Excel Professional Services, Inc. (Luzon) Manila and Ortigas 739-88447734-7908 * alam, Laguna (049) 845380" (Wiseyas) Sacolod City (034) 4388714 ~ Cebu City (092) 286-7777 Lov. 122 (afindanao) Cagayan ce Oro City (08622) 725150 * Davao City (082) 225-0069 \www.prte.com.ph CPA REVIEW OPEN FINAL PRE-BOARD EXAMINATIONS AUDITING THEORY [Exam Coverage | RPCPA Licensure | Examination Syllabus | I (Exam Code i (Exam Code AT.OpenFPB.1009 _ i (Date = September 25, 2009 | iTime 13:30 PM to 6:30 PM No. of Questions |100 2. of Questions j100 ‘SET IcEOSHERTADW 3602 S08 comm PS sulWeXg Plkog-ed ted Quaid 847 BUD;ER 103 nod ues sje ‘andi “p sity ‘asjeg “4 nig ‘asjes “9 andy fons -2 ‘sBulpuy $Joupne 343 yal Bouepzo258 uy SILOWIE}EIS ‘pods 03 pue /1018 40 press 02 anp sayrauie WIaIeISSIUI JEUDIU WON} Buy Su B|OyM e SE SOWIE] Jeu 4} J8yTEYM 3noGe eoUEINSse ajgeuosea: 9138 ‘oon Buon ‘daaxe “Bulmojo; 343 sapnuy uoiswedns, ‘seouersuunoui9 34 uj ayeudosdde 3q 63 pans! st Jeu yoda sdoupne avi 10} pue 'siusuisuinbs: (269; pue Alozeindo: PU SouRpuRls jeuorSssajold ym soURyaUIO> Uy quoWiAabeBUS aiene 2x2 Jo saueUHO}Iad ue ‘uoisjaledns ‘uoRSaup eur 40; Ayjaisuodses a2 pinoys sued jeweBeBue sul “> ESSER resoz ace SPA ee S24, P oN oN oN, 3 on sa, on 4 54 oN, SOA, e uopeug BusoueW — vojsiiadng gSeunpazeid pue sarsijod Jo13u0D Azijend Su BulusiigeISS Ur parsp/sucD aq Pinoys FU jonUOD Arjend Silly aD @ Jo SqUBUIB;a (axe) SI BuIMO][O) IN Jo UDMA “¢ au pue sel yam aoueyduios “p juodai soypne ey > Joupne au 40) syeoyspeaids squawayeys jepueuy payipre ayy -e 403 3 jawabeuen) “Z estes ‘enut 'p asies ‘esiey -¢ andy ‘asies > anal ‘emg -e eau SSOIUN sySq WAM soUeydus0D uesoids1 JOU jjeus soupNe 34) “payeyssiu Ayjeuarew 2q 0} swuswareIS jeoueUy a4) Bsne> jen SIXI ‘Azui seoueysuuno.9 3eus BuiziuBose! Wsondays [euo!ss9soid 10 SPnyNNe UE YM YORE Ue WHoped pue uEId jJeys 1oYpNe Buy “T @IADNMGOOD “AMO z “ON TIONAd Bsn. COTTVANI 792ys smsue UoNeUIUIeXd JNck spud! “GIMOTW SBuNSwes ON ANDNIS “papiacld x UR UO WY YDED IOs JAMsUE BUC fluo >HeW BM Jo Wee Jo) Jamsue ys9q ouassete 97. Which statement engagements? 2. It is an engagement in which a practitioner expresses & ion designed to enhance the degree of confidence intended users other than the responsible party about the outcome of the evaluation ar measurement of 2 subject matter against criteria. b, Not all engagements performed by professional accountants are assurance engagements. Whether a particular engagement is an assurance engagement will depend upon whether it & all the following elements - a three party relationship, a subject matter, suitabie criteria, sufficient appropriate evidence and a written assurance report, 4. All of the above statements are correct correct regarding assurance tics for determining whether criteria are a op < @ Yes Yes Yes Yes Yes Yes Yes Yes tenes yes Yes No Yes Yes No No Yes Yes Yes No No Yes No No Yes Comparabi Understandat 99. The framework for auditing and related services as addressed by PSA excludes 3. Revie! MAS. b. Compilation 6. Agreed upon procedures 4100.An audit of financial statements is anon assurance engagement. The auditor is engaged for purposes of expressing an opinion designed to enhance the degree of confidence of intended users in the financial statements. In conducting the audit so as to achieve its abjective, the overall objective of the independent auditar is to obtain Page Sot arin a ina Fheory sere a, ‘Tracking the progress of the audit engagement. b, Addressing significant issues arising during the audit ‘engagement, considering their significant, and modifying the planned approach appropriately. c. Informing the members of the engagement team of their responsibiities. 