Auditing and Assurance Principle 2017 Edition

By : Ireneo, Ireneo
Ireneo and James
James
Solutions Manual

 AS!E" #E$ % &'AP(E" 1 : )undamentals o* Assurance Ser+ices

11
1 FALSE Assurance refers to the practitioner’s   satisfaction...
2 TRUE
3 FALSE
4 TRUE
5 TRUE
6 FAL
FALSE The
The res
respopons
nsib
ibe
e part
part!! an"
an" the
the int
inten
en"e
"e"" use
userr nee
nee"" not
not be fro
fro#
# sep
separarat
atee or$
or$an
ani%i%a
ation
tions.
s.
& TRUE The ter# practitioner is broa"er  in  in scope co#pare" to the ter# au"itor.
' FALSE A pr
professiona ac accountant sh sha not  a$ree
 a$ree to perfor# an assurance en$a$e#ent (hich the!
are not co#petent to carr! out.
) TRUE
1* FAL
FALSE The
The int
inten
en"e
"e"" use
userr #a!
#a! be thethe one
one (h(ho en$en$a a$es
$es the
the prof
profes
essi
sion
ona
a accou
ccount ntan
ant.
t.
11 FALS
FALSE
E See
See not
note e in
in nu#
nu#be berr 1*.
1*. The
The int
inten
en"e
"e" " use
userr is
is the
the pers
person
on or cas
casss of
of per
persosons
ns for
for (ho
(ho## the
the
practitioner prepares the report.
12 TRUE
13 TRUE
14 TRUE
15 FALSE The criteria in an FS au"it is +FRS or ,AA+.
16 FALSE Appropriateness re refers to
to -uait!  (hie sufficienc! refers to -uantit! ... ...
1& FALSE E/i"ence obtaine" "irect! t! b! the practi ctitione
oner is #ore  reiabe...
 reiabe...
1' FALSE The practitioner e0presses a concusion that pro/i"es a e/e of assurance...
1) FAL
FALSE This
This sta
state#
te#ent
ent "es
"escr
crib
ibes
es a "ir
"ireect rep
reporti
ortin$
n$ assu
assura
ranc
nce
e en$
en$a a$e#e
$e#entnt..
2* TRUE
21 FALSE Absoute assurance is $enera! not  attainabe...
 attainabe...
22 FALSE +As #a! perfor# nonassurance en$a$e#ents.
23 FALS
FALSE
E A$re
A$ree"
e"uupo
pon n proc
proce"
e"ur
ures
es ac
ac a (rit
(ritte
tenn assu
assuraranc
nce
e repo
report
rt or conc
concuusi
sion
on.. t is a non
non
assurance en$a$e#ent.
24 FAL
FALSE o#p
o#pi ian
ance
ce au"i
au"itsts are
are cass
assif
ifie
ie"
" as assu
assuraranc
nce e en$
en$a$e#
a$e#e ents.
nts.
25 TRUE

12
1 A 
2 
3  En$a$e#ent process is an ee#ent accor"in$ to the superse"e" +SA 1**.
4 A 
5 
6 
&  Sub7ect #atte
tter #a
#a! in
incu"
u"e fi
financia
ia or
or no
nonfin
financia in
infor#ation ph
ph!sica
ca ch
character
teristics
ics
s!ste#s an" processes an" beha/ior.
' A 
)  Sufficienc! is an attribute of au"it e/i"ence.
1* A Efficienc! an" effecti/eness #a! in/o/e sub7ecti/e factors.
11 
12 
13  o#piations are nonassurance en$a$e#ents.
14  hoice  refers to usiness Ris Assess#ent ser/ice.
15 
16 
1& A 
1' A 
1) 
2* 

1
 Auditing and Assurance Principle 2017 Edition
By : Ireneo, Ireneo
Ireneo and James
James
Solutions Manual

 AS!E" #E$ % &'AP(E" 2 : Audits o* )inancial Statements : An Introduction

21
1 TRUE
2 FALSE ...co#pie" (ith $enera! accepte" accountin$ principes  or  or +FRS
3 FALSE This refers to operationa au"its .
4 FAL
FALSE +re
+repara
paratition
on of finfinanci
anciaa stat
state#e#en ents
ts is the
the resp
respononsi
sibi
biit!
it! of #ana$ana$e e#e
#entnt..
5 TRUE
6 FAL
FALSE An au"i
au"itt ai"
ai"ss in
in the
the co#
co##uni
#unica cati
tion
on of eco
econo
no#i
#icc "a
"ata becauecause se it pr
pro/i"
o/i"es
es rea
reasona
sonab be
e
assurance that the financia state#ents are fair! state".
& FALSE The fifinancia sta
statte#ents re#ain #a #ana$e#ent’s re responsibiit!. t!.
' TRUE
) TRUE
1* TRUE
11 FALS
FALSE
E The
The #os
#ostt cos
cost
tbe
bene
nefifici
cia
a opti
optionon to re"u
re"ucece info
infor#
r#at
atio
ion n ris
ris is
is to
to ha/
ha/e e the
the fina
financ
nciaia
state#ents au"ite".
12 FAL
FALSE An au"i
au"itt "oe
"oess not
not pro/
pro/i" i"ee ass
assur
uraance
nce re$
re$aar"in
r"in$$ the
the pre
pre/ent
/entio ionn of
of fra
frau"
u"..
13 TRUE
14 FALS
FALSE
E The
The a au"
u"it
itor
or of the
the pas
pastt foc
focususe"e" on "ete
"etect
ctin
in$
$ fra
frau"
u" (hi
(hiee the
the a au"
u"ititor
or of to"a
to"a!! foc
focus use"
e" on
e0pressin$ an opinion on the fairness of financia state#ents.
15 TRUE
16 FALSE The rues an" re$uations are set b! a hi$her authorit!  8such  8such as e$isation9.
1& TRUE
TRUE :ote
:ote ho(e
ho(e/e /er
r that
that e0te
e0ternrnaa au"i
au"ititin$
n$ #a
#a! ! as
aso
o ref
refer
er to operoperat atio
iona
na au"
au"ititss an"
an" co#p
co#pi ian
ance
ce
au"its that are perfor#e" b! in"epen"ent au"itors.
1' TRUE
1) FALS
FALSE
E nte
ntern
rna
a au"i
au"its
ts are
are int
inten
en"e"e" " to
to ser
ser/e
/e the
the nee
nee"s
"s of #a
#ana na$e$e#e#entnt not
not to ai"ai" the
the e0te
e0tern rna
a
au"itor.
2* FALSE The #a#a7or beneficia iciarr! of
of in
interna au au"its is #a
#ana$e#ent.
21 FALSE
22 FALSE Au"itin$ re-uires that "ata shou" be /erifiabe.
23 TRUE
24 TRUE
25 FALS
FALSE
E The
The #ai
#ainn" "if
iffe
fere
renc
ncee bet
bet(e
(een en au"i
au"itotors
rs an"
an" aacc
ccou
ount
ntan
ants ts is
is the
the abi
abiit
it!
! to
to $at
$athe
herr an"
an" e/a
e/aua
uate
te
e/i"ence.

