‘Ol: AUDIT SERVICES IN GENERAL REQUIRED READINGS + Chapter 2, Auditing and Assurance Principles, 12" ‘+ PSA 200 (Revised and Redrafted) Audit in Accordance with Philippi Edition (Ireneo, Treneo, James) ) — Overall Objectives of the Independent Auditor and the Conduct of an ine Standards on Audit The word auaiting comes from the Latin audire, which means: A. To see 8. To detect £. To hear D. To test 2. Which of the following is an incorrect phrase? A. Auditing is a systematic process. 8B. Auditing objectively obtains and evaluates evidence. <. Auditing evaluates evidence regar: D. Auditing communicates results to interested users. 3. Broadly defined, the subject matter of any audit consists of: ‘A. Financial statements C. Assertions og rep) B. Economic data D. Operating dat Representations by management, explicit or otherwise, that are embodied in. the financial Statements, as used by the auditor to consider the different types of potential misstatements that may occur. A. Financial statement assertions C. Notes to the financial statements B. Audit evidence D. Disclosure requirements 5. Financial statements need to be prepared in accordance with one, or a combination of: AL PrkS FC. Otner auchomauve vasis B. IFRS D. All of the answers. 6. This term is used to refer to the person or persons conducting the audit, usually the engagement partner or other members of the engagement team, or, as applicable, the firm, ‘A. Users of financial statements C. Auditor B. Those charged with governance D. Management 7. The auditor communicates the results of his or her work through the medium of the: A, Audit engagement letter. C. Management letter. Z. Audit report. D. Notes to the financial statements, 8. An audit of financial statements is conducted to determine if the: ‘A. organization is operating efficiently and effectively. 8, auditee is following specific procedures or rules set down by some higher authority. #. overall financial statements are stated in accordance with an applicable financial reporting framework. D. chent’s internal control is functioning as intended. 9. This type of audit is performed to determine whether an entity's financial statement: fairly stated in conformity with generally accepted accounting principles. sanintie e Financial statement audit, C. Compliance audit ‘8. Operational audit D. Internal audit 10. The overall objectives of the independent auditor in conducting financial its is: ‘A. To prove accuracy and reliability of financial statements = Statement audits is: 8. To prepare and present financial statements in accordance with PFRS F- To obtai sonable assurance about whether the financial st material misstatements, due to fraud and error tatements are free from Te report on the financial statements and communicate as required by PAS 11. The purpose of an audit of financial statements is to: A. Enhance understanding of the stakeholders of the company B. Provide government agencies, such as BIR with basis for assessments eG as "Wiis Weal tinal Hit enemiesAT-01 dence Of intended users of the financial statements Skills of external auaitors, Enhance the degree of conti 'D. Enhance the knowledge and P12. most of the independent a ~ consists of. tudHLOrs work in formulating an opinion on Financia! statements A. Studying and evaluating internal control F Obtaining and examining evidential matter C. Examining cash transactions D. Comparing recorded accoun: bility with phy al existence of property © 13,4 aitference between the sical Greazctat of a reportes financial statement itein and the amount, Casseation, preventazion, or disclosure that 1S required for the itern to be in accordance with the applicable fimancial reporting framework. A. Non-compliance L wisstatement 8. Fraud 5 thar 14.4 urintentional mistatement in financial statements, includ the omission of an arneurt or dictosure Ay sorecomoares C,Msstatement B. Fraud FF Error B 15. An intentional act by one or more individuals among management, those charged with Governance, employees, or third parties, invalving the use of deception to obtain an unjust or illegal advantage. A, Non-compliance CC. Misstatement BE Fraud / Ieregularity D. Error D 16.The primary responsibility for the prevention and detection of fraud and error rests with ‘A. The external auditor, the company’s management, and those charged with governance B. The compeny’s menagement Those charged with governance ZF The company’s management and those charged with governance: aE B 17.1his type of audit involves a review of an organization's procedures and methods for the purpose of evaluating efficiency and effectiveness of aperabons, and identifying areas for improvement. A. Financial statement audit C. Compliance audit BF Operational audit BL, Internat auait D 18. wnich of the following best describes tne operational aut? are requires the constant review by intemal audlors of the administrative controls as they relate to operations of the company B. Itconcentrates on implementing financial and accounting control in a newly organized company, C. It attempts and 15 designed to verify the fair presentation of 2 company’s results of operations. A. ieoncentiates on seeking out aspects of operations io wnich waste would be reduced by the introduction of controls. C. 19:This type of audit 1s performed in order to determine the degree of adherence to specihc procedures and rules set down by some higher authority A, Financal statement audit Z Compliance audit - B. Operational audit D. Internat audit CL 20. Which of the following types of audits are most similar? ‘A. Operational audits and compliance audits. 8. Independent financial statement audits and operational audits Z. Compliance audits and independent financial staternent audits, D. Internal audits and independent financial statement audits (L-_21.Which of the following types of aucting 5 performed most commonly by CPAS for more than one client and on 9 contractual basis? ‘A. Internal auditing External auaiting B. Income tax auditing External auaingB 22.7his is an independent appraisal activity established within an entity as a service to the entity’ A. External or independent auditing. . Government auditing 2% Internal audit function. D. Compliance auditing D 23. The overall objective of internal auditing is to: A. Attest to the efficiency with which resources are employed. B. Ascertain that controls are costs-justified. C, Provide assurance that financial data have been accurately recorded. 2 Assist the members of the organization in the effective discharge of their responsi \D 24.wmich of the following statements is not a distinction between independent auditing and internal auditing? A. Independent auditors represent third party users external to the auditee entity, whereas internal auditors report directly to management. & Although independent auditors strive for both validity and relevance of evidence, internal auditors are concerned almost exclusively with validity. C. Internal auditors are employees of the auditee, whereas external auditors are independent contractors. D. The internal auditor's span of coverage goes beyond financial auditing to encompass operational and performance auditing. C/ 25.This type of audit goes beyond the usual financial statement audit, to include audits of compliance with laws and regulations, operations of governmental entities, and the proper disbursement and management of public funds. A. External or independent auditing. #. Government auditing B. Internal audit function. D. Compliance auditing. p 26. In government auditing, the three elements of expanded scope auditing are: A, Goal analysis, audit of operations, audit of systems. Financial and compliance, economy and efficiency, program results, Pre-audit, post-audit, internal audit. D. National government audit, local government audit, corporation audit. C 27.4n audit designed to determine the extent to which the desired results of an activity established by the legislative or other authorizing body are being achieved. A. Economy audit. Z Program results audit. B. Efficiency audit. ‘D. Financial-related audit. ‘ -end of AT-01-