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Final Pre-Board Examination
Multiple Choice:

Which of the following is an invalid reason why an auditor cannot issue an absolute assurance?
a. Most audit evidences are conclusive rather than being persuasive.
b. The inherent limitations of any accounting and internal control system.
c. Audit is based on testing.
d. Audit procedures that are effective in detecting ordinary misstatements are ineffective in detecting intentional
Individual CPAs, Firms or Partnerships of CPAs, including partners and staff members thereof shall register with the
BOA and the PRC. If the application for registration of ABC & Associates, CPAs was approved on May 10, 2013, the registration
will expire on:
a. September 30, 2015
c. December 31, 2016
b. December 31, 2015
d. May 10, 2016
3. The independent auditor selects several transactions in each financial area and traces them through the entire system,
paying special attention to evidence about whether or not the controls are in operation. This is an example of a (n)
a. Application test.
c. Substantive test.
b. Test of a control.
d. Test of a function.
Further audit procedures consist of which of the following?
Risk assessment procedures
Substantive procedures
Test of controls
a. Yes
b. Yes
c. No
d. No
Which of the following statements best describes the ethical standard of the profession pertaining to advertising and
a. All forms of advertising and solicitation are prohibited.
b. There are no prohibitions regarding the manner in which CPAs may solicit new business.
c. A CPA may advertise in any manner that is not false, misleading or deceptive.
d. A CPA may only solicit new clients through mass mailings.
6. Some or all of the following are planning considerations:
Criteria to be used.
Nature and extent of involvement of the experts.
Possible sources of evidence
Type of conclusion to be issued.
Preliminary judgment about materiality and engagement risk.
Content of the management letter.
Which of the foregoing are matters that need to be considered in planning an assurance engagement?
a. All of them.
b. I, II, III, V.
c. II, III, IV, VI.
d. I, III, V, VI
7. Confirmations of accounts receivable address which assertion most directly?
a. Completeness
b. Existence
c. Valuation
d. Classification
Which of the following is always present in an attestation engagement?
a. Assertion about the subject matter
c. Subject matter
b. Generally accepted assurance principles
d. An examination report
If information is for managements use only, which of the following forms of CPA association with financial information is
most likely to result in no report being issued?
a. An agreed-upon procedures engagement
c. A compilation
b. An audit
d. A review
A CPA who is not independent may perform which of the following services for a nonissuer company?
Audit evidence on the proper segregation of duties ordinarily is best obtained by:
a. Preparation of a flowchart of duties performed by available personnel
b. Inquiring whether control activities operated consistently throughout the period
c. Reviewing job descriptions prepared by the personnel department
d. Direct personal observation of the employees who apply control activities
12. In considering internal control, the auditor is basically concerned that it provides reasonable assurance that
a. Operational efficiency has been achieved in accordance with management plans
b. Material misstatements due to errors and fraud have been prevented or detected
c. Controls have not been circumvented by collusion
d. Management cannot override the system
13. Inquiries of warehouse personnel concerning possible obsolete or slow-moving inventory items provide assurance about
managements assertion of
a. Completeness
b. Existence
c. Presentation
d. Valuation
The primary reason an auditor requests letters of inquiry be sent to a clients attorneys is to provide the auditor with
a. A description and evaluation of litigation, claims, and assessments that existed at the date of the balance sheet
b. An expert opinion as to whether a loss is possible, probable, or remote
c. The opportunity to examine the documentation concerning litigation, claims and assessments
d. Corroboration of the information furnished by management concerning litigation, claims, and assessments
15. Reports are considered special reports when issued in connection with
a. Compliance with aspects related to audited financial statements/contractual agreement
b. Pro forma financial presentations designed to demonstrate the effect of hypothetical transactions

c. Feasibility studies presented to illustrate an entitys results of operations

d. Interim financial information reviewed to determine whether material modifications should be made to conform with
16. Financial information based on assumptions about events that may occur in the future and possible actions by an entity
