Multiple Choice Questions Genoralhy Acvpted Andéting, Standards (GAAS) 1. In the auditing environment, failure ws meet auditing, standards is often: a, atvaccepted practice a suggestion of neghizence conclusive evidence of negligence tantamount to erisminal behavior aoe 2. Audit standard requires an auditot to: a. Perform procedures that are designed to detect all instances of fraud. , b. Provide reasonable assurance that the financial statements are not materially misstated. c. issuean unmodified opinion only when the auditor is SatsGed that no instances of fraud have occurred. ¢. Design the audir program to meet financial statement users’ expectations concerning fraud. 3. Which of the following underlies the application of generally accepted auditing standards, particularly the standards of field work and reporting? @. Element of internal control. 6. Elements of materiality and risk. c. Element of reasonable assurance. 4. Element of comoborating evidence 4. Which of the following best describes what is meant by generally accepted audining standards? 2. Audit objectives generally determined on audit cagagements. b. Acts to be performed by the auditor. 5 Measures of the quality of the auditor’s performance. Procedures to be used to gather evidence to ort Beancdls / OPPRequirements for training, independence and due Professional care ate included in which group of the generally accepted auditing standards? a. Fieldwork. b. General. < — Reporting 4. Quality control, The general standards of the generally accepted auditing standards include a tequirernent that a. The fieldwork to be adequately planned. b. The auditor’s report to state whether the financial Statements are presented in conformity with PFRS. Due professional care be exercised by the auditor. d. The auditor to obtain sufficient, competent evidential ‘matter. ° Under GAAS, which of the following reflects a concept from the general group? a. The confirmation of accounts receivable. b. Completing an internal control questionnaire ¢. The initial planning of the audit with the audit partner, manager, senior, staff and client personnel. d. The assignment of audit personnel to an engagement where they have no financial interest. What is the general character of the three generally accepted auditing standards classified as general standatds? a. Criteria for competence, independence, and professional care of individuals performing the audit. b. Criteria of evidence gathering, c. Criteria for the content of the auditors’ report on financial statements and related footnote disclosures. d. The requicements for the planning of the audit and supervision of assistants, if any.10. 11. Tu ter of the three generally accepted auditing standards classified as standards of field work? a. ‘The competence of persons performing the audit. b. Criteria for the content of the auditor’s report on financia) statements and related footnote disclosures. "The criteria of audit planning and evidence-gathering, d. The need to maintain an independence in mental atutude in all matters relating to the audit What is the general charac Which of the following does not pertain to the standards of fieldwork? a, Adequate planning and supervision. b. Obtaining sufficient competent evidential matter. c. Proper study and evaluation of internal control as a basis for reliance thereon. d. Technical training and proficiency. While performing audit services for their clients, professional accountants have a duty to provide a level of care which is a. Reasonable b, Greater than average c. Superior d. Guaranteed to be free from error. . The standard of due audit care requires the auditor to a. Make perfect judgment decisions in all cases. b. Ensure that the financial statements are free from error c. Possess skills clearly above the average for the profession. d. Apply judgment in a conscientious manner, carefully weighing the relevant factors before reaching a decision. The third standard of field work states that sufficient competent evidential matter may in part be obtained through» the following methods except a. Inspection Confirmation b. Observation d. Reconciliation FB: Dig:tal Accounting Books hts belongs to respec14. 15. 16. 17. The generally accepted standards of reporting encompass all of the following except a. consideration of an entity’s internal control b. consistent application of accounting principles ¢. informative disclosures d. conformity of financial statements with GAAP The third generally accepted standard of reporting in auditing refers to a. Whether financial statements are presented in conformity with GAAP, b. Whether accounting Principles have been consistently observed. Adequacy of disclosures. d. An expression of opinion on the financial statements taken as a whole. 9 The objective of the consistency standard is to provide assurance that a. There ate no variations in the format and presentation of financial statements. b. Substantially different transactions and events are not accounted for on an identical basis. c. The auditoris consulted before material changes are made in the application of accounting principles, d. The comparability of fimancial statements between periods in not materially affected by changes in accounting principles without disclosure. ‘The fourth generally accepted auditing standard of reporting requires an auditor to render a report whenever an auditor's name is associated with financial statements, The overall Purpose of the fourth standard of reporting is to require that reports: a. State that the examination of financial statements has been conducted in accordance with generally accepted auditing standards. Allrights belongs to respective at e eLOREb. Indicate the character of the auditor’s examination an the degree of responsibility assumed by the auditor, c. Imply that the auditor is independent in mind as well a5 in appearance with respect to the financial statements under examination. ; : d. Express whether the accounting principles used in preparing the financial statements have been applied consistently in the period under examination. 18. The fourth reporting standard requires the auditor’s report to contain an expression of opinion regarding the financial statements taken as a whole, or an assertion to the effect that an opinion cannot be expressed. The objective of the fourth standard is to prevent a. _Anauditor from reporting on one basic financial statement and not on the others. b. An auditor from expressing different opinions on each of the basic financial statements. c. Management from reducing its final responsibility for the basic financial statements . d. Misinterpretations regarding the degtee of responsibility the auditor is assuming 19. The auditor is not liable to his client for a. Negligence Fraud b. c. Dishonesty d. Errors in application of judgment Philippine Standards on Auditing (PSA) 20. The Philippine Standards on Auditing issued by the Auditing and Assurance Standards Council: a. are interpretations of generally accepted auditing standards. : b. are the criteria used in evaluating the fair presentation of the financial statements. ceca All rights belongs to respective authorsaly 22. 