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Audit Theory Quiz 1
Audit Theory Quiz 1
3. Documentary evidence is one of the principal types of corroborating information used by an auditor to
substantiate an opinion. Which of the following examples is the most reliable audit evidence?
5. The party responsible for assumptions identified in the preparation of prospective FS is usually
9. A type of audit the purpose of which is to determine whether the auditee is following specific procedures or
rules set down by some higher authority
10. A technique for regularly and systematically appraising a unit of function and its effectiveness against corporate
and industry standards with the objective of assuring management that its aim are being carried out and/or
identifying conditions capable of being improved
a. Operational Audit
b. Compliance Audit
c. Financial Audit
d. Management Audit
11. Which of the following statements is correct concerning an auditor’s responsibility regarding FS?
a. Making suggestions that are adopted about the form and content of an entity’ FS impair an auditor’s
independence.
b. An auditor may draft an entity’s FS based on information from management’s accounting system.
c. The fair presentation of audited FS in conformity with GAAP is an implicit part of the auditor’s
responsibilities.
d. An auditor’s responsibilities for audited FS are not confined to the expression of the auditor’s opinion.
12. I In exceptional circumstances, an auditor may judge it necessary to depart from PSA in order to more effectively
achieve the objective of an audit. When such situation arises, the auditor is not required to justify the departure.
13. I Information Theory is in value information concerning the financial potential losses, that the auditor is seen to
have greater ability to pay.
II Motivational Theory is to improve the non-financial and financial data for internal decision making.
14. Auditors mostly perform financial statement audits, but sometimes they may also perform compliance and
operational audits.
16. Which of the following is not allowed by the Code of Ethics for Professional Accountants?
a. A professional accountant in public practice may issue to client or, response to an unsolicited request, to a
non-client a factual and objectively worded of the services provided.
b. A firm or CPA practitioner can continue to use the term “accredited” or any similar words or phrase
calculated to convey the same meaning if the claimed accreditation has not expired.
c. The use of the name of an international accounting firm affiliation/correspondence is generally allowed.
d. Booklets and other documents bearing the name of a professional accountant and giving technical
information for the assistance of staff or clients may be issued to such persons, other professional
accountants or other interested parties.
e. None of the above
17. The following is a qualification of an applicant for CPA licensure examination, except
a. Holder of BSA degree
b. At least 21 years of age
c. Of good moral character
d. Filipino citizen
e. None of the above
21. Which of the following is not one of the specified objectives of the Accountancy Act of 2004?
a. Promulgation of accounting and auditing standards
b. Standardization and regularization of accounting education
c. Examination for registration of CPAs.
d. Supervision, control and regularization of accounting practice.
e. All of the above
22. Which of the following is not a requisite in applying for the CPA licensure examinations?
a. Good moral character
b. BSA degree holder
c. Not been convicted of any criminal offense involving moral turpitude.
d. Filipino citizen
e. None of the above
23. Advertising as defined in the Code of Ethics for Professional Accountants, means
a. The communication to the public of facts about a professional accountant which are not designated for the
deliberate promotion of that professional accountant.
b. The approach to a potential client for purpose of offering professional services.
c. The communication to the public of information as to services or skills provided by professional accountants
in public practice view a procuring professional business.
d. Any of the given choices.
e. None of the above
24. Which of the following is allowed by the Code of Ethics for the Professional Accountants?
a. A professional accountant in public practice may issue client or, in response to an unsolicited request, to a
non-client a factual and objectively worded of the services provided.
b. Publicity on behalf of the client in which the emphasis on the publicity is directed towards the objective, to
be achieve for the client.
c. Booklets and other documents bearing the name of professional accountant and giving technical
information for the assistance of staff clients may be issued to such persons, other professional accountants
or other interested parties.
d. The use of the name of an international accounting firm affiliation/correspondence is generally allowed.
e. All of the above.
25. In general sense, advertising and publicity in any medium are acceptable provided that
a. It has as its objective the notification to the public or such sectors of the public as are concern, of matter of
fact in a manner that is not false, misleading or deceptive.
b. It is in good taste
c. It is professionally dignified
d. It avoids frequent repetition of, and any undue prominence being given to the name of the firm or
professional accountant in public practice.
e. All of the above
26. The following shall not be allowed and prohibited advertising and publicity, except
a. Self-laudatory statements.
b. Discrediting, disparaging or attacking other firms or CPA practitioners
c. Giving too much emphasis on competitive differences
d. Publishing services in billboard
e. All of the above
28. I. A foreign CPA who is an internationally recognized expert or with specialization in any branch of accountancy
ad his service is essential for the advancement of accountancy in the Philippines.