a. Historical financial information
c. Pro forma financial information
b. Prospective financial information
d. Budgeted financial information
17. What is meant by a financial forecast?
a. A prospective financial statement that predicts an entitys expected financial position, results of operations, and cash
b. A prospective financial statement that presents an entitys expected financial position, results of operations, and cash
c. A prospective financial statement that predicts an entitys expected financial position, results of operations, and cash
flows based on one or more hypothetical assumptions
d. A prospective financial statement that presents an entitys expected financial position, results of operations, and cash
flows based in one or more hypothetical assumptions
18. The risk of incorrect acceptance and the likelihood of assessing control risk too low relate to the:
a. Allowable risk of tolerable misstatement.
Efficiency of the audit.
b. Preliminary estimates of materiality levels.
Effectiveness of the audit.
19. Which of the following factors is (are) considered in determining the sample size for a test of controls?
deviation rate
deviation rate
20. How would increases in tolerable misstatement and assessed level of control risk affect the sample size in a substantive
test of details?
Increase in tolerable
Increase in assessed
level of control risk
Increase sample size
Increase sample size
Increase sample size
Decrease sample size
Decrease sample size
Increase sample size
Decrease sample size
Decrease sample size
21. An advantage of statistical sampling over nonstatistical sampling is that statistical sampling helps an auditor to:
a. Eliminate the risk of nonsampling errors.
b. Reduce the level of audit risk and materiality to a relatively low amount.
c. Measure the sufficiency of the audit evidence obtained.
d. Minimize the failure to detect errors and fraud.
Which of the following statements best describes the auditors responsibility concerning the appropriateness of the
going concern assumption in the preparation of the financial statements?
a. The auditors responsibility is to make a specific assessment of the entitys ability to continue as a going concern.
b. The auditors responsibility is to predict future events or conditions that may cause the entity to cease to continue as
a going concern.
c. The auditors responsibility is to consider the appropriateness of managements use of the going concern assumption
and consider whether there are material uncertainties about the entitys ability to continue as a going
concern that
need to be disclosed in the financial statements.
d. The auditors responsibility is to give a guarantee in the audit report that the entity has the ability to continue as a
going concern.
23. Which of the following conditions or events most likely would cause an auditor to have substantial doubt about an entitys
ability to continue as a going concern?
a. Cash flows from operating activities are
c. Significant related party transactions are pervasive.
d. Research and development projects are postponed.
b. Stock dividends replace annual cash dividends.
24. Which of the following documentation is not required for an audit in accordance with PSAs?
a. A written audit program setting forth the procedures necessary to accomplish the audits objectives
b. An indication that the accounting records agree or reconcile with the financial statements
c. A client engagement letter that summarizes the timing and details of the auditors planned field work
d. The basis for the auditors conclusion when the assessed level of control risk is below the maximum level
25. During an audit of an entitys shareholders equity accounts, the auditor determines whether there are restrictions on retained
earnings resulting from loans or agreements. The audit procedure most likely is intended to verify managements assertion of
a. Existence of occurrence
Valuation or allocation
b. Completeness
Presentation and disclosure
26. Many entities use the Internet as a network to transmit electronic data interchange (EDI) transactions. An advantage of
using the Internet for electronic commerce rather than a traditional value-added network (VAN) is that the Internet
a. Permits EDI transactions to be sent to trading partners as transactions occur.
b. Automatically batches EDI transactions to multiple trading partners.
c. Possesses superior characteristics regarding disaster recovery.
d. Converts EDI transactions to a standard format without translation software.
27. A hot site is most frequently associated with
a. Disaster recovery.
Source programs.
b. Online relational database design.
Temperature control for computer.
28. Which of the following is a network node that is used to improve network traffic and to set up as a boundary that prevents
traffic from one segment to cross over to another?
a. Router.
b. Gateway.
c. Firewall.
d. Heuristic.
