ANSWERS TO

FREQUENTLY MISSED QUESTIONS

AT1 – QUIZ NO. 1
1. Assurance services are best described as services designed for the improvement of
client’s operations, thereby resulting in better outcomes.

FALSE. CONSULTING SERVICES PROVIDE ADVICE ON HOW TO IMPROVE

OPERATIONS

ASSURANCE ENGAGEMENTS PROVIDE ASSURANCE ON AN

UNDERLYING SUBJECT MATTER

2. The objective of a review of financial statements is to enable the practitioner to express

an opinion whether the financial statements are prepared, in all material respects, in
accordance with an applicable financial reporting framework.

FALSE. ONLY AUDITS PROVIDE AN OPINION OR POSITIVE FORM OF

CONCLUSION.

3. The objective of a review of financial statements is to obtain reasonable assurance about

whether the financial statements as a whole are free from material misstatement.

FALSE. REASONABLE ASSURANCE IS GIVEN IN AUDIT ENGAGEMENTS.

MODERATE ASSURANCE IS GIVEN IN REVIEW ENGAGEMENTS.

4. In a review engagement, the practitioner is tasked to collect, classify, and summarize

financial information without expressing any form of assurance.

FALSE. COMPILATION.

REVIEW ENGAGEMENTS PROVIDE LIMITED OR MODERATE

ASSURANCE IN THE FORM OF NEGATIVE CONCLUSION.

5. An assurance engagement includes services in which a practitioner is engaged to testify

as an expert witness in accounting, auditing, or tax matters, given certain stipulated
facts.

FALSE. NONASSURANCE
 TESTIFYING IS NOT GIVING ANY ASSURANCE.

6. An assurance engagement is one in which a practitioner is engaged to assemble

prospective financial statements based on the assumptions of the entity’s management
without expressing any assurance.

FALSE. COMPILATION, A NONASSURANCE ENGAGEMENT, INVOLVES

COMPILING OR ASSEMBLING FINANCIAL STATEMENTS.

ASSURANCE ENGAGEMENTS PROVIDE ASSURANCE.

7. Assurance services include the assembly or compilation of financial statements based

on assumptions of a responsible party.

FALSE. RELATED SERVICE (NONASSURANCE ENGAGEMENT) INCLUDE

COMPILATION AND AUP ENGAGEMENTS.

8. In an assurance engagement, a CPA typically offers litigation support services.

FALSE. NONASSURANCE

9. A CPA typically do not provide management consultancy services as part of assurance

engagements.

TRUE. NONASSURANCE

10. The Framework for Assurance Engagements applies to audits, reviews and related
services.

FALSE. RELATED SERVICES ARE NONASSURANCE ENGAGEMENTS

11. Assurance engagements are performed in accordance with applicable PSAs, PSREs,
or PSRSs, as the case may be.

FALSE. PFRSs ARE STANDARDS USED TO PERFORM RELATED SERVICES,

WHICH ARE NONASSURANCE ENGAGEMENTS

12. Related services framework differs from the assurance engagement framework in that
related services claim compliance with PSAs.

FALSE. RELATED SERVICES ARE PERFORMED IN ACCORDANCE WITH

PSRSs.

13. An assurance engagement involves a multi-party relationship involving the practitioner,

a responsible party, those charged with governance, and the intended users.
 FALSE. THE 3-PARTY RELATIONSHIP DOES NOT INCLUDE THOSE
CHARGED WITH GOVERNANCE.

14. For an assurance engagement with respect to the cash budgets of ABC Company, the
responsible party would be ABC Company.

TRUE.

15. For an assurance engagement with respect to the cash budgets of ABC Company, the
responsible party would be the shareholders of ABC Company.

FALSE. SHAREHOLDERS ARE INTENDED USERS.

16. Related services do not result in the issuance of an audit opinion.

TRUE. RELATED SERVICES DO NOT PROVIDE ANY ASSURANCE

(INCLUDING OPINION)

17. Related services (compilation and agreed-upon procedures engagement) are non-
assurance engagements that do not result to the issuance of an opinion but may result
to the issuance of some form of assurance.

FALSE. RELATED SERVICES DO NOT RESULT TO THE ISSUANCE OF ANY

ASSURANCE BECAUSE THEY ARE NON ASSURANCE
ENGAGEMENTS.

18. Related services enhance the degree of confidence intended users can have.

FALSE. ONLY ASSURANCE ENGAGEMENTS CAN ENHACE THE DEGREE

OF CONFIDENCE OF INTENDED USERS.