22
1  e$ree of correspon"ence bet(een assertions an" estabishe" criteria .
2 
3 
4 
5  This refers to the co#peteness assertion
6 
& 
' 
) 
1* 
11 
12  hoic
oice A is (ron$ because in"epen"ent au"itin$
in$ is not a branch of acco
ccountin$. hoice
ice 
refers to accountin$. hoice  is incorrect because au"itin$
au"itin$ cannot assure the accurac! of
financia state#ents.
13 A 
14 A Line fu
functi
ctions ar
are p
po
ositio
tions th
that e0
e0ercise "
"e
ecision#a
#ain$ po(ers or
or re
responsibiitie
ties.
15 

2
 Auditing and Assurance Principle 2017 Edition
By : Ireneo, Ireneo
Ireneo and James
James
Solutions Manual

16 A 
1& 
1' 
1) 
2* 
21 
22 A nfor#
or#atio
tion ri
ris is the ie
ieihoo" that infor#ation pres resente"
te" is fase or #is
isea"in$
in$.
23  The be
best re
reason for
for au"its is
is th
the co
confict of
of in
inter
terest be
bet(e
t(een pr
preparers an
an" us
users of fi
financia
state#ents.
24  hoic
oice  re
refers to the ob7ecti/
cti/ee of a financia stat
tate#ent au
au"it not a reason for au
au"its.
25 
26  Stat
tate#ent 1 is fa
fase b
be
ecau
cause +
+As ha
ha/e aass th
their pr
pri#a
i#ar! re
responsibii
iit! th
the p
pe
erfor#ance of
the au"it function on pubishe" financia stat e#ents of pubic! tra"e" corporations.
2& 
2' 
2) 
3*  So#e
o#e e/i"ence supportintin$ peso representati
tation
onss in the financia stat
tate#ents #ust be
obtaine" b! ora or (ritten representation of #ana$e#ent .

 AS!E" #E$ % &'AP(E" - : (.e Pro*essional Practice o* Accounting

-1
1 FALSE
2 TRUE
3 FALSE There ar
are 1*
1* si
si$natories a
a #e
#e#bers of of AS
ASEA: of of th
the ;R
;RA.
4 FAL
FALSE The
The +A
+A teach
eachin
in$
$ is pract
ractic
icin
in$$ the
the prof
profes
essi
sion
on in the
the e"uc
e"ucat
atio
ion
n sect
sector
or..
5 FALSE ...has pai"up capita of at east F4<E #iion an"=or annua re/enue of at east TE: #iion 
TE: #iion .
6 FAL
FALSE A +
+A #a!
#a! pract
ractiice in #ore
#ore than
than one
one sec
secto
tor
r pro/
pro/ii"e"
"e" suc
such
h pra
pract
ctic
ice
e" "oe
oess not
not i#pa
i#pair
ir the
the
-uait! of ser/ices ren"ere" in a sectors in/o/e".
& FALSE The FRS is the officia accountin$  stan"ar"
 stan"ar" settin$ bo"! in the +hiippines. For au"itin$
stan"ar"s in the +hiippines the Au"itin$ an" Assurance Stan"ar"s ounci is the
responsibe bo"!.
' TRUE
) FALS
FALSE
E The
The >A
>A cons
consis
ists
ts of a chai
chair#
r#an
an an"
an" si0
si0 #e
#e#b
#ber
ers
s a
a app
appoi
oint
nte"
e" b! the
the +hi
+hii
ipp
ppin
ine
e +re
+resi
si"e
"ent
nt..
1* FALSE The +
++A ha
has 15
15 na
nationa "i
"irectors.
11 TRUE
12 FALS
FALSE
E Such
Such can"
can"i"i"at
atee sha
sha
 be re-u
re-uir
ire"
e" to tae
tae a ref
refre
resh
sher
er cour
course
se of at eas
eastt 24
24 uni
units
ts of sub7
sub7ec
ectt
$i/en in the +A oar" e0a#s. After the refresher course the can"i"ate #a! be ao(e" to to
tae the +A oar" E0a#s a$ain.
13 FALS
FALSE
E The
The +A
+A cert
certif
ific
icat
atee is
is a one
oneti
ti#e
#e issu
issuan
ance
ce on!
on!.. The
The pro
profe
fess
ssio
iona
na i"e
i"ent
ntif
ific
icat
atio
ion
n car
car"" sha
sha
 be
rene(e" e/er! 3 !ears.
14 FAL
FALSE ,ene
,enera
ra
!
! fore
foreii$n +As
+As are
are n
not
ot ao
ao(e
(e"" to
to pra
pract
ctic
ice
e in
in the
the +hii
hiipp
ppin
ines
es..
15 TRUE
16 FALSE >n
>n! th
the cou
courrts of
of a
a( ca
can #e
#ete ou
out i#
i#pris
rison#ent se
senten
tences.
1& TRUE
1' FALSE This refers to inte$rit!.
1) FALSE +SAs contain basic principes  an"
 an" essentia proce"ures...
2* FALS
FALSE
E A +A
+A #a#a!! "ep
"epar
artt fro
fro#
# an
an AAS
AAS
is
issu
sue"
e" stan
stan"a
"ar"
r" if such
such "epa
"epart
rtur
ure
e sha
sha
 resu
resut
t in a #or
#ore
e
effecti/e achie/e#ent of the ob7ecti/e of an en$a$e#ent. ?o(e/er the +A #ust be
prepare" to 7ustif! such "eparture in his or her au"it report.
21 FALS
FALSE
E +rac
+racti
tice
ce Sta
State
te#e
#ent
ntss (hi
(hie
e ha/
ha/in
in$
$ auth
author
orit
it!
! ser/
ser/e
e on!
on! as
as pro
pro/i
/i"e
"ers
rs of
of tech
techninica
ca $ui
$ui"a
"anc
nce
e in
in
i#pe#entin$ the re-uire#ents of +SAs.
22 FALSE The #ini#u# +E units per !ear is 15 units.

3
 Auditing and Assurance Principle 2017 Edition
By : Ireneo, Ireneo
Ireneo and James
James
Solutions Manual

23 FALSE +er#anent e0e0e#ption sh

sha be
be $r
$rante" up
upon re
reachi
chin$ a$
a$e 65 .
24 FALSE The +R1 1+E 1ounci...
25 FALS
FALSE
E + 6)2
6)2 has
has are
area"
a"!
! bee
been
n sup
super
erse
se"e
"e"
" b!
b! Rep
Repub
ubi
icc Act
Act :o.
:o. )2)
)2)'
' the
the +hi
+hii
ipp
ppin
ine
eAAcc
ccou
ount
ntan
anc!
c!
 Act of 2**4

-2
1 
2 
3 
4  To be con
consi"ere" as practici
ticin
n$ the
the profession the +A #ust be usin$
in$ his=her no(e
(e"$e or
e0pertise in accountin$.
5 A 
6  Fun"a#enta prprincipes re
refer to
to et
ethica re
re-uire#ents th
that #u
#ust be
be co
co#pie" (i
(ith in
in a
a
en$a$e#ents of the +A. n"epen"ence (hie bein$ an ethica re-uire#ent is not
necessar! in so#e +A ser/ices 8such as co#piation of financia state#ents9.
& 
'  Representation ofof c
cients be
before $
$o
o/ern#ent a$
a$encies on
on ta
ta0 an" ot
other #a
#atters #u
#ust be
be
reate"  to
 to accountin$.
) A 
1* 
11 
12 A 
13  ;ust not ha/e an! pecuniar! interest "irect or in"irect ...
...
14 
15 
16 
1& 
1' A 
1)  Toerance  of
 of /ioations of the +hiippine Accountanc! Act is a $roun" for suspension or
re#o/a of a #e#ber of the >A.
2* 
21 
22 
23 
24 
25 
26 A :aturai%e" Fiipino citi%ens #a! tae the +A oar" E0a#s.
2& 
2' 
2) A 
3* 
31 
32 A 
33 

