AUDITING QUESTIONS WITH ANSWER

Which of the following is not one of the limitations of an audit – LIMITATIONS IMPOSED BY
CLIENTS
An audit involves ascertaining the degree of correspondence between assertions and
established criteria. In the case of an audit of financial statements, which of the following would
not be a valid criterion- PHILLIPPINE STANDARDS ON AUDITING
the client’s management has primary responsibility for the fairness of the representation made
in the financial statements
Operational audit uses laws and regulations as its criteria- FALSE (COMPLIANCE AUDIT)
An audit that involves obtaining and evaluating evidence about the efficiency and effectiveness
of an entity’s operating activities in relation to specified objectives a(n)- OPERATIONAL AUDIT
The subject matter of any audit consists of assertions. TRUE
Which of the following is not among the conditions that give rise to a demand by external users
for independent audits of financial statements- COMPLEXITY OF MAKING ECONOMIC
DECISIONS
which of the following statements does not properly describe an element of theoretical
framework of auditing- AUDITORS ACT ON BEHALF OF THE MANAGEMENT
Internal auditing is the most commonly performed type of auditing by CPAs on a contractual
basis- FALSE-EXTERNAL
the criteria for evaluating quantitative information vary. for example, in the case of financial
statements by cpa firms, the criteria are usually the- PFRS
the auditor communicates the results of his or her work through management letter- FALSE
(AUDITOR’S REPORT)
which of the following statements does not properly describe a limitation of an audit- MANY
FINANCIAL STATEMENT ASSERTIONS CANNOT BE AUDITED
by providing high level of assurance von audit reports on financial statements, the auditor-
ENHANCES THE CREDIBILITY OF THE FS
most of the independent auditor’s work in formulating an opinion on financial statements
consists of- OBTAINING AND EXAMINING EVIDENTIAL MATTER
internal auditing is an independent appraisal function established within the organization to
examine and evaluate its activities. to that end, internal auditing provides assistance to-
MANAGEMENT AND BOD
which of the following quality control objectives would be least important to the auditor-
DETERMINATION OF AUDIT FEE
a body created by the board to conduct an oversight of the quality of audit of financial
statements by reviewing the firms quality control is known as quality review committee- TRUE
the general standards of the generally accepted auditing standards include a requirement that-
DUE PROFESSIONAL CARE BE EXERCISED BY THE AUDITOR
the fourth generally accepted accounting standard of reporting requires an auditor to render a
report whenever an auditor’s name is associated with financial statements . the overall purpose
of the fourth standard of reporting is to require that reports- INDICATE THE CHARACTER OF
THE AUDITOR’S EXAMINATIONAND THE DEGREE OF RESPONSIBILITY ASSUMED BY
THE AUDITOR
which of the following statements most accurately captures the intent of the standards of field
work- FIELD WORK STANDARDS ARE PRIMARILY DIRECTED AT THE AUDITOR’S
PLANNING…
direction involves monitoring the progress of the audit- FALSE SUPERVISION
in compliance with the element of human resources, the firm should address issues relating to-
ASSIGNMENT OF ENGAGEMENT TEAMS
the generally accepted standards of reporting encompasses all of the following except-
CONSIDERATION OF AN ENTITY’S INTERNAL CONTROL
the generally accepted auditing standard that requires adequate technical training and
proficiency is normally interpreted as requiring the auditor to have- FORMAL EDUCATION IN
AUDITITNG AND ACCOUNTING
the Philippine standards on auditing can be described as- DEFINING THE MINIMUM
STANDARDS OF PERFORMANCE FOR AN AUDITOR
which of the following is not an essential component of quality control- POLICIES AND
PROCEDURES TO ENSURE THAT THE FIRM PERSONNEL
the quality control reviewer is responsible for the audit engagement and its performance and for
the auditor’s report that is issued in behalf of the firm- FALSE ENAGEMENT PARTER
a firm of independent auditors must established and follow quality control policies and
procedures because these standards- GIVE REASONABLE ASSURANCE THAT THE FIRM AS
A WHOLE WILL COMPLY WITH PROFESSIONAL STANDARDS
which of the following describes what is meant by generally accepted auditing standards-
MESURES THE QUALITY OF THE AUDITOR’S PERFORMANCE
Independence is the primary factor that should be considered in determining the extent of
supervision needed by an assistant- FALSE COMPETENCE
quality control policies and procedures should provide the firm reasonable assurance that the
policies and procedures relating to the other elements of quality control are being effectively
applied. this statements defines the quality control element- MONITORING
Which of the following ethical principles does no apply to an agreed – upon procedure
engagement ? -independence
Which of the following generalization is incorrect about the reliability of evidence gathered by
practitioners? -evidence obtained indirectly by the practitioner is more likely reliable than that
obtained directly
The auditor’s satisfaction as the reliability of an assertion being made by one party is called-
audit rish – False ASSURANCE
Audit of financial statement provides reasonable level of assurance – True
The objective of review of financial statement is to – state whether anything has come to
auditor’s attention the indicates that the financial statement are not presented fairly
When providing limited assurance that nothing came to the CPA’s attention that would indicate
that the financial statement are not in accordance with financial reporting standards, the CPA
should – Understand the accounting principles of the industry in which the business entity
operates
Which of the following services provides a moderate level of assurance about the client’s
financial statement – Review
Which of the following best describes “related services” – Compilation and agree-upon
procedures engagements.