4. Identifying matters for consultation or consideration by more experienced engagement team members during the audit engagement. least likely discuss with ant prior to acceptance? wing will an au the former auditors of a poten 3. Integrity of management b. Fees charged for services © Disagreements with management regarding accounting principles: . Reasons for changing audit firms 8. Assuming @ recurring audit, in which of the following situations would the auditor be unlikely to send a new engagement letter to the client? 3, A recent change in partner and/or staff involved in the audit engagement. b. Acchange in the terms of engagement. & Arecent change of client management. d. A significant change in the nature or size of the client's business. Which of the following is not included in an engagement letter? 2, Limitation ia the scope of examination as imposed by ient 'o. Limitation in the scope of examination as imposed by circumstances c. Restrictions on auditor's exists d, Satisfactory title to assets, liens on assets and assets pledged when such possibility Eraeorpraasuadorty OWOSTRMNAM re soer a8eu wows P= EERE ie em Hoy;ne Aroye;nBar eqOD suoneuiusexa pneay @ SouDUILIC ypne op Woy UbISey “upne aif jo syvedse tayio Joy suoeondua! oyp 49pisueD gpauinbas s| $496 0} panyluqns aq je4s IwaWIs}eIs pue diepuers 3up yo Yoigin ‘sqUaWa}2}S jeroueU S42 OF jeuOTEUL “Shep 06 Ay 30U 5} jUSUIa}e}SSIU a4 Jo PeLS our Je43 ang prey) Jo NSO! {SUULUOD 103 3UBS 51 3| WOYM 03 SUOSIBG PUB SuoNeZ|uebIO au 9g ABW Jo Si JUaLIBYEISSILG e sexatiaq LONPNe el USUM “TT Aq peiapisuod ag 0} syuauiayes pue spiepurrs "YeIp aunsodxa ysea so} pamojje powed sinsodxS auL *] prey 1SivW 40 SyUDWIDUNOUOIE UR PaveACOUN BAEY [NOM S¥Sq Jo LOReDIdde OUR UEYAR “P quBWIeIS — LIMA “96 ‘ayenbapeu aq 03 so7pne uy ‘Aq paBpnf s} Joz3U09 jeuieyut Jo Warshs s.jusyD ayy LUM “> we syuswiaieys [eueuy ‘AL pul é 1 SqUOHD ayy UO Aes OF Ajo |B sdgIEd PILE BUA “@ Uuorsnyjo3 Wo4y 3INSai 30u PIP pred Sy UBUAA “e epney Sunpeyep 104 ajqysuadsas soupne Sup St UUM “OT au) Sulpiefier — y9an02 “Apt swuawia6e6ug soueinssy “sjusuisbe6ua majaay “Y ‘squawa6ebu3 xe np yuowyesovey *¢ voneiawinaop paylsies uorsnyoy “e epnesy ADeIeYD 2 AjjeridAs Jou Ss} SuLMO}IOY BY JO WDIYM * vo spiepueys auc Spiepueig 2oueinssy pue Sunipny 942 é prey aiqssod auy uode: 0} Ayuojne quswaai9jus me) © qoevED Way ayy yyy ISe65NS “Pp pasinao0 ‘anzy 0} Ajayi St JO pa4ung90 sey pney eusyeU 1yIayM Sumuuajep 0} sovapiAc jeuoMIDpe uieGo 0} wWdweRY “> quowiaBeuew 30 jena} sTeudordde we UIA vone6asaau! ssy2inj 0} yaeosdde pue anew ayy ssnosiq -G yne auy Jo ssadse soy30 105 suoweoydiu) syN JepisuoD “e qeuajet ag Aew Squawiazers [eoUeLY ‘aun eu; paunuuayep Sey pue ‘pres Jo nse: ous jaUBIeISSIW e Je41 PaulUueIap Sey soUpNE ue Uaym asudsa: Ajsyy 2 OU SI Suimoyoy Buy Jo UIIWM “2 “suzah om) paaaxe 0} 20u atu Jo pouiad-e 404 “sue84 Sau paaaxe 0} 20U auuih jo poriad & x pure s,sauyed p ‘Sjuo Al pue tr 9438 fvoau Buspay 43s sey, Boney93. Which statement is(are) Austieg Theory sete CPA, proprietor of the firm and the signing partner of the partnership. Li A member of the Board of Accountancy should not be connected to any CPA Review school or university offering courses leading to admission @ CPA Board Examinations, whether directly or indirect IV. Any candidate who faiis in two (2) complete