4
 Auditing and Assurance Principle 2017 Edition
By : Ireneo, Ireneo
Ireneo and James
James
Solutions Manual

 AS!E" #E$ % &'AP(E" / : Setting p and Maintaining An Accounting Practice

/1
1 TRUE
2 FALSE At e
east '*
'* un
units b!
b! 2*
2*1& in increasin$ $r
$ra"ua! to
to 12
12* un
units
3 FAL
FALSE The
The corp
corpor
orat
ate
e for#
for# is notnot a
ao(e
o(e"" for the
the prac
practi
tice
ce of pubi
ubicc acco
accoun
unta
tanc
nc!.
!.
4 FALSE This #etho" of biin$ refers to per "ie# basis.
5 TRUE
RUE :ote
:ote ho(e
ho(e/ /er tha
that thi
thiss is
is not
not the
the #
#aain "ete
"eter#
r#in
inan
antt of
of the
the a#a#ou
ount
nt of pro
profe
fess
ssio
iona
na fee
fees.
s. See
See
reate" -uestion nu#ber 6.
6 TRUE
& FALSE This is a contin$ent fee arran$e#ent.
' FALSE :ot an!#ore re-uire" per >A Resoution :o. 5)
) FALSE This refers to soicitation.
1* FALSE ...sha be /ai" for a perio" of three !ears ...
...
11 FALSE @3* "a!s fro# "ate of such "eath
12 FALSE @ao(e" sub7ect to certain con"itions
13 TRUE
14 FAL
FALSE @the
@there re is no such
such con
con"iti
"ition
on for
for re/o
re/oca
cati
tion
on of partn
artne
er’s
r’s ice
icens
nsee
15 FALSE @+R
@+R + +E o
ounci cacan "e
"ee$ate the
the (o
(or toto +
++A ++E oounci
16 FALS
FALSE
E @not
@not i##e
i##e"i"iat
ate
e!.
!. Thre
Threee !ea
!ears
rs of #e
#ean
anin
in$f
$fu
u e0pe
e0peri
rien
ence
ce sha
sha be earn
earne"
e" firs
firstt b!
b! the
the +A 
+A 
1& FALS
FALSE
E @it’
@it’ss the
the cert
certif
ific
icat
ate
e of
of re$i
re$ist
stra
rati
tion
on that
that is
is $ran
$rante
te"" on!
on! onc
once.
e. er
erti
tifi
fica
cate
te of
of Acc
Accrere"i
"ita
tati
tion
on is
is
/ai" for three !ears.
1' TRUE
1) FALSE @first na#e is ao(e"
2* TRUE These are aternati/e #etho"s of earnin$ + u
un
nits.

/2
1 
2 
3 
4 
5 
6 
& 
' 
) A 
1* 
11 
12 
13 
14 
15 
16 
1& A 
1' 
1) 
2* 

5
 Auditing and Assurance Principle 2017 Edition
By : Ireneo, Ireneo
Ireneo and James
James
Solutions Manual

 AS!E" #E$ % &'AP(E"  : uality &ontrols

1
1 TRUE
2 FALSE The fir#’s partners  assu#es
 assu#es uti#ate responsibiit!...
3 FALSE At east annua!
4 FALSE A fa#iiarit! threat occurs...
5 TRUE S#aer fir#s #a! e#po! ess  for#a...
 for#a...
6 TRUE
& FAL
FALSE ons
onsu
uta
tati
tion
on is a nor
nor#a
#a par
partt of
of a +A’
+A’ss en$
en$a$
a$e#
e#e
ents
nts an" appi
ppies
es in par
parti
ticu
cua
arr to
to
contentious or "ifficut #atters.
' TRUE
) FALSE An enen$a$e#ent -u-uait
it! co
contro
tro re
re/ie( is
is re
re-uire" fo
for a
a au
au"its of iste" entities.
1* FALSE The en$a$e#ent partner #a! consut  (ith  (ith the en$a$e#ent -uait! contro re/ie(er...
11 FALSE ...incu"e at east one en$a$e#ent  for
 for each en$a$e#ent partner o/er an inspection c !ce.
12 FALSE Au"it (orin$ papers are the propert! of the au"itor.
13 TRUE
14 FALS
FALSE
E +SA
+SA 22*
22* fo
foo(
o(ss the
the cas
cassi
sifi
fica
cati
tion
on of ee#
ee#en ents
ts of -ua
-uait
it!
! con
contr
tro
o #e
#ent
ntio
ione
ne"
" in
in +S
+S
 :o.
:o. 1
15 FALS
FALSE
E +SA
+SA 22*
22* a
app
ppiies
es to au"i
au"its
ts of
of his
histo
tori
rica
ca fin
finan
anci
cia
a info
infor#
r#at
atio
ion
n (hi
(hiee +S
+S :o.
:o. 1 app
appie
iess to
to
assurance ser/ices in $enera.

2
1 
2 
3  En$a$e#ent -uait! contro re/ie( appies to en$a$e#ents prior to issuance of the report 
(hie inspections app! to co#pete"  en$a$e#ents.
 en$a$e#ents.
4 
5  ;onitorin$ is the responsibiit! of the ea"ers of the fir#.
6 
& 
' 
) A 
1*  Rot
Rotation
tion of se
senior personn
onne 8i
8i.e. pa
partn
rtner9 is
is "o
"one e/
e/er! fifi/e !e
!ears as
as #a
#an"ate" b!
b! the
o"e of Ethics.
11 
12  The o"e of Ethics "oes not re-uire continuance of the en$a$e#ent.
13  ...coachin$ b! #ore  e0perience"
 e0perience" staff.
14 A hoice
ice  is incorr
orrect because super/ision incu"
u"es consi"erin$ the cap
capabiities an"
co#petence of in"i/i"ua #e#bers of the assurance tea# . hoice  is incorrect because
super/ision incu"es a""ressin$ si$nificant issues... hoice  is incorrect because
super/ision incu"es i"entif!in$ #atters for consutation or consi"eration b! #ore 
e0perience" en$a$e#ent tea# #e#bers.
15 
16 A 
1& 
1' A 
1) 
2* A 
21 
22 
23 
24 
25 

6
 Auditing and Assurance Principle 2017 Edition
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Ireneo and James
James
Solutions Manual

 AS!E" #E$ % &'AP(E" 3 : (.e &ode o* Et.ics

Et.ics *or &PAs in t.e P.ilippines

31
1 FALSE
2 TRUE
3 FALSE The au"itor shou" as the cient to correct the error.
4 FALSE A +A #a! not  /ountari!...
 /ountari!...
5 TRUE
6 TRUE
& FALSE A fa#iiarit! threat ...
...
' TRUE
) FALSE A professiona accountant in pubic practice (i or"inari! nee"  ...
 ...
1* FALSE A pr
professiona ac
accountant in
in p
pu
ubic pr
practice #a
#a! not  rea"i!...
 rea"i!...
11 TRUE
12 FALS
FALSE
E :et(
:et(or
or
 fir
fir#s
#s are
are as
aso
o re-
re-ui
uire
re"
" to
to be
be in"
in"ep
epen
en"e
"ent
nt of a fin
finan
anci
cia
a stat
state#
e#en
entt au"
au"it
it cie
cient
nt..
13 TRUE
14 FAL
FALSE >n!
>n! e$i
e$ititi#
#ate
ate ai#s
i#s #ust
#ust be furt
furthe
here
re"" an" supp
suppor
orte
te"" b! the
the +A.
+A.
15 FALSE +As ca
cannot pr pro/i"e asassurance of
of in
infaibiit!.
16 FALS
FALSE
E The
The firs
firstt re#e
re#e"! "! is
is to app
app!
! the
the po
poic
icie
iess of the
the or$
or$an
ani%
i%at
atio
ion
n on
on reso
resouuti
tion
on of
of eth
ethic
ica
a con
conffic
ict.
t.
1& FALS
FALSE
E >b7e
>b7ect
cti/
i/it
it!
! is
is "if
"iffe
fere
rent
nt fro#
fro# stub
stubbo
born
rnne
nessss.. >b7e
>b7ect
cti/
i/it
it!
! si#
si#p
p!
! ref
refer
erss to
to bei
bein$
n$ neut
neutra
ra or
or
unbiase".
1' TRUE
1) FALSE See co##ents in nu#ber 14
2* FALS
FALSE
E ;a!
;a! be
be a
ao(
o(e"
e" on!
on! if the
the nec
neces
essa
sar!
r! safe
safe$u
$uar
ar"s
"s are
are in
in p
pa
ace
ce 8to
8to re"u
re"uce
ce or ei#
ei#in
inat
ate
e thr
threa
eats
ts
to co#piance (ith fun"a#enta principes9.