II. A foreign CPA engaged as professor, lecturer or critic in fields essential to accountancy education in the
Philippines and his engagement is confined to teaching only.
a. False, False
b. False, True
c. True, False
d. True, True
29. A candidate in CPA licensure examination, must have the grade of?
a. General average of seventy five percent (75%) in all the subject
b. General average of sixty five percent (65%) in all the subject
c. General average of seventy five percent (75%), with no grades lower than sixty five percent (65%) in all
subjects.
d. General average of sixty five percent (65%), with no grades lower than seventy five percent (65%) in all
subjects.
e. None of the above
30. Which of the following is not normally a service rendered by public accountants?
a. Management Consultation service
b. Attest function
c. Internal auditing
d. Taxation
31. The primary duty to enforce the provision of RA 9298 and its IRR rests with
a. PRC
b. BOA
c. PRC and BOA
d. AASC
32. The Accountancy Law provides that all working papers during an audit shall be the property of the auditor.
These working papers shall include the following, except:
a. Schedules and memoranda made by the CPA and his staff
b. Working papers prepared and submitted by the client
c. Excerpts or copies of documents furnished the auditor
d. Reports submitted by the CPA to the client
33. Who is not permitted by law to practice accountancy?
a. Corporation whose stockholders are all CPAs
b. Partnership of CPAs
c. Individual CPA practitioner
d. Partnership of CPAs with some non-CPA staff
34. Which of the following is not one of the grounds for proceedings against a CPA?
a. Gross negligence or incompetence in the practice of his profession
b. Engaging in public practice while being employed in a private enterprise
c. Insanity
d. Immoral or dishonorable conduct.
35. The BOA shall submit to the PRC the ratings obtained by each candidate within how many days after the
examination?
a. 5 days
b. 3 days
c. 10 days
d. 15 days
36. Which of the following is not one of the penalties that can be imposed by the Board of Accountancy?
a. Fine and imprisonment
b. Revocation of CPA certificate
c. Reprimand
d. Suspension of CPA certificate
37. Which of the following is not one of the specified objectives of the Accountancy Act of 2004?
a. Examination for registration of CPAs
b. Supervision, control and regulation of accounting practice
c. Standardization and regulation of accounting education.
d. Promulgation of accounting and auditing standards.
38. The following sectors represented by the PICPA to the membership of AASC have one representative except
a. Government
b. Public practice
c. Commerce and industry
d. Academe
39. All of the following situations except one, a person is deemed to be engaged in professional accounting practice.
Which of them is the exception?
a. Performing audits or verification of financial transactions and records for more than one client.
b. Employed as the department chairman that supervises the BSA program of an educational institution
c. Employment as controller of a private business enterprises and such employment requires that the
holder thereof should be CPA.
d. Appointment in the government where first grade civil service eligibility is a prerequisite.
40. As define in RA 9298, it is an organization engaged in the practice of public accountancy, consisting of sole
proprietor, either alone or with one or more staff members.
a. Firm
b. Individual CPA
c. Partnership
d. Sector
43. Which of the following engagements provides third parties the highest level of assurance about the client’s
financial statements?
a. Audit
b. Review
c. Agreed-upon procedures
d. Compilation
45. A concept relating to the accumulation of the audit evidence necessary for the auditor to conclude that there
are no material misstatements in the financial statements taken as a whole.
a. Reasonable assurance
b. Positive assurance
c. Moderate assurance
d. Negative assurance
50. Engagements frequently performed by professional accountants that are not assurance engagement include the
following, except
a. Agreed upon procedures
b. Reasonable assurance engagement
c. MAS
d. Compilation of FS
51. The subject matter of an assurance engagement may take many forms, including
a. Financial performance or condition
b. Behavior
c. Systems and processes
d. All of the above
53. These are the benchmark used to evaluate or measure the subject matter of an assurance.
a. Criteria
b. GAAP
c. Assertions
d. Conclusions
54. I Independence of mind is the avoidance of facts and circumstances that are so significant that a reasonable and
informed third party, having knowledge of all relevant information, including applied, would reasonably
conclude a firm's, or a member of the assurance teams', integrate, objectivity or professional skepticism had
been compromised.
II Independence in appearance is a state of mind that permits the provision of an opinion unaffected by
influence that compromise professional judgment, allowing an individual to act with integrity, and to exercise
objectivity and professional skepticism.
a. I is True, II is False
b. I is False, II is True
c. Both statement is True
d. Both statement is False
55. A Professional Identification Card bearing the registration number, date of issuance, expiry date, duly signed by
the chairperson of the commission, shall be issued to every registrant renewable every
a. 2 years
b. 3 years
c. 4 years
d. 5 years