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Quiz 2
Auditing & Assurance: Introduction

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1. The following are characteristics of "direct reporting" assurance engagements, except *

1 point

a. The subject matter information is in the form of an assertion by the responsible party that is made available to the
intended users.

b. The subject matter information is provided to the intended users in the assurance report.

c. The practitioner either directly performs the evaluation or measurement of the subject matter or obtains a representation from
the responsible party that has performed the evaluation or measurement.

d. The representation of the responsible party that has performed the evaluation or measurement of the subject matter is not
available to the intended users.

2. What type of assurance engagement is involved when the practitioner expresses a positive form of conclusion? *

1 point

a. Limited assurance engagement

b. Positive assurance engagement

c. Reasonable assurance engagement

d. Absolute assurance engagement

3. What type of assurance engagement is involved when the practitioner expresses a negative form of
conclusion? *

1 point

a. Reasonable assurance engagement

b. Negative assurance engagement

c. Assertion-based assurance engagement

d. Limited assurance engagement

4. A practitioner's assurance report contains the following conclusion: "Based on our work described in this report,
nothing has come to our attention that causes us to believe that internal control is not effective, in all material
respects, based on ABC criteria.". What type of assurance engagement was performed? *
1 point

a. Limited assurance engagement

b. Reasonable assurance engagement

c. Negative assurance engagement

d. Positive assurance engagement

5. In assertion-based assurance engagements, the evaluation or measurement of the subject matter against criteria
is performed by the *

1 point

a. Intended users

b. Responsible party

c. Practitioner

d. AASC

6. The following statements relate to the three parties involved in an assurance engagement. Which is correct? *

1 point

a. The responsible party and the intended users should be from different entities.

b. A practitioner should decline a proposed assurance engagement when the subject matter requires specialized skills and
knowledge beyond those ordinarily possessed by the practitioner.

c. A responsible party is the person who is responsible for the subject matter or the subject matter information.

d. The responsible party, not the intended users, determines the nature of the procedures to be performed.

7. A practitioner should accept an assurance engagement only if: *

1 point

a. The subject matter is in the form of financial information.

b. The criteria to be used are not available to the intended users.

c. The practitioner's conclusion is to be contained in a written report.

d. The subject matter is the responsibility of either the intended users or the practitioner.

8. Which of the following statements is true concerning evidence in an assurance engagement? *

1 point

a. Sufficiency is the measure of the quantity of evidence.

b. Appropriateness is the measure of the quality of evidence, that is, its reliability and persuasiveness.

c. The reliability of evidence is influenced not by its nature but by its source.

d. Obtaining more evidence may compensate for its poor quality.

9. Assurance engagement risk is the risk... *

1 point

a. That the practitioner expresses an inappropriate conclusion when the subject matter information is materially
misstated.

b. Of expressing an inappropriate conclusion when the subject matter information is not materially misstated.

c. Through loss from litigation, adverse publicity, or other events arising in connection with a subject matter reported on.

d. Of expressing an inappropriate conclusion when the subject matter information is either materially misstated or not materially
misstated.

10. The following are components of assurance engagement risk, except *

1 point

a. Inherent risk

b. Control risk

c. Detection risk

d. Business risk

11. Which of the following standards are to be applied, as appropriate, in the audit of historical financial
information? *

1 point

a. PSREs

b. PSAEs

c. PSRSs

d. PSAs

12. Which of the following standards are to be applied to compilation engagements, engagements to apply agreed-
upon procedures to information, and other related services engagements as specified by the AASC? *

1 point

a. PSRSs

b. PSAs

c. PSAEs

d. PSREs

13. The Philippine Standards on Review Engagements (PSREs) are to be applied in *

1 point

a. The audit of historical financial information.

b. Assurance engagements dealing with subject matters other than historical financial information.

c. The review of historical financial information.

d. The review of both historical and prospective financial information.

14. What level of assurance is provided by the auditor in an audit engagement? *

1 point

a. Absolute

b. High, but not absolute

c. Moderate

d. No assurance

15. Which of the following engagements does not require compliance with independence requirements? *

1 point

a. Compilation of financial information

b. Review of financial statements

c. Examination of prospective financial information

d. Audit of financial statements

16. The auditor is required to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to fraud or error. In all cases when reasonable assurance cannot be obtained,
the auditor's report should contain a/an... *
1 point

a. Unmodified opinion

b. Qualified or adverse opinion

c. Qualified or disclaimer of opinion

d. Disclaimer of opinion

17. Which of the following can be significantly affected by a financial statement audit? *

1 point

a. Business risk

b. Information risk

c. Inherent risk

d. The risk-free interest rate

18. The primary responsibility for the adequacy of disclosure in the financial statements rests with the... *

1 point

a. Partner assigned to the audit engagement

b. Management of the company

c. Securities and Exchange Commission

d. Auditor in charge of the field work

19. Which of the following elements does not relate to audit quality? *

1 point

a. Audit competence

b. Audit fees

c. Independence

d. Due diligence

20. Independent auditing can best described as... *

1 point

a. A branch of accounting

b. A professional activity that measures and communicates financial and business data

c. A discipline which attests to the results of accounting and other functional operations and data

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

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