23. 24. ¢. ate interpretations of generally accepted accounting principles. 4. are optional guidelines which an auditor may choose to follow or not follow when conducting an audit. According to Philippine Standards on Auditing, because there are inherent limitations in an audit that affect the auditor's ability to detect material misstatements, the auditor is: a, A guarantor but not an insurer of the statements b. An insurer but not a guarantor of the statements. ¢. Neither a guarantor nor an insurer of financial statements. d. Botha guarantor and an insurer of the financial statements. An auditor need not abide with a specific requirement of PSA if the auditor believes that: a. The amount is insignificant. b. The requirement of the PSA is impractical to perform, c. The requirement of the PSA is impossible to perform. d. Any of the given three choices is correct. The Philippine Standards on Auditing can be described as a. Providing very specific guidance about the specific activities an auditor must perform on each engagement. b. Similar to Philippine Financial Reporting Standards (PFRS). c. Defining the minimum standards of performance for an auditor. d. Providing assurance that an auditor will not issue an inappropriate audit opinion Which of the following best describes the function of Auditing and Assurance Standards Council (AASC)? a. To establish and promulgate generally accepted accounting principles in the Philippines. . To investigate violations of Accountancy Law. c. To promulgate auditing standards, practices and procedures that shall be generally accepted by the accounting profession in the Philippines. . d. To determine the minimum requirements for admission in the accounting profession.25. 26. 27. 28. Pronouncements issued by AASC may be in-the form of itit ippir ilippir Philippin, Phitippine Philippine — Phaleppine ippine Si noe on Standards on Standards on Standards on Auditing — Assurance Review Related Services Engagements Exngagements a Yes Yes Yes Yes b. Yes No Yes No e Yes Yes Yes No d No Yes No Yes Which of the following is correct about Philippine Auditing Practices Statements (PAPS)? a. These are issued to resolve issues relating to PSAs. b. . These statements are intended to have the authority of PSAs. c. ‘These statements are issued to provide practical assistance to auditors in implementing PSAs or to promote good practice. = d. These statements are forms of interpretations issued by AASC. Which of the following pronouncements issued by AASC is designed to resolve issues relating to PSAs? a. Philippine Auditing Practices Statements b. Interpretations i c. Statements of Auditing Standards in the Philippines 4. Generally Accepted Auditing Standards Based on the structure of AASC pronouncements, related services include? Ausurance Review Agreed-npon provedures Compilation a. Yes Yes No No b No No . Yes Yes c. Yes Yes Yes No d. No Yes Yes Veo All rights belongs to respective fo eval oO ate29. The tisk that an auditor will fail to uncover a material misstatement is eliminated a. If client has good intetnal control. b. If auditor observes the Code of Professional Ethics c. When the auditor complies with PSA. d. Under no circumstances. 30. The auditor’s best defence when material misstatements are not uncovered is to have conducted the audit: a. in accordance with PSA. b. as effectively as reasonably possible. c. ima timely manner. d. only after an adequate investigation of the management team. 31. The failure of the auditor to meet the requisites of PSA is a. An accepted practice. b. A suggestion of negligence, c: An evidence of negligence. d. Tantamount to criminal behavior. Quality Control System 32. A firm of independent auditors must establish and follow quality control policies and procedures because these standards a. Are necessary to meet increasing requirements of auditors’ liability as insurers. b. Are required by the SEC for auditors of all firms. c. Include formal filing of records of such policies and procedures to a regulatory agency. d. Give reasonable assurance that the firm as a whole will comply with professional standards. All rights belongs to respective authors fo eval oO nto OD™ 33. ‘The main purpose of implementing a system of quality conn.) is to provide the firm with reasonable assurance that: a. ‘The firm and its personnel will comply regulatory ang legal requirements. b. ‘The audit will be performed in accordance with PSA. ¢. The firm will issue a teport that is appropriate in the circumstances. d. All of the above. 34, ‘The nature and extent of a CPA firm’s quality control policies and procedures depend on ‘The CPA Firm's Size The nature of the CPA Cost-benofit Sige Firm's Practice considerations a. Yes Yes Yes b. Yes ‘Yes No Yes No Yes a. No Yes Yes 35, Which of the following is not an essential component of quality control? a. Policies and procedures to ensure that firm personnel are actively engaged in marketing strategies. b. _ Policies and procedutes to ensue that the work performed by firm personnel meet applicable professional standards. c. Policies to ensure that personnel maintain their independence in fact and in appearance. d. Policies that ensure that monitoring activities are effectively applied. 36. The objective of the quality control policies to be adopted by an audit firm will ordinarily incorporate all of the following except a. Risk assessment b. Leadership responsibilities c. Engagement performance d. Human resources FB: Digital Accounting Books PH ral us es to ro ES37. 38. 39. 40. 41. The person responsible for the audit engagement and its performance, and for the auditor’ report that is issued in behalf of the firm is the a. quality control reviewer b. engagement partner ¢. client’s management d. audit manager Which of the following is an element of a CPA firm’s quality control system that should be considered in establishing its quality control policies and procedures? a, Complying with laws and tegulations b. Using statistical sampling techniques c. Independence . d. Consideration of audit risk and materiality Elements of a CPA firm’s quality control that should be considered in establishing its quality control policies and procedures must include: Monitoring Ethical Requirements Engagement Performance a. Yes Yes Yes b Yes Yes No G Yes No Yes d. No Yes Yes Which of the following is one of the elements of a CPA firm’s quality control system? a. Leadership responsibilities b. Computer assisted audit techniques ¢. Control activities d. Control environment Which of the following quality control objectives would be least important to the auditor? Engagement performance Human resources Determination of audit fee Independence Bie ee