1.

PSA 330 requires the auditor to

a. Determine overall responses to address risks of material misstatement at the financial statement level.
b. Design and perform further audit procedures, including tests of the operating effectiveness of controls, when relevant or
required, and substantive procedures, whose nature, timing, and extent are responsive to the assessed risks of material
misstatement at the assertion level.
c. Evaluate whether the risk assessment remain appropriate and to conclude whether sufficient appropriate audit evidence
has been obtained
d. All of the above.

2.

Assurance engagement
a. Is an engagement in which a practitioner is engaged to issue, or does issue, a written communication that expresses a
conclusion about the reliability of a written assertion that is the responsibility of another party.
b. Is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions
and events to ascertain the degree of correspondence between those assertions and established criteria and
communicating the results to interested users.
c. Is an engagement in which the auditor provides a moderate level of assurance that the information subject to the
engagement is free of material misstatement.
d. Is an engagement intended to enhance the credibility of information about a subject matter by evaluating whether the
subject matter conforms in all material respects with suitable criteria, thereby improving the likelihood that the
information will meet the needs of an intended user.

3.

Which of the following is incorrect regarding the Philippine Standards on Assurance Engagements (PSAE)?
a. It provides an overall framework for assurance engagements intended to provide either a high or moderate level of
assurance.
b. It provides basic principles and essential procedures for engagements intended to provide a moderate level of
assurance.
c. When a professional accountant is engaged to perform an assurance engagement for which specific standards exist,
those standards apply.
d. If no specific standards exist for an assurance engagement, PSAE apply.

4.

Which of the following is incorrect regarding the general principles of an audit?

a. The auditor should comply with the Code of Ethics for Professional Ethics for Certified Public Accountants
promulgated by the Philippine Professional Regulation Commission
b. The auditor should conduct an audit in accordance with PSAs.
c. The auditor should plan and perform an audit with an attitude of professional skepticism recognizing that circumstances
may exist that cause the financial statements to be materially misstated.
d. The auditor would ordinarily expect to find evidence to support management representations and assume they are
necessarily correct.

5.

Which of the following statements is correct concerning analytical procedures?

a. Analytical procedures usually involve comparisons of ratios developed from recorded amounts to assertions developed
by management.
b. Analytical procedures used in planning an audit generally use data aggregated at a high level.
c. Analytical procedures can replace tests of controls in gathering evidence to support the assessed level of control risk.
d. Analytical procedures are more efficient, but not more effective, than tests of details and transactions.

6.

Which of the following statements is not correct about materiality?

a. The concept of materiality recognizes that some matters are important for fair presentation of financial statements in
conformity with GAAP, while other matters are not important.
b. An auditor considers materiality for planning purposes in terms of the largest aggregate level of misstatements that
could be material to any one of the financial statements.
c. Materiality judgments are made in light of surrounding circumstances and necessarily involve both quantitative and
qualitative judgments.
d. An auditors consideration of materiality is influenced by the auditors perception of the needs of a reasonable person
who will rely on the financial statements.

7.

When events or conditions have been identified which may cast significant doubt on the entitys ability to continue as a
going concern, the auditor should:
a. Review managements plans for future actions based on its going concern assessment.

b.
c.
d.

Gather sufficient appropriate audit evidence to confirm or dispel whether or not a material uncertainty exists through
carrying out procedures considered necessary, including considering the effect of any plans of management and other
mitigating factors.
Seek written representations from management regarding its plans for future action.
All of the above.

8.

In which of the following situations would the auditor appropriately issue a standard unqualified report with no explanatory
paragraph concerning consistency?
a. A change in the method of accounting for specific subsidiaries that comprise the group of companies for which
consolidated statements are presented.
b. A change from an accounting principle that is not generally accepted to one that is generally accepted.
c. A change in the percentage used to calculate the provision for warranty expense.
d. Correction of a mistake in the application of a generally accepted accounting principle.

9.

Which of the following events occurring after the issuance of an auditors report most likely would cause the auditor to
make further inquiries about the previously issued financial statements?
a. A technological development that could affect the entitys future ability to continue as a going concern.
b. The entitys sale of a subsidiary that accounts for 30 percent of the entitys consolidated sales.
c. The discovery of information regarding a contingency that existed before the financial statements were issued.
d. The final resolution of a lawsuit explained in a separate paragraph of the auditors report

10. Which of the following best describes the auditor's responsibility for "other information" included in the annual report to
stockholders which contains financial statements and the auditor's report?
a. The auditor has no obligation to read the "other information."
b. The auditor has no obligation to corroborate the "other information," but should read the "other information" to
determine whether it is materially inconsistent with the financial statements.
c. The auditor should extend the examination to the extent necessary to verify the "other information."
d. The auditor must modify the auditor's report to state that the "other information is unaudited" or "not covered by the
auditor's report."