32
1 A 
2 A 
3 
4 
5 
6 
& 
' 
) 
1* 
11 A 
12  A secon"
on" re#e"! (ou
(ou" be to en$a$e the ser/ices of e0perts. n the absence of re#e"ies
the +A has no choice but to "ecine the en$a$e#ent.
13 
14 
15 A 
16 
1& 
1' 
1) 
2* 
21  ontin$ent fe
fees re
resut to si
si$nificant th
threats to co
co#piance (i
(ith fun"a#enta pr
principes (h
(hen
ao(e" for assurance en$a$e#ents.
22 
23 A :oteB Assu#e tha
that the
the +As ha/e not estab
tabishe" the neces
cessar! safe$uar"s to re"uce
threats to co#piance (ith fun"a#enta principes.

&
 Auditing and Assurance Principle 2017 Edition
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Ireneo and James
James
Solutions Manual

24  Cith"ra(a of fees fro# cient’s #onies re-uire cient appro/a.

25 A There #a
#a! be
be ti
ti#es (h
(hen th
the ai
ai#s of
of th
the pr
profession an
an" th
the e#
e#po!er ar
are in
in co
confict.
26 
2& A 
2' 
2) A 
3* 
31  ear $ui"eines for #e#bers of the au"it personne on issues of securit! an" confi"entiait!.
32 
33  orrectionB The choices shou" be nu#bers not etters.
34 
35 

&'AP(E" 7 : (.e )inancial Statements Audit Process

71 : (rue or )alse

1 FAL
FALSE +rof
+rofes
essi
sion
ona
a co#p
co#pet
eten
ence
ce an"
an" "ue
"ue care
care is obt
obtaine
aine"
" thr
throu
ou$h
$h a co#
co#bi
bina
nati
tion
on of e"uc
e"ucat
atio
ion
n an" 
e0perience. t cannot be obtaine" throu$h e"ucation aone.
2 TRUE
3 FALS
FALSE
E ;ate
;ateri
ria
ait
it!
! is
is one
one of the
the #a7
#a7or
or fact
factor
orss con
consisi"e
"ere
re"
" in
in "ete
"eter#
r#ininin
in$
$ tra
trans
nsac
acti
tion
onss tha
thatt (ou
(ou"
" be
re/ie(e".
4 FALS
FALSE
E Ris
Ris of #a
#ate teri
ria
a #iss
#issta
tate
te#e
#ent
nt is $rea
$reateterr (he
(henn tra
trans
nsac
acti
tion
onss an"
an" baa
baanc
nces
es in/o
in/o/
/e"
e" esti
esti#a
#ate
tess
5 TRUE
6 TRUE
& TRUE
' TRUE
) TRUE
1* FALS
FALSE
E The
The suc
succe
cess
ssor
or au"
au"ititor
or has
has the
the "ut!
"ut! to init
initia
iate
te co#
co##u
#uni
nica
cati
tion
on (ith
(ith the
the pre"
pre"ec
eces
esso
sorr au"
au"it
itor
or
since the atter is boun" b! t he "ut! of confi"entiait!.
11 TRUE
12 FALS
FALSE
E The
The pri
pri#a
#ar!
r! ob7e
ob7ect
cti/
i/e
e of
of the
the stu"
stu"!
! an"
an" e/a
e/aua
uati
tion
on of inte
intern
rna
a cont
contro
ro is
is to
to "et
"eter
er#i
#ine
ne the
the
nature e0tent an" ti#in$ of substanti/e tests to be perfor#e".
13 TRUE
14 TRUE
15 TRUE

72 : Multiple &.oice

1 A +ease chan$e choice A to Fairness  an"

 an" reiabiit! of accountin$ "ata.
2 
3 
4 A 
5 A 
6 
& A 
' 
) 
1* A 
11 
12 
13 
14 

'
 Auditing and Assurance Principle 2017 Edition
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Ireneo and James
James
Solutions Manual

15 A 
16 
1& A 
1' 
1) 
2* 
21 
22 
23 
24 
25 
26 A 
2& A 
2' 
2) 
3*  hoice
ice A refers to E0istence. hoice
ice  refers to o#peteness. hoic
oice  refers to ri$hts
an" obi$ations.

&'AP(E" 4 : Audit Planning

41 : (rue or )alse

1 FALSE +annin$ assists  in

 in proper assi$n#ent of (or to assist ants.
2 FAL
FALSE The
The t!p
t!pe
e of
of op
opinio
inionn to
to be
be e0p
e0pre
ress
sse"
e" is not
not a con
consi
si"e
"era
rati
tion
on in "eter
eter#i
#ini
nin$
n$ the
the e0t
e0te
ent of
pannin$.
3 TRUE
4 TRUE
5 FALS
FALSE
E ie
ient
nt’s
’s cons
consen
entt sho
shou
u"
" be
be obta
obtain
ine"
e" befo
beforere the
the succ
succes
esso
sorr au"i
au"ito
torr can
can #a
#aee in-u
in-uir
irie
iess (ith
(ith
pre"ecessor au"itor an" accept an en$a$e#ent fro# a ne( cient.
6 FALS
FALSE
E The
The ob7e
ob7ect
cti/
i/e
e of perf
perfor
or#i
#in$
n$ ana
ana!t
!tic
ica
a proc
proce"
e"ur
ures
es in pan
panni
nin$
n$ an au"i
au"itt is to obta
obtain
in an
un"erstan"in$ of the transactions an" e/ents that are refecte" in the financia state#ents
an" "eter#inin$ unusua ite#s (hich cou" in"icate possibe #isstate#ents in the financia
state#ents.
& FALSE Shou" fofocus on
on un
un"erstan
tan"in$ th
the c
cien
ient’s bu
business en
en/iron#ent
' TRUE
) TRUE
1* FALSE An au"it "oes not  nor#a!
 nor#a! incu"e au"it proce"ures specifica! "esi$ne" to "etect ie$a
acts that ha/e an in"irect but #ateria effect on the financia state#ents.
11 TRUE
12 TRUE
13 FALS
FALSE
E An au"i
au"ito
torr sho
shou
u"
" "es
"esi$
i$n
n the
the (ri
(ritt
tten
en au"i
au"itt pro
pro$r
$ra#
a# so tha
thatt the
the spec
specif
ific
ic au"i
au"itt ob7
ob7ec
ecti
ti/e
/ess of
of
the en$a$e#ent are achie/e".
14 TRUE
15 TRUE
TRUE The
The cci
ien
ent’
t’ss #an
#ana$
a$e#
e#en
entt is
is e0p
e0pec
ecte
te"
" to
to ha/
ha/ee a "eep
"eeper
er un"e
un"ers
rsta
tan"
n"in
in$
$ of
of the
the enti
entit!
t! an"
an" its
its
en/iron#ent.
16 FALS
FALSE
E Ris
Ris asse
assessss#e
#ent
nt pro
proce
ce"u
"ureress are
are au"i
au"itt pro
proce
ce"u
"ure
ress "es
"esi$
i$ne
ne"
" to
to obt
obtai
ain
naan
nu un"
n"er
erst
stan
an"i
"in$
n$ of
the entit! an" its en/iron#ent.
1& FALSE t is not  necessar!
 necessar! for a tea# #e#bers to ha/e a co#prehensi/e no(e"$e of a aspects
of the au"it. Chat is i#portant is that coecti/e!
coecti/e! the! possess the nee"e" no(e"$e.
1' TRUE
1) FALS
FALSE
E Stra
Strate
te$i
$ies
es are
are ope
opera
rati
tion
ona
a appr
approa
oach
ches
es b! (hic
(hich
h #an
#ana$
a$e#
e#en
entt int
inten
en"s
"s to achi
achie/
e/e
e its
its

)
 Auditing and Assurance Principle 2017 Edition
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Ireneo and James
James
Solutions Manual

ob7ecti/es. >b7ecti/es are the o/era pans for the entit!.

