SHORT QUIZ 1

1. Which of the following is NOT an assurance service?

A. Examination of prospective financial information
B. Compilation of financial information
C. Review of financial statements
D. Audit of historical financial statements

2. Which of the following best describes the objective of an assurance engagement?

A. Assist in preparing the company’s financial statements
B. Enhance the credibility of information to meet the needs of the intended user
C. Compare the company’s information and policies with those of other entities
D. Improve the company’s outcomes

3. How many separate parties are involved in an assurance engagement?

Answer: Three

4. In an assurance engagement, the responsible party and the intended users

A. Should be from the same entity
B. Should be from different entities
C. May be from the same entity or different entities
D. Are both responsible for determining the nature, timing and extent of the
procedures to be performed

5. The level of assurance provided by the practitioner in an audit is

A. Low
B. Moderate
C. Reasonable
D. None

6. Which of the following types of audit uses laws and regulations as its criteria?
A. Operational Audit
B. Financial Statement Audit
C. Compliance Audit
D. Performance Audit

7. A typical objective of operational audit is to determine whether an entity’s

A. Internal control structure is adequately operating as designed
 B. Operational information is in accordance with generally accepted accounting
principles
C. Specific operating units functioning efficiently and effectively.
D. Financial statements present fairly the results of operations

8. The subject matter of any audit consists of

A. Assertions about economic actions and events
B. Economic data
C. Financial statements
D. Operating data

9. Most of the independent auditor’s work in formulating an opinion on financial

statement consist of
A. Studying and evaluating internal control
B. Obtaining and examining evidential matter
C. Examining cash transaction
D. Comparing recorded accountability with assets

10. An audit of the financial statements of KIA Corporation is being conducted by an

external auditor. The external auditor is expected to
A. express an opinion as to the fairness of KIA’s financial statements.
B. express an opinion as to the attractiveness of KIA for investment purposes.
C. certify the correctness of KIA’s Financial Statements
D. examine all evidence supporting KIA’s financial statements.
SHORT QUIZ 1 – B2

1. The following are the example of reasonable assurance, except?

a. Information is factual and conforms with reality
b. Complies with accounting standards and any relevant legislation
c. Data is correctly transferred from accounting records to the FS
d. Reflects plainly the commercial substance of the transactions

2. Which of the following statements relate to review engagements?

1. Subject matter is plausible
2. Reasonable assurance
3. Nothing has come to our attention which would indicate that the subject matter
contains material misstatements
4. Positive assurance
a. 1 and 3
b. 2 and 4
c. 2 and 3
d. 1 and 4

3. _________ is where there is sufficient evidence that the subject matter agrees to certain
criteria.
a. Reasonable Assurance
b. Limited Assurance
c. Audit
d. Low Level Assurance

4. Statement 1. An Audit Report gives Positive Assurance

Statement 2.A Review Engagement gives Negative Assurance
a. Statement 1 is false
b. Both statements are false
c. Both statements are true
d. Statement 2 is false

5. The following are not the elements of assurance engagement, except?

a. Internal auditing
b Income Tax auditing
c. Government auditing
d. Criteria
6. Most of the independent auditor’s work in formulating an opinion on the financial
statements consists of
a. Obtaining and examining evidence
b. Examining cash transactions
c. Comparing recorded accountability with assets
d. Studying and evaluating internal control

7. An audit of financial statements is conducted to determine if the

a. Organization is operating efficiently and effectively
b. Client is following specific procedures or rules set down by some higher authority
c. Overall financial statements are stated in accordance with the applicable
financial reporting framework.
d. Client’s internal control is functioning as intended

8. Which of the following types of audit uses laws and regulations as its criteria?
a. Operational audit
b. Financial Statement Audit
c. Compliance Audit
d. Performance Audit

9. One objective of an operational Audit is to:

a. Determine whether the financial statements fairly present the entity’s operations.
b. Evaluate the feasibility of attaining the entity’s operational objectives.
c. Make recommendations for improving performance.
d. Report on the entity’s relative success in attaining profit maximization