The statement that nothing came to our attention which would indicate that these statements
are not fairly presented expresses which of the following? –negative assurance
A reporton factual findings is the end product of the auditor when performing agreed-upon
procedure – True
What level of assurance does and accountant give on compilation report? – None
If the CPA has reason to believe that the information subject to review may be materially
misstated, the CPA should – Carry out additional or more extensive procedure
An accountant would most likely perform procedures such as collecting, classifying and
summarizing financial information under review engagement. –False Compilation
If there had been a material scope limitation on a review engagement, the CPA may – not
provide any assurance on the financial statement
Which of the following is incorrect about a compilation engagement – The CPA uses his auditing
expertise to collect, classify and summarize financial information
1. A firm of independent auditors must establish and follow quality control policies
and procedures because these standards. // Give reasonable assurance that the
firm as a whole will comply with professional standards.
2. The fourth generally accepted auditing standard of reporting requires an auditor
to render a report whenever an auditor’s name is associated with financial
statements. The overall purpose of the fourth standard of reporting is to require
that reports. // Indicate the character of the auditor’s examination and the degree of
responsibility assumed by the auditor.
3. Quality control policies and procedures should provide the firm reasonable
assurance that the policies and procedures relating to the other elements of quality
control are being effectively applied. This statement defines the quality control
element of. // Monitoring
4. In compliance with the element of human resources, the firm should address
issues relating to. // Assignment of engagement teams
5. Which of the following is not an essential component of quality control? //
Policies and procedures to ensure that firm personnel are actively engaged in
marketing strategies
6. Direction involves monitoring. // false
7. The generally accepted standards of reporting encompass all of the following
except: // consideration of an entity’s internal control
8. A body created by the Board to conduct an oversight of the quality of audit of
financial statement by reviewing the firms quality control is known as Quality
control Review committee. //
9. Which of the following quality control objectives would be least important to the
auditor? // Determination of audit fee
10. The quality control reviewer is responsible for the audit engagement and its
performance and for the auditor’s report that is issued in behalf of the firm. // False.
Engagement Partner
11. The general standards of the generally accepted auditing standards include a
requirement that. // Due professional care be exercised by the auditor
12. Which of the following statements most accurately captures the intent of the
standards of field work? // Field work standards are primarily directed at the
auditor’s planning, understanding of internal control, and evidence accumulation.
13. The generally accepted auditing standard that required “Adequate technical
training and proficiency” is normally interpreted as requiring the auditor to have. //
Formal education in auditing and accounting
14. Independence is the primarily factor that should be considered in determining
the extent of supervision needed by an assistant // False. Competence
15. The Philippine Standards on Auditing (PSA) can be described as. // Defining
the minimum standards of performance for an audit.
16. Which of the following describes what is meant by generally accepted auditing
standards? // Measures of the quality of the auditor’s performance.
Exercise 1 
1. By providing high level of assurance on audit reports on financial statements,
the auditor . //Enhances the credibility of the financial statements.
2. An audit involves ascertaining the degree of correspondence between
assertions and established criteria. In the case of an audit of financial statements,
which of the following would not be valid criterion? // Philippine Standards on
Auditing
3. The client’s management has the primary responsibility for the fairness of the
representations made in the financial statements. // True
4. The auditor communicates the result to his of her work through management
letter. //False. Audit Report
5. Which of the following statement does not apply properly describe limitation of
an audit? // Many financial statement assertions cannot be audited.
6. Most of the independent auditor’s work in formulating an opinion on financial
statements consists of. // Obtaining and examining evidential matter
7. Internal auditing is an independent appraisal function established within an
organization to examine and evaluate its activities. To the end, internal auditing
provides assistance to. // Management and the board of directors
8. The subject matter of any audit consists of assertions. // False. Financial
Statements
9. Which of the following is not among the conditions that give rise to a demand by
external users for independent audits of financial statements? // complexity of
making economic decisions
10. An audit that involvers obtaining and evaluation evidence about the efficiency
and effectiveness of an entity’s operating activities in relation to specified
objectives is a(n): // Operational Audit
11. Compliance audit uses laws and regulations as its criteria // True
12. The criteria for evaluating quantitative information vary. For example, in the
case of an independent audit of financial statements by CPA firms, the criteria are
usually the. // PFRS
13. Which of the following is not one of the limitations of an audit? // Limitations
imposed by client
14. Which of the following statements does not properly describe an element of
theoretical framework of auditing? // Auditors act in behalf of the management
15. External Auditing is the most commonly performed type of auditing by CPA’s
on a contractual basis. // True

