AUDITS OF HISTORICAL FINANCIAL INFORMATION 

 1. Which of the following best describes the reason why an independent
auditor reports on the financial statements? 
A. A poorly designed internal control system may be in existence. 
B. Different interests may exist between the company preparing the statements
and the persons using the statements. 
C. A misstatement of account balances may exist and is generally corrected as the
result of the independent auditor’s work. 
D. A management fraud may exist and it is more likely to be detected by
independent auditors. 
2. Which of the following best describes the objective of an assurance
engagement? A. Assist in preparing the company’s financial statements. 
B. Improve the company’s outcomes. 
C. Compare the company’s information and policiees with those of other entities.
D. Enhance the credibility of information in order to improve the likelihood that
the information will meet the needs of an intended user. 

3. The auditor is required to obtain reasonable assurance about whether the financial
statements are free from material misstatements, whether due to fraud or error. In
all cases when reasonable assurance cannot be obtained, the auditor’s report
should contain a/an 
A. Disclaimer of opinion C. Qualified or disclaimer of opinion B.
Qualified or adverse opinion D. Unmodified opinion 
4. Which of the following statements is a standard applicable to financial statement
audits in accordance with Government Auditing Standards? 
A. An auditor should determine the extent to which the entity’s programs
achieve the desired level of results. 
B. An auditor should report on the scope of the auditor’s testing of internal
control. C. An auditor should assess whether the entity has reportable
measures of economy and efficiency that are valid and reliable. 
D. An auditor should briefly describe in the auditor’s report the method of
statistical sampling used in performing tests of control and substantive
tests. 
5. Internal auditors cannot totally be totally independent 
Since they do not possess the CPA license. 
As long as an employee-employer relationship exists. 
Because they don’t audit financial statements. 
Unless their immediate supervisor is a CPA.
6. Each page in the financial information compiled by the accountant should
include the following reference, EXCEPT 
A. “Unaudited” C. “Compiled without Audit or Review” B. “Refer to Compilation
Report” D. “Compiled, Negative Assurance Expressed” 7. A pervasive
 characteristic of a CPA’s role in a consulting services engagement is that of being
a (an) 
A. Independent practitioner C. Confidential reviewer 
B. Computer expert D. Objective advisor 
8. Which of the types of audits are most similar? 
A. Operational audits and compliance audits. 
B. Internal audits and independent financial statement audits. 
C. Compliance audits and independent financial statement audits. 
D. independent financial statement audits and operational audits. 
9. An audit designed to determine the extent to which the desired results of an
activity established by the legislative or other authorizing body are being
achieved. A. Economy audit C. Program results audit. 
B. Efficiency audit. D. Financial-related audit. 
10.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 merge if she/he has little experience with the industry involved? 
A. Decline the engagement because he/she lacks sufficient knowledge.
B. Accept the engagement and issue a report that contains his/her
opinion on the achievability of the results of the merger. 
C. Accept the engagement and perform it in accordance with the Philippine
Standards on Auditing (PSAs) 
D. Accept the engagement but he/she should conduct research or consult with
others to obtain sufficient competence.