1.

Test the operating effectiveness only if the design is strong - True

2. Test of controls only test the design of the internal controls implemented by the entity - True

3. Auditors report may include, emphasis of the matter paragraph right after the opinion. - True

4. Substantive Testing is the most cheap procedure upon gathering an evidence in an audit - False

5. If the auditor finds out that upon testing the controls of the entity, the implementation and
design of internal controls are weak the auditor shall perform an extensive substantive test - True

6. Attribute sampling is the use of sampling method that is not related to test of controls - False

7. In using the attribute sampling, we are looking into the amounts and not in the characteristics
of the samples. - False

8. Material weaknesses means that there are possibilities that upon testing the controls of the
entity there are material misstatements - True

9. Significant deficiencies is not as important as material weaknesses- False

10. If the auditor finds out that there are significant deficiencies and material weaknesses in the
entity’s internal controls, it should be communicated to the management and those charged with
governance. - True

11. Upon communicating the significant deficiencies and material weakness the standards
required it to be written in the audit report.- False

12. Management Letter is the same as Management Representation Letter - False

13. Management Letter theoretically comes from the management and should be given to the
auditor - false

14.Management Representation Letter comes from the auditor that should be given to the
management. - false

15. The fourth audit process is, the test of details of balances and transactions - True

16. Substantive Testing is the heart of audit process - true

17. Auditor cannot use both analytical procedures and substantive test of details of transaction
and balance is a method in substantive testing. - False

18. Attribute and Variable sampling is both used in an audit process - True

19. In a substantive testing, variable sampling is used - True

20. Corroborative evidence is that evidence which supports the fact and assures the auditor that
the audit evidence is sufficient and appropriate- True

21. Searching for unrecorded liabilities is not a part of completing the audit - False
22. Upon completing the audit , the auditor is required to perform a final analytica procedures -
True

23.Unqualified audit opinion means that the financial statements was presented fairly, in all
material aspects. - True

24. There are 5 kinds of audit opinion - False

25. It is possible for the auditor to issue a disclaimer of opinion meaning, the auditor do not
express an opinion. True

TRUE/FALSE

1. An external confirmation represents audit evidence obtained by the audit client as a direct
written response to the auditor from a third party (the confirming party), in paper form, or by
electronic or other medium.

Answer: False

2. The evidence-gathering technique of inquiry cannot be regarded as conclusive because it is not

from an independent source and might be biased

Answer: True

3. Analytical procedures are performed at least once in an audit – in the planning procedures.

Answer: False

4. As the auditor performs audit procedures outlined in the audit plan, the audit plan is updated
and changed to reflect the further audit procedures considered necessary given the
circumstances.

Answer: True

5. Detection risk has its components inherent risk, control risk, and audit risk.

Answer: False

6. Significant risks are often business risks that have the potential to result in material
misstatement of the financial statements.

Answer: True

7. The auditor assesses inherent risk based on the perceived effectiveness of the entity’s internal
control system in preventing and/or detecting material misstatement.

Answer: False

8. The members of the engagement team and the engagement partner should discuss the
susceptibility of the entity’s financial statements to material misstatements.

Answer: True

9. The auditor assesses inherent risk based on the perceived effectiveness of the entity’s internal
control system in preventing and/or detecting material misstatement.

Answer: False

10. The auditor must obtain written representations from management and those charged with
governance, saying that they believe significant assumptions used in making their accounting
estimates are reasonable.

Answer: True

11. In a written representation of management letter (management representation letter),

management states that they have recognized, measured, presented, or disclosed aspects of laws,
regulations, and contractual agreements that may affect the financial statements.

Answer: True

12. Assessing risk is the core of the audit. The rest of the audit is designed to provide an
understanding of internal control.

Answer: False

13. One of the procedures in the planning process is to understand the entity and its
environment, including the entity’s internal control.

Answer: True

14. The risk of not detecting errors is higher than the risk of not detecting fraud.

Answer: False

15. If management corrects the misstatements that were detected during an audit, the auditor
must still perform additional audit procedures to determine whether misstatements remain.

Answer: True
16. Internal documents may be processed by both internal and external parties representing the
agreement.

Answer: False

17. Risk assessment procedures that may indicate fraud include inquiries of management
regarding whether they know of any fraud in the entity.

Answer: True

18. The largest amount of audit evidence in an audit is obtained from the evidence-gathering
technique of inspection.

Answer: False

19. One of the procedures in the strategic-oriented framework is understanding the risks that
threaten the client’s business objectives.