Certified Public Accountant 8oard Examination sh from taking another set of exan submits evidence to the satisfaction he/she enrolled in and completed at (24) units of subject given in ion, ve days after the affectivity of RA 9298, t to the approval of PRC and in coordination with APO, sh: rules and reg) 9298 and which shall take effect foiiowing its publication in the Of major daily newspapers of general and V only and V only adopt end promulgate F renewal of professional fifteen (15) credit units shall 5e earned in each year, . Any excess credit units in one year may be carried over to the succeeding yeers within the three-year period, Excess credit u ed shail not be carried over to the next three-year period without exception IV. A registered professional who is wor permanently exempted from cor Fequirement during his/her stay abroad, provided that he/she fs has been out of the country for at least two years immediately prior to the date of renewal. ‘Ausiéng Theory sere 12. The following are examples of circumstences that may indicate the possibility that the financial statements may contain a material misstatement resuiting from fraue, except 2. Unwillingness by management to permit the auditor to ‘meet privately with those charged with governance. ©. Accounting policies that appear to be consistent with Industry norms. ¢. Frequent changes in accounting estimates that do not appear to result from changed circumstances. d. Tolerance of violations of the entity's Code of Conduct, ich statement {s_ incorrect regarding the auditor's sideration of laws and jons in an audit of financial statements? is the responsibi h the oversight it the 's operations laws and regulations, including compliance with laws and regulations thet dete entity's financial statements. This for the prevention and detection of non-compliance jaws and regulations b. In order to plan the audi specific understai framework applical how the entity ry of management ith governa the auditor should obtain a and and the industry and plying with that framework, jes transactions entered into by, or in document identified or suspected non- ws and regulations and the results of management, and where applicable, those charged with governance and other parties outside the entity. When planning the 2 believe that noncom: he should it, if the auditor hes no reason to nce with laws and regulations exist, Se aoa wae a BROpenFRBIOGS apse area AiOpanPPEIO.OScomune PS seem scocests lenajpuy 243 Jo Joquiny uoReNsIBay ved eu) panesbua 2g [84S 99 JayeUIs ay Jo Sipolw aly UI _pUe Susu] 943 panesOua aq [jeys soazauy ’aq Atus 9S29 04) Se diysiaunied 40 WH Soeds alg yo oRued seddn ayy ul pue uy & YYM Wi) UF JeIMOND UE Sq EUS VED ex u jase}oap 9q ffe4S jemeUaL 3se] WO. JO wl sueak snonunuoa S@5u891) feuoIssolold maues 02 paliey OUM 3504s T gann (aie) 51 {5)}UBUIE 1295 YHA “Suu 9! Pue gEzZS VY OF ere! SUSUISIEIS BuImojos ayL “76 HA pue 1A “A 'AL AIO TIA Bue A 'AL Avo TA pu Avo TEA Bue TA "A “THD suoneuiexs 10} spefgns au 40 192 ayy jo quawipuswe 40 souenss! ‘uoRdope ‘uoneieday, ‘QS¥¥ PUC ISA 03 SuAgUIEU! Jo ywauIUIOddy siaded uowieujwiexs oup jo Suized pue Suoneuiwuexs ainsuasy Wad Bu 40 SWUaWOD ayi Jo UOReledald ‘A ‘Sa J0 oneziweBie jeuosssajoid paypaiove axa Jeno uaisiMiadnS “AL ‘ouequnoade jo s0RDeid aif Jo uO!Te|N6Sy “TH Aouequnoa.e Jo anperd ays 104 uorens|Gei so oreD1NUBD aug Jo uawioyeysures 40 'voRBDoNaL ‘uolsuadsns ‘SOUENSSI “1 SUOABUILUCK® YD 2u3 0} SOIEPIPUED Jo LO|SSILUDE aU co: Burpes} swuawounbos wnwluw ay; Jo