The following are assurance engagements, except

A. Tax services
B. Review engagement
C. Other assurance engagements
D. Reasonable assurance engagement

An auditor is required to establish an understanding with a client regarding the responsibilities for each
engagement. This understanding generally includes
A. The auditor's responsibility for the fairness of the financial statements
B. Management's responsibility to guarantee that there are no material misstatements due to fraud
C. The auditor's responsibility to plan and perform the audit to provide reasonable, but not absolute,
assurance of detecting material errors or fraud
D. Management's responsibility for providing the auditor with an assessment of the risk of material
misstatement due to fraud

The characteristic for determining whether criteria in engagement are suitable include the following,
except
A. Neutrality
B. Completeness
C. Understandability
D. Verifiability

The need for assurance services arises for all of the following reasons except
A. Closeness between a user and the organization
B. Potential bias in providing information
C. Remoteness between a user and the organization
D. Complexity of the processing systems

Which of the following would best be described as an assurance service?

A. Assisting a client in identifying potential sources of capital for potential acquisitions
B. Working with a client to develop a more efficient method of processing financial transactions
C. Preparing a report representing a client’s position during a BIR audit
D. Offering an opinion concerning the accuracy of statements made on a client’s web site relating to the
client’s online privacy policies

Results of compliance audits are typically reported to someone within the organizational unit being
audited rather than to be a broad spectrum of outside users. Which of the following audits can be
regarded as generally being a compliance audit?
A. COA auditor’s evaluation of the computer operations of governments units
B. An internal auditor’s review of a company’s payroll authorization
C. A CPA firm’s audit of the local school district
D. BIR agents’ examinations of taxpayer returns
The following statements relate to external auditing. Which of the following statements is incorrect?
A. To be effective, internal auditors should submit their reports to the senior management.
B. Internal audits are performed by an entity's employees or by personnel contracted for that purpose.
C. Internal auditing has evolved in a highly professional activity that extends beyond the appraisal of the
efficiency and effectiveness of an entity's operations.
D. Internal audit areas include providing assurance and consulting services relating to entity's risk
management, control and governance process aimed at adding value to the organization.

Which of the following is not normally a service rendered by public accountants?

A. Internal auditing
B. Management consultation service
C. Taxation
D. Attest function

Unlike consulting services, assurance services?

A. Report on how to use information
B. Are two-party contacts
C. Make recommendation to management
D. Report on the quality of information

Which of the following is not included in an engagement letter?

A. Limitation in the scope of examination as imposed by circumstances
B. Restrictions on auditor’s liability, when such possibility exists
C. Limitation in the scope of examination as imposed by client
D. Satisfactory title to assets, liens on assets and assets pledged

An auditor should design the written audit program so that

A. substantive tests prior to the balance sheet date will be minimized
B. each account balance will be tested under either tests of controls or tests of transactions
C. the audit procedures selected will achieve specific objectives
D. all material transactions will be selected for substantive testing.

Which of the following factors most likely would cause an auditor not to accept a new audit
engagement?
A. An inadequate understanding of the entity’s internal control structure
B. Concluding that the entity’s management probably lacks integrity
C. An inability to perform preliminary analytical procedures before assessing control risk
D. The close proximity to the entity’s fiscal year end.

Which of the following risks of material misstatement relating to cash pertains to completeness
assertion?
A. Cash is overstated because of recorded fictitious, overstated receipts, or has been stolen
B. Cash is overstated because the entity has lost right to recorded cash.
C. Cash is misstated because bank accounts denominated in a foreign currency have been translated
using the incorrect exchange rate
D. Cash is understated because not all bank accounts and receipts have been recorded

Which of the following relates to management’s philosophy and operating style of control environment?
A. Consideration of key areas of authority and responsibility and appropriate lines of reporting
B. Recruitment, orientation, training, evaluation, counseling, promotion, compensation, and remedial
action
C. Effective communication of standards and values and removal of incentives and temptations for
dishonest or unethical acts
D. Management’s approach to taking and managing business risks

Which of the following should an auditor obtain from the previous auditor before accepting an audit
work?
A. Analysis of income statement accounts
B. Facts that might bear on the integrity of management
C. All matters of continuing accounting significance.
D. Analysis of balance sheet accounts

Assertions are representations by management, explicit or otherwise, that are embodied in the financial
statements. Management's assertions in the financial statements are of relevance to the audit process
because:
A. they are utilized by auditors in developing proper tests and procedures
B. they are direct evidence that management has prepared financial statements in accordance with
generally accepted audit standards
C. they relate more to the audit while the financial statements belong to the auditor
D. they are the procedures that will be performed by the audit team

Concluding analytical procedures are used

A. As an overall review of financial information in the final review stage of the audit
B. As a substantive test to obtain evidential matter about particular assertion related to account
balances or classes of transaction
C. To assist the auditor in assessing the risk of material misstatements of the FS
D. All of the choices

Which of the following matters is generally included in an auditor's engagement letter?

A. Management's liability for illegal acts committed by its employees
B. Limitations of the engagement
C. Factors to be considered in establishing preliminary judgments about materiality
D. The auditor's responsibility to obtain negative assurance relating to the occurrence of illegal acts

Flowcharting as a means of internal control evaluation provides the following advantage over the use of
questionnaires and descriptive narratives:
A. Ease in following information flow
B. Comprehensive coverage of controls
C. Ease of preparation
D. Simplicity

An audit program is created to specify which of the following?

A. how an auditor should think while performing audit procedures
B. the type of audit opinion to be rendered based upon procedures performed
C. the audit procedures that will be performed every year for the client
D. audit objectives and procedures to be followed during the audit process