1.

The independent auditor is most concerned with which of the following:

A. Accuracy and reliability of accounting data.

B. Promotion of operational efficiency.

C. Adherence to prescribed managerial policies.

D. Attainment of the organization's objectives.

2. Auditing standards differ from auditing procedures in that procedures relate to:

A. Measures of performance.

B. Audit principles.

C. Acts to be performed.

D. Audit judgments.

3. One of the following refers to an ethical responsibility of the auditor:

A. Confirm the cash balances

B. Exercise due professional care

C. Join professional society

D. Destroy confidential relationship with client.

4. The ethical requirement of "professional competence and due care" should mean that a CPA who accepts an
engagement has a duty to perform:

A. As a professional possessed with the degree of skills customarily held by others in the profession.

B. With necessary diligence and without fault or error.

C. As a professional who will assume responsibility for damages caused by his error of judgment.

D. To the satisfaction of the audit committee and third parties who may rely upon his result.

5. Which of the following is mandatory if the auditor is to comply with Philippine Standards on Auditing?

A. Possession by the auditor of adequate technical training.

B. Use of analytical procedures in audit engagements.

 C. Use of statistical sampling whenever feasible on an audit engagement.

D. Confirmation by the auditor of material accounts receivable balances.

6. Which of the following best describes why publicly traded corporations follow the practice of having the
outside auditor appointed by the board of directors or elected by the stockholders?

A. To comply with the regulations of the FRSC

B. To encourage a policy of rotation of the independent auditors.

C. To emphasize auditor independence from the management of the corporation.

D. To provide the corporate owners with an opportunity to voice their opinion concerning the quality of the
auditing firm selected by the directors.

7. Before accepting an audit engagement, a successor auditor should make specific inquiries of the
predecessor auditor regarding:

A. Disagreements which the predecessor had with the client concerning auditing procedures and
accounting principles.

B. The predecessor's evaluation of matters of continuing accounting significance.

C. The degree of cooperation the predecessor received concerning the inquiry of the client's legal counsel.

D. The predecessor's assessments of inherent risk and judgments about materiality.

8. If permission from the client to discuss its affairs with the proposed auditor is denied by the client, the
predecessor auditor should:

A. Keep silent of the denial.

B. Disclose the fact that the permission to disclose is denied by the client.

C. Disclose adequately to proposed auditor all noncompliance made by the client.

D. Seek legal advice before responding to the proposed auditor.

9.The primary purpose of the engagement letter is to:

A. Remind management that the primary responsibility for the financial statements rests with management.

B. Provide a written record of the agreement with the client as to the services to be provided.

C. Provide a starting point for the auditor's preparation of the preliminary audit program.
 D. Satisfy the requirements of the CPA's liability insurance policy.

10. Which of the following is least likely to be included in an audit engagement letter?

A. Identification of specific audit procedures that the auditor needs to undertake.

B. Description of any letters or reports that the auditor expects to submit to the client.

A reference to the inherent limitations of an audit that there is an unavoidable risk that some ma