ATEOREV Quizzer 002

1. Which of the following is one of the procedures in the audit acceptance phase?
a. Prepare the audit programme.
b. Perform audit procedures to understand the entity and its environment.
c. Investigate legal information.
d. Determine need for other professionals.
2. Which of the following least likely influence the auditor’s decision to send a separate
engagement letter to a component of parent entity client?
a. Legal requirements
b. Degree of ownership over a component entity by parent company
c. Location of the principal place of business of the component entity
d. Who appoints the auditor of the component
3. Which of the following is least likely included in an audit engagement letter?
a. Management responsibility for the financial statements.
b. The form of any reports or other communication of the results of the engagement.
c. Arrangement concerning the involvement of other auditors or experts in some aspects of
the audit.
d. The objective of financial reporting.
4. Based on PSA 210, which of the following refers to the use by the management of an acceptable
financial reporting framework in the preparation of the financial statements and the agreement
of management and, where appropriate, those charged with governance to the premise on
which an audit is conducted.
a. Precondition for an audit
b. Reportable conditions
c. General Financial Reporting Framework
d. Special Purpose Framework
5. The development of a general strategy and a detailed approach for the expected nature, timing,
and extent of audit refer to:
a. Supervision c. Audit procedures
b. Directing d. Planning
6. Which of the following is not an assertion relating to classes of transactions?
a. Accuracy. c. Consistency.
b. Cutoff. d. Occurrence
7. Adequate planning of the audit work helps the auditor of accomplishing the following
objectives, except:
a. Gathering of all corroborating audit evidence.
b. Ensuring appropriate attention is devoted to important areas of the audit.
c. Identifying the areas that need a service of an expert.
d. The audit work is completed efficiently.
8. Which of the following factors most likely is a reason why an auditor would not accept a
prospective audit engagement?
a. The auditor lacks adequate understanding of the entity’s internal control.
b. The client is close to the end of its fiscal year.
c. The auditor concludes that the prospective management of the client lacks integrity.
 d. The auditor’s inability to perform analytical procedures before assessing control risk.
9. An engagement letter is used primarily to
a. Ensure a clear contractual understanding of the services to be provided by the CPA.
b. Express an opinion on the financial statements.
c. Provide management representations to be included in the audit evidence.
d. Disclaim liability.

10. An audit engagement letter least likely includes

a. A reference to the inherent limitation of an audit that some material misstatements may
remain undiscovered.
b. Identification of specific audit procedures that the auditor needs to undertake.
c. Description of any letters or reports that the auditor expects to submit to the client.
d. Arrangement concerning the involvement of internal auditors and other client’s staff.