uoneuIWaIEG *T AoweqUnooY Jo pleog OUR Jo SUONIDUNY a1e BuIMOlIOJ SUL ‘TE “eye joquoD “Pp “seq ApEn “4 "502 wD 903 ssaudzajdulod “e yndu) Gurssa20xd e129 03 pa6iey> Sunoy Joge| Jo asneveq GUOU yreS SI Bnsuaye sauinbar woda: uoRNaUISI s0ge| shu ouas ‘eoe4 1 Busony so-orsasuedo 2¥ re p09 oes eu} 0} Sune! aidpuud yesuas @ s1 Bumojloy aur 40 DYNA “L “pues oy3 wiewior seouersuunouD 243 ang ‘aypne 03 apne woy Kuen Aew sannseigo apne ersus6 sy “P ‘Blues dYp Sulewia! paze|nwiNose e2UapiAs uy ang “upNe 03 sine Way AleA A@Us soDUeISWNDUD OyL “2 “se0UeISWINDI et uo Burpuadep ‘sauea souapiaa ayy yng ‘tipne or ypne Woy ses ayy uj! saannafqo sipne jeisus6 Syl “o “ssoueysuinaup ay? uo Buipuadap *hren sangpaigo je.eua6 343 Ing "Ipne 0} 3Ipne Woy awes al Sulewis! sayejnuinoze Joupne ayy yey BoUAPIAA ayL “e G3081102 $1 BUIMO}IOS 2U3 JO YDIYM “OT 2olsd JEW Sy 03 Janda saouid ye BuISeyDINg “—p suoRDesues} papiozas Ayadosdwy 40 suonoesuen pazuoysneun “2 Guymoyos sup ‘(Susuiaze3g [ebueUls Jo UpNY Ue U! SuORE;NBsy pue Smey JO UoReIepISHOD)PSYEIDEY OSZ WSd 02 Sulpiosoy ‘st “spe [2Galy Sundszep jo fayqeqosd Buoys © eney yoium seinpado.d Jone apnpul “P 4290 02 Spe (eB 30 Ayja\Ssod Bip) SOU] sine jeBail @Acoun 03 Alteaulaads pausisep seunpeooud apne sui0s apr “sal 'es0u9 2 BIA pue “SLO 3438Aadiing Theory sere IV and V only © [Mand ‘and V only 4. Tand it a b 86, ACIS environment least likely affects a, The overall objective and scope of an audit, b. The procedures followed by the auditor in obti sufficient understanding of the eccounting and control systems c. The consideration of inherent risk and contral which the auditor arrives at the risk assessment. G, The auditor's design and yance of tests of control and substantive procedures appropriate to meet the audit objective, 87. An auditor anticipates assessing cor computerized ment, Under these clrcumstai h of the following procedures would the audito focus? a. Programmad control procedures Application controi procedures Genera control procedures 88. If an auditor Is using test data in a client's computer system to test the Integrity of the systems output, which of the following types of controls is the auditor testing? controis. c. User controls. test controls, d. Application controls. the develop ich one of the ications. computer prograi computer prograi Ausitiog Theory sere b, Audit evidence provided by photocopies is more reliable than that provided by facsimiles. ¢. Audit evidence obtained from knowledgeable independent sources outside the client company is more reliable than audit evidence obtained from nonindependent sources. d. Audit evidence provided by original documents is more reliable than aucit evidence generated through a system of effective controls. ich of the following is not 2 basic procedure used in an it? & Tests of cuntreis. d. Tests of direct evidence, ma valid basis for an for the 19. Each of the following might by itsei auditor to decide to omit a test, ex a. Relative risk involved, 5. degree of reliance on the relevant internal controis. ©. difficulty and expense Involved in testing a particular item. d, relationship between the cost of obtaining evidence and its usefulness. 