1.

The independent audit is important to readers of F/S because it

a. Reports on the accuracy of all information in the F/S.

b. Determines the future stewardship of the management of the

company whose financial statements are audited.

c. Involves the objective examination of, and reporting on, management-

prepared statements.

d. Measures and communicates financial and business data in the F/S.

2. Independent auditing can best be described as

a. A discipline that attests to the results of accounting and other functional

operations and data.

b. A branch of accounting.

c. A professional activity that measures and communicates financial and business

data.

d. A regulatory function that prevents the issuance of improper financial

information.

3. The primary difference between operational auditing and financial

auditing is that in operational auditing
a. The auditor starts with the financial statements of an activity being
audited and works backward to the basic processes involved in
producing them.
b. The auditor can use analytical skills and tools that are not necessary in financial
auditing.
c. The auditor is seeking to help management use resources in
the most effective manner possible.
d. The auditor is not concerned with whether the audited activity is
generating information in compliance with financial accounting
standards.

4. The criteria for evaluating quantitative information vary. For example, in

the audit of historical financial statements by CPA firms, the criteria are
usually
a. Regulations of the Securities and Exchange Commission
 b. Generally accepted accounting principles.
c. Regulations of the Internal Revenue Service.
d. Generally accepted auditing standards.

5. Which of the following best describes the reason why an independent

auditor reports on financial statements?

a. A misstatement of account balances may exist and is generally

corrected as the result of the independent auditor's work.

b. A management fraud may exist and is more likely to be detected by independent

auditors.

c. Poorly designed internal control may exist.

d. Different interests may exist between the company preparing
the statements and the persons using the statements.

6. Which of the following is incorrect regarding the Philippine Standards on

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

7. Assurance, attest, and audit services have in common all of the following except that
they all
a. Involve obtaining and evaluating evidence.
b. Pertain only to financial statements.
c. Involve issuing a report.
d. Involve determining the correspondence of some information to a set of criteria.

8. Auditing includes both a (an):

 a. Evaluation process and a reporting process
b. Documentation process and an evaluation process
c. Investigative process and a reporting process
d. Documentation process and a reporting process

9. Which of the following terms best describes the audit of a taxpayer's tax return by
the BIR auditor?
a. Operational audit.
b. Internal audit.
c. Compliance Audit
d. Government Audit

10. Which of the following attributes is more closely associated with

attestation services performed by a CPA firm than with other lines of
professional work?
a. Integrity
b. Maintenance of competence
c. Acquisition of competence
d. Independence