29. During the initial planning phase of an audit, a CPA most likely would
a. Identify specific internal control activities that are likely to prevent fraud
b. Evaluate the reasonableness of the clients accounting estimates
c. Discuss the timing of the audit procedures with the clients management

d. Inquire of the clients attorney as to whether any unrecorded claims are probable of assertion
30. An auditor is preparing an audit report with a qualified opinion. Which of the following phrases is the correct way to start
writing a qualified opinion?
a. Except for
c. Either a or b
b. Subject to.
d. Neither a nor b
An auditor is unable to obtain sufficient appropriate audit evidence as a basis for the opinion on the financial
statements. This situation illustrates a(n):
a. Scope limitation
c. Uncertainty
b. Lack of independence
d. Inconsistency
32. An auditor is unable to determine the amounts associated with illegal acts committed by a client. The auditor would most
likely issue:
a. Either a qualified opinion or a disclaimer of
c. Either a qualified or an adverse opinion
d. A disclaimer of opinion
b. An adverse opinion
A limitation on the scope of an audit sufficient to preclude an unqualified opinion will always result when management:
a. Engages the auditor after the year-end physical inventory count is completed
b. Fails to correct a material internal control weakness that had been identified during the prior years audit
c. Refuses to furnish a management representation letter to the auditor
d. Prevents the auditor from reviewing the working papers of the predecessor auditor
34. In case of a significant client-imposed scope limitation, the auditor must consider issuing a:
a. Qualified opinion or disclaimer of opinion
Disclaimer of opinion or adverse opinion
b. Unqualified report with an explanatory paragraph
Disclaimer of opinion
35. An auditor may not express a qualified opinion when
a. A scope limitation prevents the auditor from completing an important audit procedure
b. The auditors report refers to the work of a specialist
c. An accounting principle at variance with GAAP is used
d. The auditor lacks independence with respect to the audited entity
36. In extreme cases, such as situations involving multiple uncertainties that are significant to the financial statements, the
auditor may consider it appropriate to express a
a. Disclaimer of opinion
Special report
b. Unqualified report with an explanatory paragraph
Qualified report
A purpose of management representation letter is to reduce
a. Audit risk to an aggregate level of misstatement that could be considered material
b. An auditors responsibility to detect material misstatements only to the extent that the letter is relied on.
c. The possibility of misunderstanding concerning managements responsibility for the financial statements
d. The scope of an auditors procedures concerning related party transactions and subsequent events
38. When considering the use of managements written representations as audit evidence about the completeness assertion, an
auditor should understand that such representations
a. Complement, but do not replace, substantive test designed to support the assertion
b. Constitute sufficient evidence to support the assertion when considered in combination with reliance on internal
accounting controls
c. Are not parts of the evidential matter considered to support the assertion
d. Replace reliance on internal accounting controls as evidence to support the assertion
To which of the following matters would materiality limits not apply in obtaining written client representations?
a. Losses from sales commitments
c. Irregularities involving management
b. Unasserted claims and assessments
d. Non-compliance with contractual agreement
40. In developing the overall audit plan and audit program, the auditor should assess inherent risk at the
Audit plan
Audit program
Financial statement level
Account balance level
Account balance level
Financial statement level
Account balance level
Account balance level
Financial statement level
Financial statement level
41. Prior to beginning the field work on a new audit engagement in which a CPA does not possess expertise in the industry in
which the client operates, the CPA should
a. Reduce the audit risk by lowering the preliminary levels of materiality.
b. Design special substantive tests to compensate for the lack of industry expertise.
c. Engage financial experts familiar with the nature of the industry.
d. Obtain knowledge of matters that relates to the nature of the entitys business.
42. Engagement risk is influenced by the risks associated with, except:
a. The sufficiency and appropriateness of the evidence likely to be available.
b. The nature and extent of the process used to collect and evaluate evidence.
c. The identified user of the assurance engagement report.
d. The nature and form of the subject matter.