Answer: True

20. The first step to responding to assessed risk is to evaluate audit evidence obtained: is it
sufficient and appropriate?

Answer: False

21. Internal control is a process that provides reasonable assurance concerning the reliability of
financial information.

Answer: True
22. The auditors' tests of controls are designed to substantiate the fairness of specific financial
statement accounts.

Answer: False

23. As part of the audit documentation, auditors should maintain copies of all client documents
reviewed during the audit.

Answer: True

24. Evidence that is obtained directly from the client is usually considered more reliable than
evidence obtained from a source independent of the client.

Answer: False

25. When testing the operating effectiveness of a control, the frequency with which the control is
performed will influence the sample size to be used by the auditor.

Answer: True

1. Testing of controls should be done always to make sure firm's effectiveness. Answer: False

2. 2. If the internal control is strong we will conduct more on test of control and less reliance of
substantive testing. Answer: True

3. 3. Sampling is one of the reason as to why auditors provide only a reasonable assurance (not
absolute) that the financial statements taken as a whole are free from material misstatements.
Answer: True

4. 4. Communication by the management and those charged with governance to the possible
significant deficiencies and material weaknesses can be done orally. Answer: False
5. 5. Management letter and management representation are theoretically the same in nature.
Answer: False

6. 6. Substantive tests are audit procedures designed to detect material misstatements in the
financial statement. Answer: True

7. 7. In substantive test procedures, you can gather evidence through analytical procedures or
substantive test details of transactions and balances but can’t be made both. Answer: False

8. 8. Test of control provides evidence that indicates a misstatement is likely to occur. Substantive
tests, on the other hand, provides evidence about the existence of any material misstatement in
an account. Answer: True

9. 9. In gathering evidence, auditors are required to look for all available documents and inspect
each one of them to make sure quality of the outcome won’t compromise. Answer: False

10. 10. When obtaining audit evidence from either tests of control or substantive test, the
auditor should only consider the sufficiency of audit evidence obtained. Answer: False

11. 11. Corroborating evidence or information is not that much of significance because of the
idea of audit sampling. Answer: False

12. 12. Subsequent events are those events or transactions that occur subsequent to the
financial statement date that may affect the financial statements and the auditor's report.
Answer: True

13. 13. Any subsequent events occurring after the date of the auditor's report, it is the auditor
that have the responsibility to perform procedures in identifying those subsequent events that
may affect the financial statements. Answer: False

14. 14. According to Philippine Standard on Quality Control, you are prohibited to issue an audit
report if there is no Engagement Quality Review Report yet. Answer: True

15. 15. Obtaining the management representation letter should be made first for us to provide
audit report to our audit client. Answer: True

16. 16. It is unqualified opinion if the financial statement has a “present fairly except for” that is
presented in the report. Answer: False

17. 17. Informing auditor's opinion both materiality and pervasiveness of effect on financial
statements should be taken into consideration. Answer: True

18. 18. Scope limitation arises when the auditor is unable to perform the necessary audit
procedures required by PSA because of the restrictions imposed by the management. Answer:
True

19. 19. Failure to obtain sufficient appropriate evidence because of such limitations imposed by
the management will cause the auditor to express a qualified opinion if the effect is material and
pervasive. Answer: False

20. 20. It is Disclaimer of Opinion if the auditor did not express an opinion. Answer: True

21. 21. If management refuses to correct misstatements uncovered by the auditor and insist of its
revision, unqualified or qualified opinion can be express depending on the materiality and
pervasiveness of its effect. Answer: False

22. 22. Qualified, Adverse, and Disclaimer of Opinion are modified opinion. Answer: True

23. 23. Responsibilities of management and those charged with governance is one of the content
of audit report. Answer: True

24. 24. When the audit is conducted in accordance with PSAs, uniformity in the wording of the
auditor’s report is not necessary and not required. Answer: True

25. 25. When the financial statements are materially misleading, the auditor shall express or
disclaim an opinion. Answer: False