10. Which of the following types of auditing is performed most commonly by CPA’s on a
contractual basis?
a. Internal auditing
b. Income Tax auditing
c. Government auditing
d. External Auditing
SHORT QUIZ 2

1. This involves developing an overall strategy for the expected conduct and scope of
the examination; the nature, extent, and timing of which vary with the size and
complexity, and experience with and knowledge of the entity.
a. Audit planning
b. Audit procedure
c. Audit program
d. Audit working papers

2. An auditor who accepts an audit engagement and does not possess the industry
expertise of the business entity should
a. engage financial experts familiar with the nature of the business entity.
b. obtain a knowledge of matters that relate to the nature of the entity's business.
c.refer a substantial portion of the audit to another CPA who will act as the principal
auditor.
d. first inform management that an unqualified opinion cannot be issued.

3. A measure of the auditor's assessment of the likelihood that there are material
misstatements in an account before considering the effectiveness of the client's internal
control is
a. control risk
b. acceptable audit risk
c. statistical risk
d. inherent risk

4. A CPA is conducting the first examination of a client's financial statements. The CPA
hopes to reduce the audit work by consulting with the predecessor auditor and reviewing
the predecessor's working papers. This procedure is
a. Acceptable if the client and the predecessor auditor agree to it.
b. Acceptable if the CPA refers in the audit the predecessor auditor's work.
c. Required if the CPA is to render an unmodified opinion.
d. Unacceptable because the CPA should bring an independent viewpoint to a new
engagement.

5. In this phase, the primary objective is to minimize the likelihood of being

associated to a client whose management lacks integrity.
a. Pre-engagement
b. Consideration of internal controls
c. Evidence gathering
d. Issuance of the audit report

6. In this phase, the primary objective is to assess and evaluate the quality of the
audit services delivered by the engagement team.
a. Audit planning
b. Completing the audit
c. Post-audit responsibilities
d. Issuance of the audit report

7. In this phase, the primary objective is to assess the different risks associated with
the audit to determine the nature, timing and extent of audit procedures to be performed.
a. Audit planning
b. Completing the audit
c. Post-audit responsibilities
d. Issuance of the audit report

8. Which of the following statements is incorrect?

a. PSA 520 – Analytical Procedures
b. PSA 300 – Planning an Audit of Financial Statements
c. PSA 320 – Materiality in Planning and Performing Audit
d. PSA 200 – Identifying and Assessing the risk of Material Misstatement through
Understanding the Entity and its Environment

9. Analytical procedure may be done thru except

a. Horizontal and trend analysis
b. Vertical Analysis
c. Ratio Analysis
d. Diagonal Analysis

10. The auditor can obtain knowledge of the business thru except
a. Hearsays
b. Review of prior years’ working papers
c. Tour of the client’s facilities
d. Reading relevant books, periodicals and other publications
SHORT QUIZ 3
1. Statement I: The auditor should obtain an understanding of relevant industry, regulatory,
and other external factors including the applicable financial reporting framework.
Statement II: The industry in which the entity operates may give rise to specific risks of
material misstatement arising from the industry of the business.
A. Both statements are true.
B. Statement I is true; Statement II is false.
C. Statement I is false; Statement II is true.
D. Both statements are false.

2. Statement I: The risk of not detecting material misstatements due to fraud is higher than
those due to error, because fraud does not involve acts of concealing the material
misstatement.
Statement II: The risk of not detecting management fraud is higher than employee fraud,
because the management has the power to override or manipulate internal controls.
A. Both statements are true.
B. Statement I is true; Statement II is false.
C. Statement I is false; Statement II is true
D. Both statements are false

3. Statement I: Human resource policies and practices relate to recruitment, orientation,

training, evaluating, counseling, promoting, compensating, and remedial actions.
Statement II: Risks can arise or change due to circumstances such as corporate
restructurings and expanded foreign operations.
A. Both statements are true.
B. Statement I is true; Statement II is false.
C. Statement I is false; Statement II is true.
D. Both statements are false.