43. Which of the following would not be considered a motivation to commit fraud?
a. Personal financial problems.
Ineffective internal controls.
b. Stock compensation program.
Tight debt covenants.
44. Which of the following is least likely to be considered a relevant financial statement assertion?
a. Completeness
45. The following statements relate to audit evidence, except:
a. The appropriateness of audit is likely improved by selecting a larger sample size or different population items.
b. The evidence obtained from a source outside the client entity is more persuasive than that one obtained from within.
c. When a clients accounting and internal controls are effective, the evidence obtained is more reliable.
d. The evidence obtained directly by the auditor through physical examination, computation, observation, or
confirmation is more competent than the information that is obtained indirectly.
46. Which of the following is true of the report based on agreed-upon procedures?
a. The report is restricted to those parties who have agreed to the procedures to be performed.
b. The CPA provides the recipients of the report limited assurance as to the reasonableness of the assertion(s)
presented in the financial information.

c. The report states that the auditor has not recognized any basis that requires revision of financial statements.
d. The report should state that the procedures performed are limited to analytical procedures and inquiry.
47. The auditors ability to detect fraud depends on factors such as
Skillfulness of the perpetrator
The relative size of individual amounts manipulated
The frequency and extent of manipulation
The seniority of those involved
The degree of collusion involved
a. I, II, III, IV and V
I, II, III and V only
b. I, III, and V only
III and V only
48. Philippine Standards on Auditing require the auditors to assess the risk of material misstatements due to fraud
a. For every audit.
Sufficient to find any frauds which may exist.
b. For first-time audits.
Whenever it would be appropriate
49. Detection of noncompliance, regardless of materiality, requires considerations of the following:
Integrity of management.
Possible effect on other aspects of the audit.
Legal determination of the act of non-compliance.
a. I, II, III
Which of the following statements best expresses the auditors responsibility with respect to facts discovered after the
date of the auditors report but before the date the financial statements are issued?
a. The auditor should amend the financial statements.
b. If the facts discovered will materially affect the financial statements, the auditor should issue a new report which
contains either a qualified opinion or an adverse opinion.
c. The auditor should consider whether the financial statements need amendment, discuss the matter with
management, and consider taking actions appropriate in the circumstances.
d. The auditor should withdraw from the engagement.
51. The maximum monetary misstatement that can exist in an account without causing the financial statements to be materially
misstated is called the
a. Possible likely misstatement
Projected likely misstatement
b. Known misstatement
Tolerable misstatement
52. Which of the following statements regarding the letter of representation is not correct?
a. It is prepared on the clients letterhead.
b. It is addressed to the CPA firm.
c. It is signed by high-level corporate officials, usually the president and chief financial officer.
d. It is optional, not required, that the auditor obtain such a letter from management
53. A client has a calendar year-end. Listed below are four events that occurred after December 31. Which one of these
subsequent events might result in adjustment of the December 31 financial statements?
a. Sale of a major subsidiary.
b. Adoption of accelerated depreciation methods.
c. Write-off of a substantial portion of inventory as obsolete.
d. Collection of 90% of the accounts receivable existing at December 31.
54. An auditor is required to obtain an understanding of the entity's business, including business cycles and reasons for
business fluctuations. What is the audit purpose most directly served by obtaining this understanding?
a. To enable the auditor to accurately identify significant deficiencies in internal control.
b. To assist the auditor in accurately interpreting information obtained during an audit.
c. To allow the auditor to more accurately perform tests of controls.
d. To decide whether it will be necessary to perform analytical procedures.
55. Which of the following is an element of a CPA firms quality control system that should be considered in establishing its
quality control policies and procedures?
a. Complying with laws and regulations.
Assigning personnel to engagements.
b. Using statistical sampling techniques.
Considering audit risk and materiality.