20. Reperformance ists of looking at a process or procedure being formed by othe b. Consists of seeking inf ion of knowledgeable persons, both financial and non-financial, throughout the entity or ng a representation of information 2 originally performed as part of the entity's interna! control Ree aaa Te DaaarraTC OT Rg Tor maa BF OpenFPRID.OFE ewe ‘uoisisap jenaB2uew ayew 0} seadojduie yuarsduio> sey just soueInsse OUL “A Suniodal jepueuy 2163 03 usuniULOD sua! aoueinsse au aziseyduua 2e4j Seinpoo0d pue S5I>KOd “AL sooreasodouy J Sjuaure1inder souapusdepu) ayy BUIWIEROE ui squawazinbaz uoneanpe 6: “seouuas §,uuny e Sulpebar SuoR Pue yyBisioao aneuidosdde sepiacud yey) ‘aayunso> ypne ue se yons ‘aimonas souewieacs ayeiodion y ‘T Bulmoyoy 847 apN|UI UsUUO.AUS 20K aya LI SpIeABDIeS * aeang Auieymues -p eas MaINDIIES °g yea1u AOBONPY "> yom Iss.0W-s1e5 'e pesticides aq Aew Ayagpafgo quanbosqns 224j Wiod 2x3 oy LoLUIde 49 Uonisod & seyoulosc ueyunaDde jeuo!ssajoud & LAY 517299 * 70M MolnarseS -q. 3eaxtp ysozauljag “e a1e2.0 Ayo 350u Aew poliad pabuojosd © 2en0 Mone ue vo sued uaWabebus peo) aes aun Bujsn 'S0aj so0p24 07 Japuo uy pauLioyisd om 30 qusM ayy AlsqeLdoddew aonpo! oy aunssald “P i aoueinsse ue yim diysuoneia: ssauisng ssojp © SulAen 2 quawabeiua ay3 Suiso} Jo Aajiaissod oun anoge weou0D “9 Walp adueinsse Ue Wo4} S99 jeI02 uo S2UspUadep anpUN “e 3eastR AASBIOULGSS, © 9180.9 JOH} ISP} GuyMOYOH aya Jo WUM, yeo4gy Aqueyuey “Pp 7easip mammsiyias “9 aeauip uonepiuiauT “> weauug ysareau jes °e 2120.5 Ayam JSOur jm Sia “Way oun Jo quswabebus ipne ue Jo saHeu! algns aig Aguanbesans fue squawiayeys jepueuy esou) pue squauineys 2oueUy 40 ‘spio2a: Sununosse so uoneuedaud aus Ul DaAjOAu 6! WY 24a JT 3e 1037 2804 <8 we “18 43s ‘ony Bungay coorsuetose OS gears “wogeywu) adoas e iomeu! ayy sapisuey -q “qusuleBebue ain wos merpuaA “2 Pinoys soxpne aun ‘woReUelaxe ajgezdazoe Ue apiAcid o3 Bigeun 51 uoWaBeUeW JT “squsWEES [eDUeUY s,AueduuOD au 30 siuswu9[9 ay UL suoREMONY qUED'JUBIS seoNOU JoYpNe ay, + “uoeuosul jeoueuy Jo Ssouaigeuoses: tp ayenjena 0} paubissp s]0.3UC> 30 SIS “p. ‘voneusiozU! [eDUeLY 30 SsaUa|qeuoseas Bu Stenjens os paubsep sis} aanuesqns °> evo] uoyequesoided squsWeBeuZUE 40 Aypyer auq axenjens o} paubisop sjaauca jo s1s9, 4 yoaquos feuiayu 30 wiaysks @ ayenjers 02 paubisep sysex aniquersang -e ‘ue Saunpanoid jean kreuy enoge aus JO ity “P upne 342 Jo a8e35 : sainpanaid a) pre ayy jo aBers Busuueld a ay “e paiidde 39 0} pexinbas jou aue ‘syunowe Paipaid Woy aeiap wpLM 40 uoReULOW) UenDj—s 2420 Yum qUBISISUODU 222 3eUI sdiysuONEEs pu suoREMONy Ps Sen! Guyinsss oy) Sulpnpul spues pue sonei JUeDyIUBIS Jo sysAjeUe si SuRSW YDIYM ‘Sainpadoud je>ndjeuy poliad Gugunosse ayeudoidde 0} pereooy}e Ayeonewaysis s} ys09 Asdold “p ‘AygUS 3up 30 SUEReE|gO HA UL BIgeked saloN “> "SnIWA o1ge2II204 19U 38 Ul ajgentaoas syunoooe apezi WONSIY Ye papiods. sj AUado.g “2 uOReDO|Ie 40 uaNen|er ynoge 30U S| suoRuesse aseyg Jo YDiysA “y 8q wed Ady] “SjuauodwWos qUoWEXEIS Yons j[e apnpur ays sougieg POIRIS a1e yeaus eougieg a 7502 ft DUeUY UP palpoquia ie Wig WeweBeuew jo suoneuassider aie suolassy re poe s6e8 ee, Te 436 ‘fecaty, Sung‘Auditing Theory sere 77. To establish the existence and ownership of a iong-term investment in the common stock of 2 publicly-traded company, an auditor ordinarily performs a security count or on the client's internat accounting controls, Austing Theory sere c. Perform additional audit procedures to investigate the further. ify the examination with the expectation of ing management fraud. aucitor’s procedures are being applied as prescribed, be orang ane number of shares owned that are held by an 25. An initial audit requires more auslt time to complete than a © Determine the market price per share at the belance Li arate ier imeclone diab sheet date fron publeneTcuaeaan 3 new aucitors