Professional Documents
Culture Documents
May 2019 First PB
May 2019 First PB
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 the laws and regulations.
b. Using statistical sampling techniques.
c. Assigning personnel to engagements.
d. Considering audit risk and materiality.
Human resources
Detection Policies and
Risk practices
a. Yes Yes
b. Yes No
c. No Yes
d. No No
3. Which of the following best describes why an independent auditor is asked to express
an opinion on the fair presentation of financial statements?
a. It is difficult to prepare financial statements that fairly represent a company’s
financial position, cash flow, and operations without the expertise of an
independent auditor.
b. It is management’s responsibility to seek available independent aid in the
appraisal of the financial information shown in its financial statements.
c. The opinion of an independent party is needed because a company may not
be objective with respect to its own financial statements.
d. It is a customary courtesy that all stockholders of a company receive an
independent report on management’s stewardship in managing the affairs of
the business.
4. Yayamaning Co. engages the services of Mr. Ka Hirapan, CPA to make a project study
on the expanded food vending operations of the Corporation with the corresponding
staffing and compensation package for its executive staff. Mr. Ka Hirapan, however,
has primarily auditing expertise and only in general merchandising operations. Mr.
Ka Hirapan may properly
a. Accept the engagement and carry it out consistent with the standards on
auditing.
b. Accept the engagement but exercise more due professional care.
c. Accept the engagement and acquire the necessary competence or consult
with established authorities.
d. Decline the engagement for lack of experience or competence in an entirely
new line of specialization.
9. Before accepting an engagement with a new client, the CPA firm shall assess the
following except
a. If the auditor is competent to perform the engagement, has the capabilities
including time and resources to do so.
b. The auditor can comply with the relevant ethical requirement.
c. If the client has integrity.
d. If the client has the financial capacity to pay the estimated audit fee.
10.If information is for management’s use only, which of the following forms of CPA
association with financial information is most likely to result in no report being
issued?
a. An agreed-upon procedures engagement.
b. An audit.
c. A compilation.
d. A review.
12.During the audit of the 2017 financial statements of Goldirock’s Corp, an entity which
supplies hardware materials to construction companies, Mr. Henry Chips received
several types of documentary evidences. Which of the following is considered as the
most reliable?
a. Working papers prepared by the Chief Accountant and reviewed personally by
the VP-Finance.
b. A check issued by the Treasurer, with the payee’s endorsement, included in
the statement mailed by the bank directly to the auditor.
c. A delivery receipt issued by the shipping department, signed by the customer,
with an accompanying copy of the sales invoice.
d. Vendor’s Confirmation of the balance of an accounts payable mailed by and
returned directly to the auditor.
13.Wald, CPA, is preparing unaudited financial statements for Zaikin Company. During
the engagement, Wald becomes aware that the statements are misleading. Wald
should
a. Disclaim an opinion.
b. Insist that the statements be corrected.
c. Issue an adverse opinion.
d. Insist that the statements be audited.
14.In accordance with the provisions of Republic Act No. 9298, the following are the
available penalties against violating CPAs
I. Revocation of CPA license.
II. Suspension of the CPA license
III. Imprisonment and/or fines
a. I and II c. II and III
b. I and III d. I, II and III
16.A CPA firm evaluates its personnel advancement experience to ascertain whether
individuals meeting stated criteria are assigned increased degrees of responsibility.
This is evidence of the firm's adherence to which of the following prescribed
standards:
a. Professional ethics.
b. Supervision and review.
c. Accounting and review services.
d. Quality control.
22.Which of the following provides the most authoritative guidance for an auditor?
a. A PICPA audit and accounting guide that provides specific guidance with
respect to the accounting practices in the client's industry.
b. A Journal of Accountancy article discussing implementation of a new standard.
c. General guidance provided by a Statement on Auditing Standards.
d. Specific guidance provided by an interpretation of a Statement on Auditing
Standards.
24.In the first audit of a client, an auditor was not able to gather sufficient evidence
about the consistent application of accounting principles between the current and
prior year, as well as the amounts of assets or liabilities at the beginning of the
current year. This was due to the client's record retention policies. If the amounts in
question could materially affect current operating results, the auditor would:
a. Be unable to express an opinion on the current year's results of operations
and cash flows.
b. Express a qualified opinion on the financial statements because of a client-
imposed scope limitation.
c. Withdraw from the engagement and refuse to be associated with the financial
statements.
d. Specifically state that the financial statements are not comparable to the prior
year due to an uncertainty.
27.A successor auditor ordinarily should request to review the predecessor's audit
documentation relating to:
Contingencies Internal Control
a. Yes Yes
b. Yes No
c. No Yes
d. No No
29.Internal accounting control comprises the plan of organization and the procedures
and records that are concerned with the safeguarding of assets and the
a. Decision process of management.
b. Reliability of financial records.
c. Authorization of transactions.
d. Achievement of administrative objectives.
30.Although the quantity and content of audit working papers vary with each particular
engagement, an auditor’s permanent files most likely include
a. Schedules that support the current year’s adjusting entries.
b. Prior years’ accounts receivable confirmation that were classified as
exceptions.
c. Documentation indicating that the audit work was adequately planned and
supervised.
d. Analyses of capital stock and other owners’ equity accounts.
33.In planning an audit engagement, which of the following affects the independent
auditor's judgment as to the quantity, type, and content of working papers?
a. The estimated occurrence rate of attributes.
b. The preliminary evaluations based on substantive testing.
c. The content of the client's representation letter.
d. The anticipated nature of the auditor's report.
34.Which of the following criteria is unique to the independent auditor's attest function?
a. General competence.
b. Familiarity with the particular industry of each client.
c. Due professional care.
d. Independence.