2* TRUE
21 TRUE
22 TRUE
23 TRUE
24 TRUE
25 TRUE

42 : Multiple &.oice

1 
2 
3 A 
4 
5 A 
6 
& A Representation e
etters ar
are cco
onsi"ere" at
at au
au"it co
co#petion.
' A The #ost cost! proce"ure is test of baances.
) 
1* 
11 
12 A 
13  This is
is a
area"! a further au
au"it pr
proce"ure 8p
8perfor#e" af
after p
pannin$9.
14 
15  :ote that the cient un"er consi"eration is a continuin$  au"it
 au"it cient.
16  o#pariso
ison of actu
ctua res
resuts /ersu
rsus bu"$ete" fi$ures is no(n as /ariance ana!sis.
1& 
1' 
1) 
2* 
21  +SA 55* co/ers reate" parties. Reate" parties are in"icate" b! transactions (hich ha/e
abnor#a ter#s of tra"e.
22 
23 A 
24 A 
25  ien
ient #a
#ana$e#ent is e0pecte" to ha/e a "eeper un un"erstan
tan"in$ of
of th
the en
entit!’
t!’s op
operatio
tions.
The au"itor is e0pecte" to obtain an un"erstan"in$ of t he entit! sufficient for hi#=her to
perfor# the au"it effecti/e! but not so #uch as to be co#parabe to the e/e o f
operationa no(e"$e possesse" b! #ana$e#ent.
26  This proce"ure is a substanti/e test .
2& 
2' A 
2)  ;ost business riss "o ha/e financia conse-uences.
3* 

1*
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Solutions Manual

&'AP(E" 5 : Study and E+aluation o* Internal &ontrol

51 : (rue or )alse

1 FAL
FALSE >bta
>btainin un"e
un"ers
rsta
tann"in$
"in$ of inter
nterna
na con
contrtro
oss re
reate
ate"" to
to fin
finan
anci
cia
a sta
state
te#e
#ent
ntss au"
au"it
it
2 FAL
FALSE nte
ntern
rna
a cont
contro
ro "o
"oes not
not a""
a""re
ress
ss a
a bus
businines
esss ris
riss
s 8on
8on!
! thos
thosee ris
riss
s (h
(hich
ich ha
ha/e bee
een
n
i"entifie" b! #ana$e#ent9.
3 FAL
FALSE t is the
the au"
au"it
itor
or’s
’s seco
secon"
n"ar
ar!
! con
consi
si"e
"erarati
tion
on to pro/
pro/i"
i"ee con
consstruc
tructi
ti/e
/e su$$
su$$eesti
stions
ons.
4 FALSE S#aer entities use ess for#a  #eans
 #eans an" si#per processes.
5 TRUE
6 TRUE
& TRUE
' FALS
FALSE
E Ris
Ris asse
assess
ss#e
#ent
nt is the
the i"e
i"ent
ntif
ific
icat
atio
ion
n an"
an" ana
ana!s
!sis
is of ree
ree/a
/ant
nt ris
risss to
to achi
achie/
e/e#
e#en
entt of the
the
ob7ecti/es for#in$ a basis for "eter#inin$ ho( the riss shou" be #ana$e".
) TRUE
1* TRUE
11 FAL
FALSE ont
ontro
ro ac
acti/i
ti/iti
tie
es #a
#a! as
aso
o be
be app
appi
ie"
e" in a co
co#put
#puter
eri%
i%e
e" e
en/
n/ir
iron
on#e
#en
nt.
12 TRUE
13 TRUE
14 TRUE
TRUE :ote
:ote ho(e
ho(e/e
/err that
that #oni
#onito
tori
rin$
n$ is #a
#ain
in!
! perf
perfor
or#e
#e"
" for
for the
the purp
purpos
ose
e of "ete
"eter#
r#in
inin
in$
$ the
the
a"e-uac! an" effecti/eness of interna contros.
15 TRUE
16 FALSE :ot a
a contros ar
are re
ree/ant to
to the au"it.
1& TRUE
1' FALS
FALSE
E >bta
>btain
inin
in$
$ an
an un"
un"ererst
stan
an"i
"in$
n$ of inte
intern
rna
a cont
contro
ros
s in/o
in/o/
/es
es e/a
e/aua
uati
tin$
n$ the
the "es
"esi$
i$n
naan"
n"
i#pe#entation 8or operation9 of contros.
1) FALS
FALSE
E A (ea
(ean
nes
esss in inte
intern
rna
a cont
contro
ro tha
thatt cou
cou"
" ha/e
ha/e a #at
#ater
eria
ia eff
effec
ectt on the
the fin
finan
anci
cia
a stat
state#
e#en
ents
ts
is no(n as a #ateria (ea3ness in interna contro .
2* TRUE
21 FAL
FALSE f contr
ontro
oss are
are not
not effe
effect
cti/
i/e
e contr
ontro
o ris
ris is ass
assesse
esse"
" at ?,?
?,?..
22 TRUE
23 TRUE
24 FALS
FALSE
E Furt
Furthe
herr au"i
au"itt proc
proce"
e"ur
ures
es inc
incu"
u"e
e test
testss of cont
contro
ros
s an"
an" subs
substa
tant
nti/
i/e
e test
testss on
on!.
!.
25 TRUE
26 FALS
FALSE
E Test
Testss of cont
contro
ros
s are
are per
perfo
for#
r#e"
e" on!
on! (hen
(hen the
the pre
prei
i#i
#ina
nar!
r! con
contr
tro
o ris
ris asse
assess
ss#e
#ent
nt is
is ?,
?,?.
?.
2& TRUE
2' FALS
FALSE
E Asse
Assess
ss#e
#ent
nt of cont
contro
ro ris
ris
 is sub7
sub7ec
ectt to
to poss
possib
ibe
e re/i
re/isi
sion
on in i$h
i$htt of
of sub
subse
se-u
-uen
entt
"e/eop#ents "urin$ the au"it.
2) TRUE
3* FALS
FALSE
E Lac
Lac of se$r
se$re$
e$at
atio
ion
n of
of "ut
"utie
iess is
is not
not an inhe
inhere
rent
nt i#i
i#ita
tati
tion
on of inte
intern
rna
a cont
contro
ro.
.

52 : Multiple &.oice

1 A 
2  hoice A is incorrect because the au"itor #ust sti obtain an un"erstan"in$ of the
accountin$ s!ste# an" contro proce"ures of an entit!. hoice  is incorrect because
contro proce"ures 8ree/ant to the au"it9
au"it9 aso re-uire the au"itor’s
au"itor’s consi"eration. hoice 
is incorrect because not a contro  proce"ures are consi"ere" b! the au"itor 8on! those
ree/ant to the au"it9.
3 
4 
5  The interna contro s!ste# of a co#pan! is broa"er in scope co#pare" to the accountin$

11
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James
Solutions Manual

s!ste# of the entit!.