are usually assigned to an initial audit. @. Confirms the umber of shares owned with the issuin i op oa ea earn nae company, : be © the client's business, industry and internal contro! are unfarnitiar to the auditor and need to be carefully studied Reece eee ae d. a larger proportion of customer accounts recelvatle need Fi eaeer arcana tecueseiminy be Heed to be confirmed on an initial audit. a. the assessed le b. a lecge number of 26, The nature and extent of planning will vary according the €. a substantial number of errors is not expected ing, except 4. the auditor has reason £0 believe thet respondents will a. Size of the er disregard these requests. b. Complexity c 79, When goods are received, the receiving clerk should match @ the goods with the 2. Purchase order and requisition. b. Vendor's invoice and the receiving report. 27. ing are the matters to be considered by the auditor ©. Vendor's shipping document and the purchase order. 19 the overall audit strategy, except 4. Receiving report and the vendor's shipping documents, ing the characteristics of the engagement 80. in order to achieve the objectives of the accountancy focus of the engagement profession, professional accountants have to observe 2 Computation of audit fees number of prerequisites or fundamental principles. The &, Ascertaining the reporting objectives of the engagement fundamental principles include the following, except a. Objectivity 28. The overall aucit plan includes: bred a. 2 description of the nature, and extent of planned © Integr risk assessment procedures sufficient to assess the risk of 4. Professional Competence and due care isstatement b. of the nature, timing and extent of planned procedures at the assertion level for each eRe ai OpaarPBTODT RTT Ai penrPBIE DS Sma ay Wet aaeee aes UOTE reso? a6ee aseyzindas 2 squewiaeide 2 ypelgns soueys jo Jaquinu a4L anjea uopepinbyy 42035 pauiayaud jo ssaqueiend Burpuezsino pue pans; sareys Jo saquinu ay, Spuaplaip jo Juausded ayy UO suORaISEY “2 sOuyuseouco segsiGes aun pue quabe Jessuey ayy way uoReULUOD UaNLM UIEIGO Pinoys 4031p ayy ‘Spiddal 3PO}IS UMO Sy WIEWUIEW OU sBop AURdUIOD sqUAIID e Lay “OL syse2aio} jeoueuls + suonequasaid jenieg suonpefoid jenueus « squawayeys (eDueuy euLoy og esud se mow ave squsuia}eys je;suewy angoadsoud Yong ~smoy yse9 pue ‘suoneedo Jo siinsai ‘uonisod erouewy papadxe s,Aqsua le “saijeq pue abpajmour sy 30 ySaq au 0} ‘aiedasd Kew Ayied aiqisuodsa1 @ ‘suondunsse jeoauodky 310W 10 BuO UaA'D “se “yoda: mainou -p Irpuer ‘9 AL pue °e DRBIADY pny “IT vonenéues “Tr seunpspa:d uodn-paai5y “ geouspuadapur aundes you op sweweBesue Suimoloy eu3 Jo YUM EL -s100q 819 Sujsop pue Bunsnipe ul ysisse 10u AeL! yhq stood sy) wo) SuaWeIES ain siedaid AEW Yad BL “P ouas feoa Busing éo-oressuadory - " TUSTROAAO re Joor abn enoge atA Joe “Pp “saunpanoud ypne sayin; Sunuoyied so ynsar 2 se suogeredo sy ue AynuS at Jo Sulpuersiepun s,soypne a4 ul aBuey> © “2 Uoewiows mou “a apne au uLNp pausnsz0 yeuy SoDUEISUINDID Uy BBUAYD e “2 ‘uimoos 2u2 30 3insou e se pasinas 39 0} peau Aow (2}qea1dde 4 “2insops: ‘SuORDESUeN JO SSE)9 se;MoNIEd © 404 (9 fsareredo AyuS ayy YDIUM ULIOJIAUS DIWOUOD pue ANjSNpU! au; pue ‘PAD UL Ye 5} ANUS 343 erOYIR “AYRUD BYR Jo aUNYeU UL “2 H(syasse you 40 sesn s9uBWO}ied 59) pasndoy aq 03 youd uo sa20} 0} puay Ai ulyenjens jo asod.nd 343 103 Spuay SqUBLIA}e}5 jeDueUY sAnUD 22] ayy JO voRUeR2 243 yDIym UO sulDD eu Bui JO SWAUaD ay “e 1 WEWLDUAG ayeLIdo.dde ue 40 uonesynusp) sua 2DaWe Kew Jey? S10I9ed “uoReUIULIATED den quiod “Bugieis ese >yeuysusq uasoy> © 0} paride uayo s1 sGequaoied y "quaulSpAL jeuo|ssojoud 40. 