Chapter 3- Audtheo
1. Which of the following conditions or events increases the risk of
error/fraud? THERE ARE FREQUENT CHANGES OF AUDITORS OR
LEGAL COUNSEL
 2. The following statements relate to the author’s responsibility for the
detection of errors and fraud. Identify the correct statement. I ONLY
3. The auditor would ordinarily expect to find the evidence to support
management representations and not assume that they are necessarily
correct. This is an example of? AN ATTITUDE OF PERSONAL
SKEPTICISM
4. Which of the following statements best describes an auditor’s
responsibility to detect errors and fraud? AN AUDITOR SHOULD ASSES
THE RISKS THAT ERRORS AND FRAUD  MAY CAUSE THE FS..
5. Which of the following is an “error” as distinguished from
“fraud”? CLERICAL MISTAKES IN THE PROCESS OF
TRANSACTIONS 
6. The term used to refer to acts of omission or commission by the entity
being audited, either intentional or unintentional, which are contrary to the
prevailing laws and regulations Is? NONCOMPLIANCE 
7. Which of the following would be least likely to suggest to an auditor
that the client’s financial statements are materially
misstated? MANAGEMENT DOES NOT CORRECT INTERNAL
CONTROL STRUCTURE WEAKNESSES THAT IT KNOWS ABOUT
8. The auditor’s best defense when material misstatements are not
uncovered is to have conducted the audit. IN ACCORDANCE WITH
AUDITING STANDARDS 
9. Which statements is/are true? I. The likelihood.. II AND III ONLY
10. Which of the following statements is/are false? I. It is
usually easier.. II ONLY

11. Which of the following conditions identified during fieldwork of an audit is most likely to affect
the auditor’s assessment of the risk of misstatements due to fraud? // Missing documents
12. If an auditor believes that material errors or fraud exist, the auditor should. // consider the
implications and discuss the matter with appropriate levels of management
13. Which of the following best describes what is meant by the term “fraud risk factors”?//
Factors whose presence often has been observed in circumstances where fraud has occurred
14. Which of the following is most likely to be a response to the auditor’s assessment that the
risk of material misstatement due to fraud for the existence of inventory is high? // Observe test
counts of inventory at certain locations on an unannounced basis
15. The term error refers to unintentional misrepresentation of financial information. Examples of
errors are when// all the statements are FALSE
16. An auditor who discovers that client has not complied with laws and regulations that has a
material effect on the financial statements most likely would withdraw from engagement if // the
client does not make remedial action that the auditor considers necessary.
17. The management responsibility to detect and prevent fraud and error is accomplished by //
implementing adequate accounting and internal control system.

18. The responsibility for the detection and prevention of errors, fraud and noncompliance with
laws and regulations rests with // client management

19. In comparing management fraud with employee fraud, the auditor's risk of failing to discover
the fraud is // Greater for management fraud because of management's ability to override
existing internal controls.

20. Fraudulent financial reporting is most likely to be committed by whom? // Company

management

FBANA
The types of data extraction tools can be arranged in any order- true
The process of moving data from source system into a data warehouse and from a data
warehouse into an analytical tools is often called ETL ( extract, transform, or load processes) –
True
Big data includes large volumes if structured and unstructured data that inundates a business
on a day-to-day basis – true
In data extra there are at least 3 sources of data which are the source systems raw transaction
and from documents and forms. – true
Predictive analytics is the type of analytics where data is used to benchmark or to profile – false
Open source tools are a restricted and can be accessed only for a free – false
The concepts for data warehousing and databases are on and the same – false
Veracity means that there are a lot uncertainly meanings with all of these different data coming
altogether but the problem is we don’t know what to do with them – true
The process of turning raw data into business action is the framework for business analytics –
true
For the data become business value. It has to be extracted from sources, curated and cleansed
and joined in a data warehouse- true
Predictive analytics is used when you want to find relationships between two different types of
data and making predictions about future data – True
Data warehousing is a process that involves retrieval of data from various sources – false
The first step to turning data into analytics is the data warehousing phase – false
In business analytics, you need to follow process turn data into value – true
On the part of the end user, cloud based tools are tangible data storage - false