56. The primary concern of the auditor regarding related party transactions is that
a. They are reported to proper regulatory authorities because they are illegal.
b. Their form be emphasized rather than their economic substance.
c. Their existence and significance be adequately disclosed.
d. Their effects are eliminated from the financial statements.
57. The requirements imposed by PSA regarding the taking of inventory make a distinction between those of auditor and client.
a. Client has the responsibility for setting up the procedures for taking an accurate physical inventory and actually
making and recording the counts.
b. Auditor has the responsibility for setting up the procedures for taking an accurate physical inventory and actually
making and recording the counts.
c. Auditor has the responsibility for setting up the procedures and client has the responsibility for following the
procedures when actually making and recording the counts.
d. Client has the responsibility for setting up the procedures and auditor has the responsibility for making and recording
the counts.
58. Which statement is incorrect regarding obtaining an understanding of the entity and its environment?
a. Obtaining an understanding of the entity and its environment is an essential aspect of performing an audit in
accordance with PSAs.
b. That understanding establishes a frame of reference within which the auditor plans the audit and exercises
professional judgment about assessing risks of material misstatement of the financial statements and
to those risks throughout the audit.
c. The auditors primary consideration is whether the understanding that has been obtained is sufficient to assess the
risks of material misstatement of the financial statements and to design and perform further audit
d. The depth of the overall understanding that is required by the auditor in performing the audit is equal to that
possessed by management in managing the entity.
59. An auditor is concerned with completing various phases of the examination after the balance sheet date. This subsequent
period extends to the date of the
a. Auditors report.
c. Public issuance of the financial statements.
b. Final review of the audit working papers.
d. Delivery of the auditors report to the client.

60. Negative confirmation of accounts receivable is less effective than positive confirmation of accounts receivable balance
a. A majority of recipients usually lack the willingness to respond objectively.
b. Some recipients may report incorrect balances that require extensive follow-up.
c. The auditor cannot infer that all non-respondents have verified their account information.
d. Negative confirmations do not produce evidential matter that is statistically quantifiable.
61. An audit program should be sufficiently detailed to provide all of the following except:
a. Evidential support for the audit opinion.
A record of the work performed.
b. An outline of the work to be done.
A basis for control the audit.
62. According to PSA, the auditors responsibility for failure to detect fraud arises
a. When such failure clearly results from failure to comply with PSAs.
b. Whenever the amounts involved are material.
c. Only when the examination was specifically designed to detect fraud.
d. Only when such failure results from negligence so gross as to sustain an inference of fraud on the part of the auditor.
63. The following statements are discussions about financial assertions and audit evidence. Which of them is (are) correct?
When in substantial doubt as to material financial statement assertion, the auditor likely attempt to obtain sufficient
appropriate audit evidence to remove such doubt.
Difficulty and cost involved is a valid basis for omitting a necessary procedure.
In obtaining audit evidence, the auditor needs to consider the relationship between the cost of obtaining it and its
When there are inconsistent evidences provided by two different sources, the auditor may need to modify his audit
a. II, III, IV
64. Which of the following procedures would an auditor normally plan for a first-time audit?
a. Review litigation against the company that was settled in prior years.
b. Review capital stock transactions from inception of the company.
c. Review accounts receivable transactions from inception of the company.
d. Review long-term debt repayments in prior years.
65. Professional skepticism dictates that when management makes a statement, the auditors should
a. Disregard the statement because such a statement will be overruled by external evidence.
b. Corroborate the evidence with other supporting documentations whenever possible.
c. Ask the client management to put it in a form of board resolution.
d. Accept the statement at its face value because the management has no reason to put itself in shameful
66. Which statement is incorrect regarding significant risks that require special audit considerations?
a. The auditor should determine which of the risks identified are, in the auditors judgment, risks that require
audit consideration.
b. The auditor excludes the effect of identified controls related to the risk to determine whether the nature of the risk, the
likely magnitude of the potential misstatement including the possibility that the risk may give rise to multiple
misstatements, and the likelihood of the risk occurring are such that they require special audit consideration.
c. Routine, non-complex transactions that are subject to systematic processing are more likely to give rise to significant
risks because they have higher inherent risks.
d. Significant risks are often derived from business risks that may result in a material misstatement.
