasts and projections b. Examination. d. 108. compilation of financial information preparation of tax returns 107. d. Compliance with contractual agreement c. Carry out those procedures of an audit nature to which the auditor and the entity and any appropriate third parties have agreed and to report on factual findings. a. d. b. 103. Assembly Compilation. Assurance engagements are intended to enhance the credibility of information about a subject matter by evaluating whether the subject matter conforms in all material respects with suitable criteria. PSREs. Provide a moderate level of assurance that the information is free of material misstatement. and identifies engagements to which PSAs. c. a. d. d. provided The CPA has audited the financial statements of the client. Which of the following services provides a moderate level of assurance about the client's financial statements? a. b. c. Defines and describes the elements and objectives of an assurance engagement. An engagement to apply agreed-upon procedure engagement may be accepted. Not all engagements performed by professional accountants are assurance engagements. c. The adequacy of the procedures to be performed will be determined by the CPA. an auditor is engaged to: a. moderate or low level of assurance. The procedures employed in doing compilation are: Designed to enable the accountant to express a limited assurance Designed to enable the accountant to express a negative assurance Not designed to enable the accountant to express any form of assurance Less extensive than review procedures but more extensive than agreed-upon procedures Which of the following procedures is normally performed in connection with a compilation engagement? Inquire of management about subsequent events Making inquiries of management concerning actions taken at board meeting Applying analytical review procedures Collect. and summarize financial information. d. Which of the following statements about assurance engagements is not correct? a. b. The Philippine Standards on Assurance Engagements issued by AASC describe the objectives and elements of assurance engagements to provide either a high. c. d. In an engagement to perform agreed-upon procedures. a. c. Establishes standards and provides procedural requirements for the performance of assurance engagements. c. 106. Review d. The form of attestation that provides the highest form of assurance is a(n): Review. 104. c. b. Use accounting expertise as opposed to auditing expertise to collect. b. level of assurance that the information is-free of material misstatement. d.c. b. and PSAEs apply. The distribution of the report will be limited only to specified parties involved. c. b. a. classify. Compilation 109. Pronouncements of Auditing and Assurance Standards Council (AASC) do not cover Review engagement Compilation engagement Consultancy Agreed-upon procedures engagement Which of the following is an example of an assurance engagement? Management advisory services Reporting on financial statements prepared using other comprehensive basis of accounting. d. 110. 105. b. a. but not absolute. Provide a high.

The Philippine Standards on Auditing (PSA) require that a report be issued whenever a CPA firm: Performs an audit. Accept the engagement and perform it in accordance with Philippine Standards on Auditing (PSAs). The performance of consulting services for audit clients does not. 117. Accept the engagement but he/she should conduct research or consult with others to obtain sufficient competence. and copies should be sent to both management and the board of directors. Consulting services ordinarily involve external reporting. d. If the auditor cannot discuss the procedures with all the parties who will receive the report. a. 112. Review relevant correspondence from the parties involved. b. A report may be based upon applying agreed-upon procedures to specified elements. I. The practitioner attaches a report to that financial information. Accept the engagement and issue a report that contains his/her opinion on the achievability of the results of the merger. The users of the report should participate in establishing the procedures to be performed. Seek legal advice if necessary. c. impair the auditor's independence. also provide consulting services to their clients. c. d. Is engaged to perform any services of any nature. c. An expression of positive assurance based on the specific procedures performed. 115. II only. d. Most CPAs. Written. c. The practitioner consents to the use of his/her name in a professional connection. 114. or items of a financial statement. Inform any known third party users of the inappropriate use of his/her name in connection with the information. and a copy should be sent to management alone. Which of the following statements concerning consulting services is false? a. and III 113. Is associated with financial statements. I only. c. II. including those who provide audit and tax services. he/she should: a. c. Performs SEC regulated work. Remain silent. II. I and II only b. II. Neither I nor II. A general description of the procedures performed. b. a. Either I or II. accounts. The form of communication with a client in a consulting services engagement should be Either written or oral. Consulting services differ fundamentally from the CPA's function of attesting to the assertions of other parties. in and of itself. Require management to cease doing so. d. b. I and III only c. he/she may: I. d. 116. Identification of the purpose for which the agreed-upon procedures were performed. a. d. b. d. b. a. Decline the engagement because he/she lacks sufficient knowledge. II and III only d. A practitioner is associated with financial information when: I. c. with appropriate documentation in working papers. b. III. A statement that the auditor is independent of the entity. Distribute a draft of the type of report that will be issued to the parties involved.a. Which of the following is the most appropriate action to be taken by a CPA who has been asked to perform a consulting services engagement concerning the analysis of a potential merger if he/she has little experience with the industry involved? a. b. Written. AT – Fundamentals of Assurance Engagements (MCQs) Red Sirug Page 13 . If the auditor learns that an entity is inappropriately using the auditor’s name in association with financial information. Oral. Discuss the procedures to be applied with appropriate representatives of the parties involved. 118.