PSQC and PSA 220
material fraud may exist
1. “Quality control policies and procedures
should be relevant, adequate, effective and
complied with” – Monitoring
2. Significant difference of opinion between
senior auditor and audit manager, bring the
matter to - engagement partner of the
engagement
3. A firm’s system of quality control should
ordinarily provide for the maintenance of
- Documentation to provide evidence of the
operation of each element of its system of
quality control
4. Quality control procedures for the acceptance
and continuance of clients – Minimize the
likelihood of associating with management
that lack integrity
5. Quality control element of CPA firm’s quality
control system that should considered in
establishing its quality control policies and
procedures – Managing human resource
A22 REMOVALS
1. When using a statistical sampling plan, the
auditors would probably require a smaller
sample if the:
o desired risk of incorrect acceptance
increases
2. Best describes the auditor’s responsibility to
detect conditions relating to financial stress of
employees or adverse relationships between
a company and its employees
o Auditor is not required to plan the
audit to discover these conditions but
should consider them if he or she
becomes aware of them during the
audit
3. Auditor of parent entity = auditor of
component. Factors may influence the
auditor’s decision whether to send a separate
engagement letter to the entity’s engagement
o Whether a separate auditor’s report is
to be issued on the component
4. Management attitude toward aggressive
financial reporting and its emphasis on
meeting projected profit goals most likely
would significantly influence an entity’s
control environment:
o Management is dominated by one
individual who is also a shareholder
5. Best describes an auditor’s responsibility to
detect fraud:
o The auditor must assess the risk that
6. Not considered a valid source of information
about client’s processes (RAP)
o Confirmation of third parties
7. Audit sampling is used to obtain evidence
about each of the following:
o Efficiency of control procedures
o Effectiveness
o Peso accuracy of ACCOUNT BALANCES
8. Element of the audit planning process most
likely to be agreed upon with the client before
implementation of the audit strategy is the
determination of the:
o TIMING of inventory observation
procedures to be performed
9. Review engagement of a nonpublic entity
o Review provides an accountant with a
basis for expressing limited assurance
on the financial statements
10. Auditing is based on the assumption that
financial data and statements are: VERIFIABLE
11. Most likely explanation why the auditor’s
examination cannot reasonably be expected
to bring all noncompliance with laws and
regulations by the client to the auditor’s
attention is that:
o Noncompliance with laws and
regulations by client often relate to
operating aspects rather than
accounting aspects
12. Most likely compromised if a professional
accountant fails to modify his/her report on
financial info that is correct, incomplete,
unsatisfactory:
o INTEGRITY
13. Family and personal relationships between a
member of the assurance team and a
director, an officer or certain employees,
depending on their role, of the assurance
client, LEAST LIKELY:
o SELF- REVIEW
14. Conditions or events that may indicate the
existence of risk of material misstatement:
o Application of new and complex
accounting pronouncement
o Business segments are most likely to
be sold or disposed
o Operating in regions that are
economically unstable
15. Significantly affected by an audit
o INFORMATION RISK
16. Ultimate purpose of assessing control risk is
to contribute to the auditor’s evaluation of
the risk that:
o Material misstatements may exist in
the FS
17. Non-sampling risk includes all of the following
except:
o Improper projection of results to the
population
18. Would an auditor normally plan for a first
time audit:
o Review share capital transactions
from inception of the company
19.