67. Which of the following actions may be appropriate if the auditor is unable to agree to a change of the engagement and is not
permitted to continue the original engagement?
Issue a disclaimer of opinion due to a significant scope limitation.
Auditor should withdraw from the engagement.
Consider whether there is any obligation to report to the board of directors or shareholders the circumstances
necessitating the withdrawal.
a. I
68. The auditing profession recognizes the need for uniformity in reporting as a means of
a. Defending against lawsuits.
b. Standardizing the policies of various CPA firms.
c. Upgrading the communications skills of auditors.
d. Promoting credibility of the report in the global marketplace.
69. PSAs require that the audit report must be titled. This is done in order to
a. Indicate that the auditor is a CPA.
b. Distinguish the report from the report that might be issued by others.
c. Identify the financial statements audited.
d. Emphasize that the report is not a guarantee as to the fair presentation of the financial statements.
70. According to Philippine Standard on Related Services, the procedures employed in doing compilation are:
a. Designed to enable the accountant to express a limited assurance.
b. Designed to enable the accountant to express a negative assurance.
c. Not designed to enable the accountant to express any form of assurance.
d. Less extensive than review procedures but more extensive than agreed-upon procedures.
71. They are not presented as complete financial statements capable of standing alone, but are integral part of the current
period of financial statements intended to be read only in relationship to the current period figures.
a. Corresponding figures.
Comparative financial statements.
b. Prior period figures.
72. An auditor ordinarily sends a standard confirmation request to all banks with which the client has done business during the
year under audit, regardless of the year-end balance. A purpose of this procedure is to
a. Provide the data necessary to prepare a proof of cash.
b. Request a cutoff bank statement and related checks be sent to the auditor.
c. Detect kiting activities that may otherwise not be discovered.
d. Gather evidence regarding the completeness assertion.
73. The purpose of risk assessment procedures is to
a. Obtain an understanding of the entity and its environment, including its internal control, to assess the risks of material
misstatement at the financial statements and assertion levels.

b. Test the operating effectiveness of controls in preventing, or detecting and correcting, material misstatements at the
assertion level.
c. Detect material misstatement at the assertion level.
d. All of the above.
74. Which one of the following statements is incorrect?
a. The auditors report must state whether the financial statements conform with the generally accepted accounting
b. The auditors report must not state whether the applicable generally accepted accounting principles were consistently
followed from the prior period to the current period.
c. The auditors report must state whether the client has provided adequate disclosure on the financial statements and
in the accompanying notes to financial statements.
d. The auditors report must express an opinion on the financial statements taken as a whole, or explain why an opinion
cannot be provided.
According to the standards of profession, which of the following would be considered consulting services?
Advisory services
Implementation services
Product services
Which of the following is correct concerning internal auditing?
a. The internal auditor often coordinates his/her work with that of the companys external auditors
b. The internal auditor must maintain independence in the sense of doing the audit completely independently from
the external auditors
c. The internal auditor has no responsibility to maintain independence
d. The work of internal auditor, if they are CPAs, substitutes for the work of external auditors
Which of the statements below cannot be considered as one of the objectives of the Commission on Audit?
a. Fiscal responsibility for the subdivisions, agencies and instrumentalities of the government.
b. Development and implementation of a comprehensive audit program.
c. Institution of control measures governing the receipt, disbursements, and uses of fund and property.
d. Keeping and enhancement of the information value of government accounts.