1. Test the internal control regardless whether the design is weak or strong.
Answer: False
2. If the design of the internal control is weak, proceed directly to test of details of balances
and transactions.
Answer: True
3. During the test of control, we only use attribute sampling.
Answer: True
4. Communicate to the management the material weaknesses only.
Answer: False
5. Communication to the management is done either orally, or written, as prescribed by the
standard.
Answer: False
6. A ‘management representation letter’ is also called “management letter”.
Answer: False
7. Substantive Test Procedures can be done through analytical procedures, or substantive
test of details of transactions or balances, or both.
Answer: True
8. During the test of control, we use variable sampling, while in substantive test the attribute
sampling is used.
Answer: False
9. We must look for evidences as well as supporting evidences from other sources.
Answer: True
10. If more misstatements are discovered during the process, the more we extend the
procedures.
Answer: True
11. In completing the audit, it is required to conduct Analytical procedures, like during the
substantive test.
Answer: False
12. Subsequent events are ignored when completing the audit.
Answer: False
13. In dual dating, you will issue another audit report but same date.
Answer: False
14. You are not allowed to issue an audit report without an engagement quality review
report.
Answer: True
15. You are not allowed to issue an audit report without a management representation
letter.
Answer: True
16. “Present fairly, in all material respect” is a statement of an unqualified opinion.
Answer: True
17. When there are material misstatements, scope limitations, or uncertainty, that are not
pervasive, an adverse opinion is issued.
Answer: False
18. Qualified, adverse, and disclaimer of opinions are modified opinions.
Answer: True
19. A high degree of scope limitation, and uncertainty gives rise to a disclaimer of opinion.
Answer: True
20. The first content in an audit report is the opinion.
Answer: True
21. The key audit matters are information that are of utmost importance about the audit
engagement.
Answer: True
22. The standard contents of an audit report are: opinion, basis of opinion, key audit
matters, responsibilities of management and those charged with governance, auditor’s
responsibilities, and other legal and regulatory requirements.
Answer: True
23. The emphasis of the matter paragraph should be placed right after the basis of opinion,
according to the standard.
Answer: False
24. The other matter paragraph includes information the auditor wants to emphasize.
Answer: False
25. The emphasis of matter includes information the auditor wants to emphasize.
Answer: True

1. Test the operating effectiveness only if the design is strong.

Answer: True
2. If the Internal control's design is not effective an strong,
immediately conduct a substantive test.
Answer: True
3. All internal controls must be tested to check whether its
design is operating effectively.
Answer: False
4. Attributable sampling is used in testing the internal control's
design.
Answer: True
5. Management letter is a written report made by auditor to
give suggestions for the improvement of internal controls.
Answer: True
6. Substantive Test of Details of Transactions and Balances is the
only Substantive Test Procedure.
Answer: False
7. Variable sampling is used in conducting a substantive test.
Answer: True
8. Final Analytical Procedures includes risk assessment, test of
controls and substantive test.
Answer: False
9. Completing the Audit and Audit Report is the step in the
Audit Process.
Answer: True
10. Philippine Standards on Quality Control states that
Engagement Quality Review Report is provided after Audit
report issued.
Answer: False
11. Auditors are prohibited to issue Audit report until
Management Representation Letter is obtained from the
management.
Answer: True
12. Unqualified, Adverse, and Disclaimer opinion are classified as
modified opinion.
Answer: False
13. An audit opinion that states "present fairly, in all material
respect" indicates a Qualified opinion.
Answer: False
14. An audit opinion that states "present fairly except for"
indicates an Unqualified opinion.
Answer: False
15. An audit opinion that states "do not present fairly" indicates
an Adverse opinion.
Answer: True
16. An audit opinion that states "do not express an opinion"
indicates a Disclaimer of opinion.
Answer: True
 17. Indications for an opinion as Qualified are material
misstatements, scope limitations, or certainty.
Answer: True
18. Auditors will form an Adverse opinion if there is a high
degree of scope limitation and uncertainty.
Answer: False
19. If there is a material and pervasive misstatements, auditors
will form a Qualified opinion.
Answer: False
20. Contents of Audit Report may include Emphasis of the
matter and Other matter paragraphs.
Answer: True
21. Emphasis of the matter is presented subsequently to Audit
opinion.
Answer: True
22. Substantive Test Procedure may be done both or either
through Analytical Procedures and Substantive Test of
details.
Answer: True
23. A significant deficiency and material weakness in internal
control should not be communicated to management and
those charged with governance.
Answer: False
24. Corroborating evidence is not necessary in gathering
evidences.
Answer: False
25. The completing the audit step requires to search for
unrecorded liabilities, review minutes of meeting and obtain
management letter.
Answer: False

