1.
   This involves developing an overall
strategy for the expected conduct and
scope of the examination; the nature,
extent, and timing of which the size and
complexity, and experience with and
knowledge of an entity.
a.    Audit planning
b.    Audit procedure
c.    Audit program
d.    Audit working papers
2.    In developing the overall audit plan for
a new client, factor not to be considered is
a.    Materiality levels
b.    The client’s business, including the
structure of the organization and
accounting system used
c.    The amount of estimated audit fee
d.    The audit risks and procedures to be
performed to achieve audit objectives
3.    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 CPA refers in the
audit report to reliance upon predecessor
auditor’s work.
b.    Acceptable if the client and the
predecessor auditor agree to it.
c.    Required if the CPA is to render an
unmodified opinion.
d.    Unacceptable because CPA should
bring an independent viewpoint to a new
engagement.
4.    The audit team gathers information
about a new client’s business and industry
in order to obtain;
a.    An understanding of the client’s
internal control systems for financial
reporting.
b.    An understanding of how economic
events and transactions affect the
company’s financial statements.
c.    Information about engagement risk.
d.    Information regarding whether the
company is engaging in financial fraud.
5.    To obtain an understanding of a
continuing client’s business in planning an
audit, an auditor most likely would
a.    Perform tests of details of transactions
and balances
b.    Review prior year working papers
and the permanent file for the client
c.    Read specialized industry journals
d.    Re-evaluate the client’s internal control
system
6.    The preliminary judgment about
materiality and the amount of audit
evidence accumulated are ______ related.
a.    Directly
b.    Indirectly
c.    Not
d.    Inversely
7.    In an auditor establishes a relatively
high level for materiality, then the auditor
will:
a.    Accumulate more evidence than if a
lower level had been set.
b.    Accumulate less evidence than if a
lower level had been set.
c.    Accumulate approximately the same
evidence as would be the case were
materiality is lower
d.    Accumulate and undetermined amount
of evidence.
8.    In making preliminary judgment about
materiality, the auditor initially determines
the aggregate (overall) level of materiality
for each statement. For planning purposes,
the auditor should use the
a.    Levels separately
b.    Largest aggregate level
c.    Average of these levels
d.    Smallest aggregate level
9.    The relationship between materiality
and risk is ordinarily
a.    Direct
b.    Parallel
c.    Inverse
d.    None
10.    Inherent risk and control risk:
a.    Are inversely related to each other
b.    Are inversely related to detection
risk
c.    Are directly related to detection risk
d.    Are directly related to audit risk
11.    Which of the following is not correct
regarding an auditor’s decision that a lower
acceptable audit risk is appropriate?
a.    More evidence is accumulated
b.    Less evidence is accumulated
c.    Special care is required in assigning
experienced staff
d.    Review of audit documentation is
performed by personnel not assigned to the
engagement
12.    The main reason why auditors make
a preliminary assessment of materiality and
risk is to:
a.    Determine the type of opinion to
express
b.    Determine the scope of the audit
procedures to be performed
c.    Evaluate the integrity of client’s
management
d.    Have a basis for constructive
suggestion to clients
13.    The primary goal of the CPA in
performing  the attest function is to
a.    Detect fraud
b.    Examine individual transactions so that
the auditor may certify as to their validity
c.    Determine whether the client’s
assertions are fairly stated
d.    Assure the consistent application of
correct accounting procedures
14.    Assurance engagements encompass
the following types of services except:
a.    Attestation services.
b.    Audit of historical financial statements
c.    Review engagements
d.    Management consulting
15.    The subject matter of an assurance
engagement may take many forms,
including:
a.    Data
b.    Behavior
c.    Systems and processes
d.    All of the above
16.    The subject matter of an assertion
may include:
a.    Historical or prospective financial
information
b.    Internal controls
c.    Compliance with regulation
d.    All of the above
17.    Which of the following is not an
objective of the Philippine Accountancy Act
of 2004?
a.    The standardization and regulation of
accounting education
b.    The examination for registration of
certified public accountants
c.    The supervision, control and regulation
of the practice of accountancy in the
Philippines
d.    The development and improvement
of accounting standards that will be
generally accepted in the Philippines
18.    This standard setting body shall have
a chairman who had been or presently a
senior accounting practitioner in public
accountancy.
a.    FRSC
b.    AASC
c.    PICPA
d.    ACPAPP
19.    The chairman and the members of
the FRSC and AASC shall have a term of
a.    3 years
b.    5 years
c.    6 years
d.    1 year
20.    Engagement letters
a.    Must be written
b.    May either be oral or written
c.    Must be written and notarized
d.    Must be written if the client is regulated
by SEC