Which statement is correct concerning the relevance of various types of controls to a financial audit?
a. An auditor may ordinarily ignore a consideration of controls when a substantive audit approach is taken
b. Controls over the reliability of financial reporting are ordinarily most directly relevant to an audit, but other
may also be relevant
c. Controls over safeguarding of assets and liabilities are of primary importance, while controls over the reliability of
financial reporting may also be relevant
d. All controls are ordinarily relevant to an audit
Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls
in the revenue cycle?
a. Fictitious transactions may be recorded that cause an understatement of revenues and an overstatement of
b. Claims received from customers for goods returned may be intentionally recorded in other customers accounts
c. Authorization of credit memos by personnel who receive cash may permit the misappropriation of the cash
d. The failure to prepare shipping documents may cause an overstatement of inventory balances
Which of the following analyses appearing in a predecessors working papers is the successor auditor likely to be
interested in reviewing?
a. Analysis of non-current balance sheet accounts
Analysis of contingencies
b. Analysis of current balance sheet accounts
Analysis of income statement accounts
After finishing the review phase of the study and evaluation of internal control in an audit engagement, the auditor
should perform compliance test on
a. Those controls that the auditor plans to rely on
b. Those controls in which material weaknesses were identified
c. Those controls that have a material effect upon the financial statement balances
d. A random sample of the controls that were reviewed
82, 1st One of the functions of the Board of Accountancy is to perform visitorial powers or review
professional work of
accounting practitioners on a general or random basis
2nd After three years, subject to certain conditions, the Board of Accountancy may order the reinstatement of a CPA
whose certificate of registration has been revoked
a. 1st statement is true, 2nd statement is false
Both statements are true
b. 1st statement is false, 2nd statement is true
Both statements are false
83. 1st Working papers are the records kept by the independent auditor of the procedures followed, tests performed,
information obtained, and conclusions reached pertinent to an audit
2nd Audit working papers are generally the property of the company whose records were audited
a. 1st statement is true, 2nd statement is false
Both statements are true
b. 1st statement is false, 2nd statement is true
Both statements are false
84. 1st Audit risk may be assessed in quantitative or non-quantitative terms
2nd The auditors preliminary judgment about materiality levels for audit purposes may or may
not be quantified
a. 1st statement is true, 2nd statement is false
Both statements are true
b. 1st statement is false, 2nd statement is true
Both statements are false
85. 1st Inherent and detection risk exist independently of the audit of financial statements
2nd The greater the inherent and control risk the auditor believes exists, the less the detection risk he can accept
a. 1st statement is true, 2nd statement is false
Both statements are true
b. 1st statement is false, 2nd statement is true
Both statements are false
86. Audit programs should be designed so that
a. Most of the required procedures can be performed as interim work
b. Inherent risk is assessed at a sufficiently low level
c. The auditor can make constructive suggestions to management
d. The audit evidence gathered supports the auditors conclusions

87. PSA 800, The Auditors Report on Special Purpose Audit Engagements does not apply to a(n)
a. Audit of financial statements prepared in accordance with GAAP in the Philippines.
b. Audit of financial statements prepared in accordance with the cash receipts and cash disbursements basis of
c. Audit engagement that involves expression of an opinion on one or more components of the financial statements.
d. Reports on summarized financial statements derived from annual audited financial statements.
88. When providing limited assurance that nothing came to the CPAs attention that would indicate that the financial statements
are not in accordance with financial reporting standards, the CPA should
a. Obtain corroborative evidence to support managements responses to inquiries.
b. Test the accounting records that identify inconsistencies with prior years financial statements.
c. Understand the accounting principles of the industry in which the business entity operates.
d. Develop an audit program.
89. The other information in a published report containing audited financial statements may be relevant to an independent
auditors examination. With respect to other information
a. The auditors responsibility does not extend beyond the financial information identified in the report.
b. The auditor is obligated to perform auditing procedures to corroborate other information contained in a document.
c. The auditor need not be concerned with the other information.
d. The auditor must include the other information in the report.
90. The following documents shall be submitted by applicants for the CPA licensure examination, except
a. Certificate of Live Birth in National Statistics Office (NSO) security paper.
b. Baptismal Certificate.
c. Marriage Contract in NSO security paper for married female applicants.
d. Transcript of records with indication therein of date of graduation and Special Order Number unless it is not required.