19. In a limited assurance engagement, the practitioner conveys reasonable assurance.

FALSE. MODERATE

20. In a limited assurance engagement, the practitioner expresses the conclusion in a

positive form.

FALSE. NEGATIVE

21. The practitioner in an assurance engagement is responsible to select the audit

procedures to be performed by the practitioner.

TRUE.
22. In a limited assurance engagement, the practitioner obtains sufficient appropriate
evidence to reduce assurance engagement risk to a level that is acceptable.

TRUE.

23. In an assurance engagement, the responsible party should always be the party who
engages the practitioner.

TRUE. THE ENGAGING PARTY MAY BE DIFFERENT FROM THE

RESPONSIBLE PARTY

24. The practitioner cannot be the responsible party, the engaging party or an intended user.

TRUE.

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

FALSE. THEY MAY COME FROM THE SAME ORGANIZATION

26. The responsible party can be the only intended user of the assurance report.

FALSE.

27. In an attestation engagement, the measurer or evaluator is either the practitioner or the
responsible party.

FALSE. IN AN ATTESTATION ENGAGEMENT, THE MEASURER OR

EVALUATOR IS NOT THE PRACTITIONER.

IN A DIRECT ENGAGEMENT, TH EMEASURER OR EVALUATOR IS

THE PRACTITIONER

28. An agreed-upon procedures engagement is an engagement in which the party engaging

the practitioner or the intended user determines the procedures to be performed and the
practitioner provides an opinion as a result of undertaking these procedures.

TRUE. AN OPINION IS ONLY ISSUED IN AN AUDIT ENGAGEMENT.

AN AUP ENGAGEMENT PROVIDES FACTUAL FINDINGS.

29. Independence of the practitioner is required when performing compilation services.

FALSE. INDEPENDENCE IS NOT REQUIRED WHEN PERFORMING

NONASSURANCE ENGAGEMENTS.
30. Subject matter information for “non-financial performance” subject matter may include
the recognition measurement, presentation and disclosure represented in the financial
statements.

FALSE. FINANCIAL PERFORMANCE

31. Criteria must be relevant, meaning, it must be clear, comprehensive, and not subject to
significantly different interpretations.

FALSE. UNDERSTANDABLE

32. Criteria are suitable for assurance engagements when they are reliable, neutral, and
unique.

FALSE. UNIQUENESS IS NOT A CHARACTERISTIC OF SUITABLE

CRITERIA

33. Regardless of the type of assurance engagement being performed, practitioners should
comply with the Code of Ethics for Professional Accountants.

TRUE.

34. It is not easy to reduce assurance engagement risk to zero because of the practitioner’s
use of selective testing.

TRUE.

35. Assurance engagement risk cannot be eliminated because of inherent limitations of

assurance engagements.

TRUE. RISK CAN ONLY BE REDUCED BUT NOT ELIMINATED.

36. One limitation of an assurance engagement is the fact that a practitioner uses
persuasive evidence rather than conclusive evidence.

TRUE.

37. An appropriate underlying subject matter is always expressed in financial terms.

FALSE. SUBJECT MATTER COMES IN MANY FORMS. IT MAY BE IN NON-

FINANCIAL TERMS, SUCH AS PERFORMANCE

38. In assurance engagements, the practitioner provides a written or an oral report

containing a conclusion that conveys the assurance obtained about the subject matter
information.
 FALSE. ONE ELEMENT OF AN ASSURANCE ENGAGEMENT IS WRITTEN
ASSURANCE REPORT. ORAL REPORTS ARE NOT SUFFICIENT.

39. Reports on non-assurance engagements may include a statement that could reasonably
imply that a conclusion designed to enhance the degree of confidence of intended users
is given.

FALSE. NONASSURANCE ENGAGEMENTS DO NOT ENHANCE THE DEGREE

OF CONFIDENCE OF INTENDED USERS.

40. Reports on non-assurance engagements should imply compliance with PSAs, PSREs,
or PSAEs.

FALSE. PSAs, PSREs AND PSAEs ARE FOR ASSURANCE ENGAGEMENTS.

41. Engagements covered by PSRSs are considered non-assurance engagements.

TRUE. RELATED SERVICES ARE NONASSURANCE ENGAGEMENTS.

42. The nature and scope of consultancy work is determined by agreement between the
practitioner and the client.

TRUE. CONTULTING ENGAGEMENTS ARE 2-PARTY CONTRACTS

INVOLVING A PRACTITIONER AND THE CLIENT. BOTH WILL
AGREE ON THE NATURE AND SCOPE OF WORK TO BE DONE.