6 
& 
'  :ot a contros are ree/ant to the au"itor’
or’s ris
is assess#ent 8on! tho
those (hich
ich #a! affect
the entit!’s abiit! to pro"uce fair! state" financia state#ents9.
) A 
1*  hoice
ice A refers to ris assess#ent proce
ocess. hoice  refers to the
the infor#
or#atio
tion s!ste#
te#.
hoice  refers to contro acti/ities.
11 
12  Spec
Specif
ific
ic autho
uthori
ri%a
%ati
tion
on is re-u
re-uir
ire"
e" for non
nonrou
routi
tine
ne tra
transac
nsacti
tion
ons
s (hi
(hie
e $ener
enera
a autho
uthori
ri%a
%ati
tion
on is
re-uire" for routine transactions.
13  Ris arises fro# chan$e. hoice  sho(s stabiit! 8no chan$e9.
14 
15 
16 
1& A See )1 nu#ber 1'
1' A The un"erstan"in$ of interna contro is use" to "eter#ine the contro ris3  not inherent ris.
1) 
2*  See nu#ber 1&.
21 
22 A 
23 
24 
25 
26 A The basis for
for the contro
tro ris assess#ent is "ocu#ente" on! (hen the contro ris
assess#ent is Less than ?i$h.
2& A hoice  is inincorrect be
because th the pr
prei#inar! as
assess#ent of
of co
contro ri
ris is
is "o
"one before  tests
 tests
of contros. hoice  is incorrect because the prei#inar! assess#ent of contro ris for a
financia state#ent assertion is nor#a! ?4,?  uness the au"itor is abe to i"entif! contros 
that are potentia! reiabe.
2'  hoice A is incorrect 8see co##ent in nu#ber 269. hoice  is incorrect because
substanti/e tests cannot be ei#inate" re$ar"ess of the contro ris assess#ent.
assess#ent. hoice 
is incorrect because e/i"ence re$ar"in$ the operation of contros in a prior perio" #a! be
consi"ere" "urin$ the current au"it.
2)  hoice
ice A is in
incorrect becau
cause tetests of
of co
contro
tros are us
use" to
to /e
/erif! eff
effe
ecti/e
i/eness of
of co
contro
tros
not #ana$e#ent assertions. hoice  is incorrect because ana!tica
ana!tica proce"ures cannot be
use" to /ai"ate contro ris an" substanti/e t ests are not use" to /ai"ate contro ris.
hoice  is incorrect because the assess#ent of contro ris has area"! been perfor#e"
8see -uestion9.
3*  Tests of contros (i not be perfor#e" since there are #issin$ contros.
31 A hoices   an"  are substanti/e tests.
32 A 
33  hoice  is e/i"ence obtaine" "urin$ the perfor#ance of substanti/e tests.
34 
35  See co##ent for hoice  in nu#ber 2).
36 
3& 
3'  As the acceptabe e/e of "etection ris "ecreases  the au"itor reies on #ore strin$ent
substanti/e testin$.
3) 
4* A 

12
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Ireneo and James
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Solutions Manual

&'AP(E" 10 : Su6stanti+e (esting and ocumentation

101 : (rue or )alse

1 FALSE
2 FALS
FALSE
E Au"i
Au"itt e/i
e/i"e
"enc
nce
e inc
incu
u"e
"ess on
on!
! the
the inf
infor
or#a
#ati
tion
on use"
use" b! the
the au"i
au"ito
torr as
as a basi
basiss for
for his
his opi
opini
nion
on..
3 TRUE
4 TRUE
5 FALSE Accountin$ recor"s on their o(n "o not  constitute
 constitute sufficient appropriate au"it e/i"ence.
6 FALSE The hi$her the -uait! of au"it e/i"ence the ess  e/i"ence
 e/i"ence is re-uire".
& FALSE >bt
>btainin$
in$ au"it e/
e/i"ence reatin$
in$ to a particu
icuar as
assertion is not  a
 a substitute for obtainin$
au"it e/i"ence re$ar"in$ another assertion.
' TRUE
) TRUE
1* TRUE
11 FALSE This state#ent refers to substanti/e tests .
12 TRUE
13 FALS
FALSE
E n-u
n-uir
ir!
! is
is con
consi
si"e
"ere
re"
" as
as ins
insuf
uffi
fici
cien
entt un
unes
esss cor
corro
robo
bora
rate
te"
" b!
b! e/i
e/i"e
"enc
nce
e fro
fro#
# oth
other
er au"i
au"itt
proce"ures.
14 FALSE The hi$her the assess#ent of ris the more reiabe is the au"it e/i"ence sou$ht b! the
au"itor fro# substanti/e proce"ures.
15 TRUE
16 FAL
FALSE Subs
Substatant
nti/
i/e
e test
testss are ne/e
ne/err ei
ei#ina
#inatete"
" in an au"i
au"itt en$a
en$a$e
$e#e#ent
nt..
1& FALS
FALSE
E Au"i
Au"itt ob7e
ob7ect
cti/
i/es
es est
estab
abi
ish
sh bro
broa"
a" $en$ener
era
a $oa
$oas
s (hi
(hie
e au"i
au"itt proc
proce"
e"ur
ures
es spe
speci
cif!
f! the
the "et
"etai
aie
e""
(or to be perfor#e".
1' FALS
FALSE
E Ana
Ana!t
!tic
ica
a proc
proce"
e"urures
es are
are re-u
re-uirire"
e" as a pa
pann
nnin
in$ $ pro
proce
ce"u
"ure
re an"
an" a co#
co#ppet
etio
ion
np pro
roce
ce"u
"ure
re but
but
not as a substanti/e test.
1) TRUE
2* FAL
FALSE Test
Testss of
of "et
"eta
ais
is ca
can be
be u
usse" for
for /er
/erif
if!i
!in$
n$ e0is
e0iste
tenc
ncee an"
an" /au
/auat
atio
ion.
n.
21 FALS
FALSE
E Cor
Corinin$
$ pape
papers
rs "o not
not ser
ser/e
/e as a subs
substititu
tute
te for
for the
the cie
cient
nt’s
’s fina
financ
ncia
ia rec
recor
or"s
"s..
22 TRUE
23 FALSE Corin$ papers shou" not be ept in the cient’s pre#ises.
24 FALS
FALSE
E Cor
Corinin$
$ pap
paper
erss (hi
(hich
ch cont
contai
ain
n inf
infor
or#a
#ati
tion
on rea
reati
tin$
n$ pri#
pri#ar
ari
i!
! to
to the
the au"
au"it
it of
of a sin
sin$
$e
e per
perio
io"
"
are no(n as current fies.
25 FALSE The primary purpose
primary purpose of in"e0in$ is to increase efficienc!  in
 in the rechecin$ an" re/ie( of
(or perfor#e".

1*2
1 A  &orrection: hoice A shou" rea"B DThe infor#ation obtaine" b! the au"itor ... 
... 
2 
3 
4  So#e au"it proce"ures a""ress t(o or #ore au"it ob7ecti/es.
5  See notes in 1*1 nu#ber &
6 
& 
' 
)  The -uestion "e#an"s for e0a#pes of assets  (hich
 (hich are inspecte". hoice A is inco#pete.
hoice  incu"es cancee" checs an" saes "ocu#ents 8both of (hich are not assets9.
hoice  incu"es cancee" checs 8a$ain not an asset9.
1* 
11 
12 
13 

13
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Ireneo and James
James
Solutions Manual

14 
15 
16  Sa#pin$ affects the sufficienc! of au"it e/i"ence.
1& 
1' A 
1) A The ""iifficu
cut! an" e0pense in
in/o/e" in
in tes
testin
tin$ a particu
ticuar ite
ite#
# is
is no
not a /ai" ba
basis fo
for an
an
au"itor to "eci"e to o#it a test.
2*  The hi$her the au"itor’s assess#ents of inherent an" contro riss the #ore  reiabe
 reiabe an"
ree/ant is the au"it e/i"ence sou$ht b! the au"itor.
21 
22  hoice  is incorrect because substanti/e tests are in/erse! reate"  to
 to the au"itor’s reiance
on interna contros.
23 
24 
25 
26 A 
2& 
2' A 
2) 
3*  hoices A  an"  (a
(arrant th
the use of positi/e confir#ation re-uests.
31 A 
32 
33 
34  A cop! of the e0terna au"itor’s au"it pro$ra# shou" be incu"e" in the (orin$ papers.
35 
36 A 
3& 
3' 
3) 
4* 