91. The following statements relate to the practice of public accountancy. Which statement is incorrect?
a. Single practitioners and partners of partnerships organized for the practice of public accountancy shall be registered
CPAs in the Philippines.
b. From the effectivity of RA9298, a Certificate of Accreditation shall be issued to CPAs in public practice only upon
showing, in accordance with rules and regulations promulgated by the Board and approved by the PRC, that
registrant has acquired a minimum of two (2) years meaningful experience in any of the areas of public
including taxation.
c. A partnership engaged in the practice of public accountancy may be carried on in the form of a general partnership
(GP) or a limited liability organized in accordance with Philippine laws.
d. The Securities and Exchange Commission shall not register any corporation organized for the practice of public
92. Which statement is correct regarding CPE requirements for renewal of professional license?
a. The total CPE units required for CPAs shall be sixty (60) units for three (3) years, provided that a minimum of
twenty (20) credit units shall be earned in each year.
b. A registered professional shall be permanently exempted from CPE requirements upon reaching the age of 60
years old.
c. A registered professional who is working abroad shall be temporarily exempted from compliance with CPE
requirement during his/her stay abroad, provided that he/she is has been out of the country for at least one
immediately prior to the date of renewal.
d. Those who failed to renew professional licenses for a period of five (5) continuous years from initial registration, or
from last renewal shall be declared delinquent.
93. Before the practitioner rely on the work of the expert, he should obtain sufficient appropriate evidence that the work of the
expert is adequate considering the following, except:
a. The reasonableness and significance of the experts findings in relation to the objective of the engagement and the
conclusion on the subject matter.
b. The professional competence, experience and objectivity of the expert.
c. The findings of the expert support the assertion issued by the party responsible to the subject matter.
d. The reasonableness of the assumptions, methods and source data used by the expert.
94. When financial statements are audited by an accounting firm, the partner-in-charge of engagement ordinarily signs in the
name of the firm because:
a. The practice is impliedly required by the Philippine Accountancy Act of 2004.
b. This assures the users of financial statements that the firm assumes the entire responsibility for the audited financial
c. The firm assumes responsibility for the audit.
d. The opinion becomes more credible if signed in name of the firm.
95. The auditors responsibility paragraph in the auditors report would normally include the following, except:
a. Statement that the audit was conducted in accordance with PSAs.
b. Statement that the audit was planned and performed to obtain reasonable assurance about whether the
financial statements are free of material misstatements.
c. Statement by the auditor that the audit provides a basis for opinion.
d. Statement that the audit includes examining on a detailed basis evidence supporting the amounts and disclosures in
the financial statements.
96. The PSA requires that, whenever practical and reasonable, the CPA must confirm a sample of
a. Accounts receivable
Accounts payable
b. Both accounts receivable and payable
Clients bank accounts
When the auditor examines the clients documents and records to substantiate the information on
the financial
statements, it is commonly referred to as
a. Inquiry
b. Confirmation
Physical examination
The audit procedure which requires the auditor to record the last check number used on the last day of the year and
subsequently trace to the outstanding checks and the cash disbursements journal is performed to satisfy the audit objective of
a. Mechanical accuracy
b. Validity
99. Which of the following is not prohibited by the Code of Professional Ethics for CPAs?
a. Advertising and solicitation of clients.

b. Payment of commission to obtain a client.

c. Receiving a contingent fee on a tax case before the Bureau of Internal Revenue.
d. Offering employment to a staff member of another CPA without first informing the CPA.
100. All CPAs who are considered in the practice of accountancy shall abide by the requirements, rules and regulations on
continuing professional education. For this purpose, it is required that all registered CPAs must complete a minimum of
a. 60 credit units in three years
30 credit units in three years
b. 45 credit units in three years
15 credit units in three years