8501eK9 34 saunbss soy e@ se sows Fepuevy euy 40s jana] AyeuaW eB BulMUUDIEG “Ez guou essyzieu “p qpueetiog “2 8uns0}25p ue seougyeq yUnose ‘suoRDeSUe Jo SSeD JeUDTEUL 138 feos Bunion‘Audting Theory ee 69. Which of the following is not 2 purpose of audit working papers? a. To coordinate the examination. b, To assist in preparation of the audit report. c. To support the financial statem G. To provide evidence of the audit work performed. 70. Wihich of the following procedures would an accountant least likely perform during an engagement to review the financial statements of a nonpublic entity? 2. Observing the safeguards over access to and use of assets and records. b. Comparing the financial statements with anticizated results in budgets and forecasts. c. Inquiring of management about actions taken at the board of directors’ meetings. 4d. Studying the reiztionships of financial statement elements expected to conform to predictable patterns. 71, Which of the following procedures is not included in @ review engagement on a nonpublic entity? uiries of managem: b. Inquiries regarding events subsequent to the balance sheet date. c. “Any procedures designed to identify relationships among data that appear to be unusual G. A study and evaluation of internal contro! structure. 72. A CPA has been engaged to compile financial statements for @ nonpublic client. Which of the following statements best describes this engagement? 2, The CPA must perform the PSAs necessary to determine that the statements are in conformity with PFRSs. b. The CPA is performing an accounting service rather then an examination of financial statements. c. The financial statements are representations of both management and the CPA. Austing Theory sere BL. In which of the f 1g situations would materiality be least ely considered critical? . A decision of whether the auditor has to obtain a representation letter from the management, b. In determining the nature, timing and extent of audit procedures, A decision of whether to modify the audit opinion. Evaluating the effect of misstatements. 32. Which of the fo! correct? ing statements about internal control is reasonably assure yes cannot occur. 1g internal control is the ws the auditor to 2 tests of detal relationship should be considered in designing internal control 33. The auditor should perform which of the following as risk assessment procedure? a. Inquiry and observation c. Recalculation b. Confirmation c. Reperformance iness risk created by industry developments b. Increased legai exposu: c. The entity does not have the personne! or expertise to deal with the changes in the industry. 4. Loss of financing due to the entity's inability to meet financing requirements, eae wanes ah a “EF. 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Name of the other auditor. c. lature of his inquiry Into the other auditor's professional standing and extent of his review of the auditor's work. 4. Reasons why he is unwilling to assume responsibility for the other auditor's work, 64. A CPA engaged to examine financial statements observes that the accounting for a certain material item is not in conformity with PERS, and that this fact is prominently disciosed | note to the financial statements. The CPA does not agree this departure from PERS and should 2. Not allow the accounting treatment for this item to affect the type of opinion because the deviation