4. Statement I: An understanding of the strategies of an entity enables the auditor to

understand the classes of transactions, account balances, and disclosures to be expected in
the financial statements.
Statement II: The presentation of financial statements in conformity with the applicable
financial reporting framework includes adequate disclosure of material matters.
A. Both statements are true.
B. Statement I is true; Statement II is false.
C. Statement I is false; Statement II is true.
D. Both statements are false.
5. When risks of material misstatements are present in the financial statements of the entity,
the auditor prepares a procedure on how to respond to identified or suspected risk. Which
of the following is not a response done by an auditor?
A. Overall Response
B. Responses to Risk at the Assertion Level
C. Responses to Risk Management Control Override
D. Responses to Risk of Change in Established Rules and Regulation

6. Statement I: If the auditor believes that the internal control is reliable and effective, he
should perform more substantive tests.
Statement II: If the auditor believes that the internal control is not reliable and ineffective,
he should perform more tests of controls.
A. Both statements are true.
B. Statement I is true; Statement II is false.
C. Statement I is false; Statement II is true.
D. Both statements are false.

7. Statement I: Risk of material misstatement of the financial statements is broader than the
business risk.
Statement II: Financial indicators also provide information that enables management to
identify deficiencies in internal control.
A. Both statements are true.
B. Statement I is true; Statement II is false.
C. Statement I is false; Statement II is true.
D. Both statements are false.

8. Which of the following is not included in the documentation of the auditor which will not
serve as an evidence in conducting the audit?
A. Communication regarding fraud
B. Suitable criteria
C. Auditor’s responses
D. Understanding the Entity and its environment

9. Determine whether the following statement are correct or incorrect.

Statement I: Communication to regulators and authorities can be done even with ethical
requirement of confidentiality when legal responsibility of the auditor overrides its duty
of confidentiality.
Statement II: Auditors should communicate identified, suspected and allegations of
material misstatements, whether due to fraud or error to at least one level higher to those
individuals involved in misstating financial statements.
 A. Both statements are true.
B. Statement I is true; Statement II is false.
C. Statement I is false; Statement II is true.
D. Both statements are false.

10. Statement I: Internal Control System is the process designed and effected by those
charged with governance, management, and other personnel to provide reasonable
assurance about the achievement of the entity’s objectives with regard to reliability of
financial reporting, effectiveness and efficiency of operations and compliance with
applicable laws and regulations.
Statement II: Internal Control means all the policies and procedures adopted by the
management of an entity to assist in achieving management’s objective of ensuring, as far
as practicable, the orderly and efficient conduct of its business, including adherence to
management policies, the safeguarding of assets, the prevention and detection of fraud
and error, the accuracy and completeness of the accounting records, and the timely
preparation of reliable financial information.

A. Both statements are true.

B. Statement I is true; Statement II is false.
C. Statement I is false; Statement II is true.
D. Both statements are false.
SHORT QUIZ 3 – B2

1. An auditor should consider two key issues when obtaining an understanding of a

client’s internal control. These issues are
c. the design and implementation of the controls

2. Which of the following is not one of the three primary objectives of effective internal
control?
c. Assurance of elimination of business risk.

3. Which of the following statements concerning the relevance of various types of

controls to a financial statements audit is correct?
a. Controls over the reliability of financial reporting are ordinarily most directly
relevant to a financial statement audit, but other controls may also be relevant.

4. In performing tests of the operating effectiveness of an entity’s controls, an auditor

should selects from a variety of techniques, including
d. Reperformance and observation

5. “Error” includes
b. An incorrect accounting estimate arising from oversight or misinterpretation of
facts.

6. Fraud involving one or more members of management or those charged with

governance is referred to as
a. Management of fraud

7. The development of a general strategy and a detailed approach for the expected nature,
timing, and extent of audit refers to:
d. Planning

8. The extent of planning will vary according to any of the following, except:
d. The assessed level of control risk.

9. Which of the following is least likely considered by the auditor in developing the
overall audit plan?
d. The general level of competence of audit assistants.
10. Which of the following least likely affect the form and content of the overall audit
plan?
b. Methodology and technology used by the auditor.