&'AP(E" 11 % Basic Audit Sampling &oncepts

111 : (rue or )alse

1 FALSE
2 TRUE
RUE Test
Testss per
perfo
for#
r#e
e" on
on 1**
1**
 of
of the
the ite#
ite#ss (it
(ithi
hin
n a popu
popua
ati
tion
on "oes
"oes not
not con
const
stit
itut
ute
e sa
sa#pi
#pin
n$.
3 TRUE
4 TRUE
5 TRUE
6 TRUE
& TRUE
' TRUE
) TRUE
1* TRUE
11 FALSE The a
ar$er th
the to
toer
erabe er
error
or th
the s#
s#ae
er th
the sa
sa#pe si
si%e
12 FALSE n tests of contros  the toerabe "e/iation rate is the #a0i#u#...
#a0i#u# ...
13 TRUE
14 TRUE
15 FALSE This state#ent refers to ran"o# seection .
16 FALS
FALSE
E Stra
Strati
tifi
fica
cati
tion
on #a!
#a! be
be app
appro
ropr
pria
iate
te to
to ass
assis
istt in the
the eff
effic
icie
ient
nt an"
an" effe
effect
cti/
i/e
e "eis
"eis$n
$n of
of the
the sa#p
sa#pe
e..
1& FALSE The ris of o/erreian
iance an" the ris
is of incorr
orrect acceptance ...
...

14
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James
Solutions Manual

1' TRUE
1) TRUE
2* TRUE
21 FAL
FALSE :on
:onsstati
tatist
stic
ica
a sa#p
sa#pin$
in$ "oes
"oes not use
use stati
tatist
stic
ica
a for#
for#u
ua
as.
22 FALSE Sa#pin$ for /ariabes  is
 is $enera! use" in substanti/e testin$.
23 TRUE
24 TRUE
25 TRUE
TRUE f the
the popu
popua
ati
tion
on is e0pe
e0pect
cte"
e" to be erro
error
rfr
free
ee thi
thiss (arr
(arran
ants
ts a re"u
re"uct
ctio
ion
n of
of but
but not
not
ei#ination of the sa#pe si%e.
26 FALSE

112 : Multiple &.oice

1 
2 
3 
4 A Seectin$ specific ite#s in/o/e seectin$ hi$h /aue or 3e! ite#s .
5 A 
6 
& 
' 
) A 
1* 
11 A ;isstate#ents refer to errors foun" "urin$ substanti/e testin$.
12 
13 A 
14 A Sa#pin$
in$ ris is in/erse! reate"
te" to sa#pe si%e. :ote aso that sa#pin$ ris
is can
can be
ei#inate" b! 1** testin$.
15 A 
16 
1& A hoice
ice  is incorr
orrect be
because th
the -u
-uestion is
is ta
tain$ ab
about
out te
tests of
of co
contros
s no
not su
substanti/
ti/e
tests. hoice  is incorrect because tests of contros an" substanti/e tests ha/e been
been
co#bine" in this state#ent. hoice  refers to the ieihoo" of assessin$ contro ris too
o(.
1' 
1) A 
2* 
21 
22  The inter/a is co#pute" as popuation si%e "i/i"e" b! sa#pe si%e .
23  The "isa"/anta$e can be rectifie" b! the use of ran"o# starts.
24 
25 
26 
2& 
2'  This rate is "e/eope" in i$ht of the
the au"itor
tor’s un"erstan
tan"in$ of the entit!
tit! an" its
en/iron#ent.
2) A This ra
rate is
is "e
"e/eope" ba
base" onon th
the au"itor’s pr
professiona 7u
7u"$#ent.
3* 
31 
32 
33  Refer to +SA 53* Appen"i0
34 
35 

15
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Solutions Manual

36 
3& A 
3' A 4=1** G 4 sa#pe "e/iat iation rate H 2 ao(a
o(ance for sa#pin$ ris
is G 6 upper "e/iation
ion
rate /ersus toerabe "e/iation rate of 5
3) 
4* 
41 
42 
43 
44  Toerabe #isstate#ent is in/erse! reate" to sa#pe si%e
45 
46 
4& A 
4'  :ote th
that th
the sa
sa#pe "
"e
e/iation rate 88iin tes
tests of
of co
contro
tros9 ne
nee" not be
be pro7ecte
cte"I on
on! th
the
sa#pe #isstate#ent 8in substanti/e tests9 nee" to be pro7ecte" to the popuation.
4) 
5* A 
51 
52 
53 

&'AP(E" 12 : &ompleting t.e Audit

121 : (rue or )ales

1 TRUE
2 TRUE
3 FALSE A pro/ision is not uncertain as to e0istence.
4 TRUE
5 FAL
FALSE :ot
:ot a
a subs
subse-
e-ue
uent
nt e/en
e/ents
ts nee"
nee" a"7u
a"7ust
st#e
#ent
ntII so#e
so#e re-u
re-uir
ire
e "isc
"isco
osu
sure
re on!
on!..
6 FALSE
& TRUE
' FALSE The perio" of assess#ent is at east  12
 12 #onths fro# the reportin$ "ate.
) TRUE
1* FAL
FALSE The
The au"
au"ititor
or in this
this case
case shou
shou"
" issu
issuee a -ua
-uai
ifi
fie"
e" or "isc
iscai
ai#e
#err of
of opi
opin
nion.
ion.
11 FALS
FALSE
E Chen
Chen othe
otherr suf
suffi
fici
cien
entt app
appro
ropr
pria
iate
te e/i"
e/i"en
ence
ce can
can be
be rea
reaso
sona
nab
b!
! e0p
e0pec
ecte
te"
" to
to e0i
e0ist
st suc
such
h
e/i"ence is obtaine" rather than si#p! $ettin$ (ritten representations fro# #ana$e#ent.
12 TRUE
RUE +SA 5'
5'* re
re-uire
ires (r
(ritte
tten #a
#ana$e#ent re representation eetter
ters.
13 TRUE
14 TRUE
15 FALS
FALSE
E Fo(
Fo(ch
char
arts
ts of inte
intern
rna
a cont
contro
ro "o not
not con
const
stit
itut
ute
e a for#
for# of inte
intern
rna
a co##
co##un
unic
icat
atio
ion.
n.

122 : Multiple &.oice

1 A 
2 
3 A 
4 
5 A Subse-uent e/ents tha
that pertai
tain to con"ition
ions that "i" not e0ist as of baance sheet "ate are
nor#a! "iscose".
6 
& A 
'  This acco#pishes no purpose reate" to subse-uent e/ents.