from PFRS wes disclosed. b, Express an unqualified opinion and add an explanatory paragraph emphasizing the matter by reference to the footnote. . Qualify the opinion because of the deviation from PFRS. d. Disclaim an opinion. h Auditing Theory sere 2, Assigning less experienced staff, b. Emphasizing to the audit team the need to maintain professional skepticism in gathering and evaluating audit evidence. ¢. Performing predictable further audit procedures, d. Performing substantive procedures at an interim date instead of at period end. are considered further audit jesigned after assessing the risks of 39. Which of the Procedures that n material misstatem: Substantive Risk assessment testsofdetails procedures es Yes Yes b Yes No c No Yes ¢ No No 40, An advantage of using statistical over nonstai methods in tests of controls is that the stati a, Can more easily convert the sample into a dual-purpose test useful for substantive testing. nate the need to use judgment in determining ropriate sample sizes. ©. Afford greater assurance thana nonstatistical sample of 41. The risk that the auditor does not recognize misstatements or deviations included in the sample for what they are 2, Sampling risk . Statistical sampling b. Confidence leveis 4G. Nonsampling risk 42. 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The standard audit report includes a (an) opinion paragraph b. auditor's responsi basis for qualified opinion paragraph dd. introductory paragraph I of the following except 57. The element of the auditor's report that distinguishes it from reports that might be issued by others is a. Title c. Addressee ¢. Opinion paragraoh b. Auditor's signature 58. The introductory paragraph jentify the entity whose audited and should state that the financial statements have been audited. The introductory paragraph should also include the following, except title of each of the financial statements that comprise the complete set of financial statements b. Refer to the summary of significant accounting policies and other explanatory notes An audit Invoives performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements d. Specify the date and period covered by the financial statements. 58. Which of the following circumstances res the modification of both the auditor's responsibility and the ‘S opinion paragraphs of the auditor's report as 705? jon on the scope of audit that results to qualified ‘Aasting Theory sere 47, Which of the fol statements that relates to subsequent tely described? ly applied procedures have ions. y require statements, performed as near as practicable to the date of tne auditor's report. @, The procedures that are designed to obtain sufficient audit evidence that all events, up to the date 137 require adjustments of, or ‘osure in, the financial statements are in addition routine procedures which may be applied to specific transactions. 48. Which vast likely 2 procedure that would be perf near the auditor's report date? a. Reading the minutes of the meetings of shareholders, the board of directors and audit executive committees held throughout the audit year. b. Reading the entity's latest avai catements. ©. Inquiring of management as to whether any subsequent ts have occurred which might affect the financial ble interim financial procedures that management has 49, The auditor has no obligation to perform any audit procedures regarding the financial statements after the date of the report. 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