16
 Auditing and Assurance Principle 2017 Edition
By : Ireneo, Ireneo
Ireneo and James
James
Solutions Manual

) 
1* 
11 
12  hoice
ices A  an
an"  in/o/e incre
creasin$ e0pen"itur
tures (h
(hich cou
ou" a$$ra/ate the
the area"!
precarious con"ition of ?i o.
13 A :onco
co#piance (ith
(ith ter#s of "ebt a$ree#ents nor#a! raise
ise a "oubts about $oin$
concern.
14 
15 
16 
1& A 
1' 
1)  See co##ents un"er 121 nu#ber 11
2* 
21 A The #inu
inutes of #eetin
tin$s #ust a be #a"e a/aiabe to the
the au"itor
tor. ;ater
teriait! is not
appicabe here J a #inutes #ust be pro/i"e" to the au"itor.
22 
23 
24 
25 
26 A 
2& 
2' 
2) 
3*  Rea
Reate
te"
" pa
partie
ties so
so#eti#e
i#es ac
account fo
for th
their tr
transacti
ctions
ons in
in a (a! th
that su
substan
tance "iffers
fro# the for#.
31 
32 A 
33 A 
34 

&'AP(E" 1- : (.e Audit "eport

1-1 : ("E or )A8SE

1 TRUE
2 FAL
FALSE This
This situ
situa
ation
tion resu
resut
tss to
to a "is
"isa$
a$re
ree#
e#en
entt (i
(ith #a
#ana
na$e
$e#e
#en
nt not a i#
i#it
ita
ation
tion on sco
scope
pe..
3 FALSE
4 TRUE
5 FAL
FALSE This
This situ
situaation
tion (ou
(ou"" re-
re-ui
uire
re the
the uuse
se of a -
-uuaif
aifie
ie"
" or
or a"/
a"/ererse
se opi
opinion
nion "ep
"epeen"in
n"in$$ on
on
#ateriait!.
6 FALS
FALSE
E The
The au"
au"ititor
or is resp
respon
onsi
sib
be
e in
in "et
"etec
ecti
tin$
n$ #a
#ate
teri
ria
a #iss
#issta
tate
te#e
#entntss ari
arisi
sin$
n$ fro#
fro# eith
either
er an erro
errorr or
or
frau".
& FALS
FALSE
E f the
the au"i
au"itotorr can
can not
not re
reie
ie"" on the
the be$i
be$inn
nnin
in$
$ in/
in/en
ento
tor!
r! the
the $ros
$rosss prof
profit
it aso
aso can
can not
not be
reie" upon hence resuts of operations can not be reie" upon but the baance sheet (ith
the correct baance of en"in$ in/entor! can be reie" upon
' FAL
FALSE E#ph
E# phas
asis
is of a ##at
atte
terr par
paraa$rap
$raphs
hs are
are a(a
a(a!s
!s pace
ace"
" bef
befor
ore
e a #o"
#o"ifie
ifie"
" opin
opiniion.
on.
) TRUE
1* TRUE
11 FALSE
12 TRUE
13 TRUE
14 TRUE

1&
 Auditing and Assurance Principle 2017 Edition
By : Ireneo, Ireneo
Ireneo and James
James
Solutions Manual

15 TRUE
16 FALS
FALSE
E isc
isca
ai#
i#er
er of opin
opinio
ion
n is
is not
not appr
approp
opri
riat
ate
e "ue
"ue to a #at
#ater
eria
ias
s "epa
"epart
rtur
ure
e fro
fro#
# ,AA+
,AA+..
1& TRUE
1' TRUE
1) FALS
FALSE
E The
The au"
au"it
itor
or shou
shou"
" not
not acc
accep
eptt or
or (it
(ith"
h"ra
ra(
( fro#
fro# en$a
en$a$e
$e#e
#ent
nt if the
the au"
au"it
itor
or is not
not
in"epen"ent in reation to the cient.
2* TRUE

1-2 : M8(IP8E &'9I&E

1 
2 
3 A 
4 A 
5 
6 
&  ,AAS in the +hiippines are no(n as +SAs.
' 
) A 
1* 
11 
12  Please disregard Cron$ hoices
13 A 
14 
15 
16  This situation incu"es an a"/erse opinion.
1&  There is unifor# (or"in$ for the au"it report 8See +SA &**=&*1 an" &*5=&*69
1' 
1) A 
2* A 
21 A 
22 
23 
24 A 
25 
26 
2& A 
2' 
2) 
3* 
31 A 
32 
33 A 
34 A 
35 
36 A 
3& A 
3' A 
3) 
4* A 
41 
42 

1'
 Auditing and Assurance Principle 2017 Edition
By : Ireneo, Ireneo
Ireneo and James
James
Solutions Manual

43 A 
44 
45 

&'AP(E" 1/ : Special &onsiderations and Audits

Audits o* Summary )inancial Statements
Statements

1/1 : (rue or )alse

1 TRUE
2 FALSE The re-uire#ents of +SA '** sha pre/ai.
3 TRUE
4 FAL
FALSE The
The spe
specicia
a repo
report
rt on #o"i
#o"ififie"
e" cash
cash basis
asis stastate#e
te#entntss nee
nee"s
"s to in"
in"icat
icate
e the
the basis
asis of
accountin$ use".
5 FAL
FALSE Au"i
Au"itt of
of co#
co#popone
nennts res
resu
uts
ts in
in a re
report
port on
on a par
parti
ticu
cua
arr par
partt of the
the fin
finan
anci
ciaa sta
state
te##ents
ents..
6 FALSE Au"it of co#ponents resut to a #ore e0tensi/e  e0a#ination
 e0a#ination of that co#ponent.
& FALS
FALSE
E Chen
Chen an a"/ea"/ers
rse
e opin
opinio
ion
n or "isc
"isca
ai#
i#er
er of opin
opinio
ion
n on the
the enti
entire
re fina
financ
ncia
ia stat
state#
e#enents
ts has
has
been e0presse" the au"itor shou" report on co#ponents o f the financia state#ents on! if 
those co#ponents are
co#ponents are not so e0tensi/e .... ....
' TRUE
) TRUE
1* TRUE

1/2 : Multiple &.oice

1 A 
2 
3 
4  f st
state#ents ar
are p
prrepare" us
usin$ th
the ac
accrua ba
basis th
the stan"ar" au"it re
report ap
appies.
5 
6 
& 
' 
) A 
1* 
11 A 
12 
13 
14 A 
15 
16 
1& 
1'  Specia re
reports on co
co#piance (it
(ith
h co
contra
tractua
tua a$
a$ree#ents are st
sti au
au"it re
reportsI
tsI he
hence
the! re-uire in"epen"ence.
1) 
2* 
21 
22 
23 
24 A 
25 
26 
2& 

1)
 Auditing and Assurance Principle 2017 Edition
By : Ireneo, Ireneo
Ireneo and James
James
Solutions Manual

2' 
2) 
3* 
31 
32 
33 
34 A 
35 
36 A 
3& 
3' 
3) 
4* 
41 

&'AP(E" 1 : onAudit Assurance

Assurance Engagements
Engagements and "elated Ser+ices
Ser+ices

11 : (rue or )alse

1 FALSE Re/
Re/ie( of interi# financia state#ents are base" on +SREs.
2 FALSE Au"its are not part of reate" ser/ices.
3 TRUE
4 TRUE
5 TRUE
6 FALSE Re/ie( se
ser/ices re
re-uire au
au"itor in
in"epen"ence.
& TRUE
' FALS
FALSE
E onf
onfir
ir#a
#ati
tion
on an"
an" /er
/erif
ific
icat
atio
ion
n of
of si$
si$ni
nifi
fica
cant
nt acco
accoun
untt ba
baan
ance
cess are
are part
part of au"i
au"its
ts not
not re/i
re/ie(
e(s.
s.
) TRUE
1* FALSE A +A #a! not  pro/i"e
 pro/i"e assurance as to the achie/abiit! of a forecast.
11 TRUE
12 FAL
FALSE A$re
A$ree"
e"u
up
pon proc
proce
e"ure
"uress en
en$a$e
$a$e#e
#ent
ntss "o
"o no
not re-
re-u
uire
ire in"
in"ep
epe
en"en
n"ence
ce..

12 : Multiple &.oice

1 A 
2 
3 
4 
5  hoice  is part of a stan"ar" au"it en$a$e#ent.
6 A 
& =
' A 
) 
1* A 
11 
12 A 
13 
14 
15 
16 
1& A 
1' 

2*
 Auditing and Assurance Principle 2017 Edition
By : Ireneo, Ireneo
Ireneo and James
James
Solutions Manual

1) 
2*  A +A is a(a!s re-uire" to e0ercise "ue professiona care.
21 
22  o#piations re-uire accountin$ e0pertise not au"it e0pertise.
23 
24 
25 A 
26  See 151 nu#ber 12
2& 

E

21