1. Test of controls is about obtaining evidence about the operating effectiveness of

internal control. Answer: True

2. If the internal control design of a company is weak, test of controls must be done.
Answer: False

3. Substantive test is the most costly process in gathering evidences by an auditor.

Answer: True

4. Management Letter is the same with the Management Representation Letter.

Answer: False

5. Attribute sampling is used in test of controls. Answer: True

6. Significant deficiency and material weaknesses are communicated with the

management and those charged with governance. Answer: True

7. Corroborating evidence is only use in substantive test when gathering evidences.

Answer: False

8. Substantive test uses variable sampling. Answer: True

9. Corroborating evidence means when gathering evidence, an evidence is enough

without any supporting evidences. Answer: False

10. There will be no issuance of audit report without the engagement quality review
report. Answer: True

11. In Substantive test, analytical procedures are required. Answer: False

12. Extending the date and dual dating has different implications. Answer: True

13. In completing the audit, analytical procedures is not necessary. Answer: False

14. Without obtaining the management representation letter, an auditor must not
issue an audit report. Answer: True

15. An auditor shall express a qualified opinion when financial statements are
presented fairly, in all material respects. Answer: False

16. When auditor concludes that misstatements are material but not pervasive to the
financial statements, a qualified opinion shall be express. Answer: True

17. Unqualified opinion is express when an auditor concludes that misstatements are
both material and pervasive to the financial statements. Answer: False

18. The auditor shall disclaim an opinion when the auditor is unable to obtain
sufficient appropriate audit evidence on which to base the opinion. Answer: True

19. There are four types of modified opinion. Answer: False

20. An unqualified opinion is expressed when an auditor concludes that the financial
statements are presented fairly, in all material respects, in accordance with the
identified financial reporting framework. Answer: True

21. Key audit matters is the basis of the auditor's opinion. Answer: False

22. Auditor's opinion is the first content in an audit report. Answer: True

23. Audit report contains only the responsibilities of the management and the
auditor. Answer: False

24. Emphasis of the Matter paragraph may be included in the contents of an audit
report and place right after the opinion according to PSA 706. Answer: True

25. Analytical procedures is optional in risk assessment Answer: False

1. In audit process, test of control is used to evaluate a company's internal control
design if it is operating effectively?

ANSWER: TRUE

2. In conducting tests of control, only the attribute sampling is tested not the
entire population of the audit?

ANSWER: TRUE

3. Management letter and management representation letter are the same?

ANSWER: FALSE – Management letter is from auditor to management while the

management representation letter is from management to auditor.

4. The audit committee is normally those charged with governance?

ANSWER: TRUE

5. Substantive controls are audit procedures designed to substantiate the account

balances or designed to detect material misstatements in the financial statements?

ANSWER: FALSE – Substantive tests

6. Analytical procedures and test of details are the two types of substantive tests?

ANSWER: TRUE

7. Under substantive tests, attribute and variables sampling are considered?

ANSWER: FALSE – only variables sampling (amounts)

8. Test of details of transactions involves testing the transactions that give rise to the
balance of an account?

ANSWER: TRUE

9. Examining directly the balance of an account is called test of details of balances?

ANSWER: TRUE

10. In completing the audit, search for recorded liabilities and review minutes of
meeting are not considered?

ANSWER: FALSE – unrecorded liabilities and must be considered

11. In completing the audit, an analytical procedure is optional?

ANSWER: FALSE – required

12. The Philippine Standard on Quality Control (PSQC) indicates that the engagement
quality report must be issued first before the audit report?

ANSWER: TRUE

13. The most common type of audit report is unqualified opinion or clean opinion?

ANSWER: TRUE

14. Qualified opinion contains material and pervasive misstatements?

 ANSWER: FALSE – Adverse Opinion

15. An audit opinion is consisting of three modified opinions and one standard
opinion?

ANSWER: TRUE

16. Adverse opinion contains material and not pervasive misstatements?

ANSWER: FALSE – Qualified Opinion

17. The type of audit opinion that has a high degree of scope limitation and
uncertainty is called disclaimer of opinion?

ANSWER: TRUE

18. Key Audit Matters contains the utmost significance or importance matter
discovered by the auditor?

ANSWER: TRUE

19. PSA 706 states that the emphasis of the matter paragraph section must be
presented before the audit opinion section?

ANSWER: FALSE – After audit opinion section

20. The auditor’s responsibility section provides a general description of an audit?

ANSWER: TRUE

21. The emphasis of the matter paragraph refers to a matter appropriately

presented or disclosed in the financial report such as auditor’s judgments, litigation
and uncertainties?

ANSWER: TRUE

22. Management’s responsibility is not included in the auditor’s report and is

presented separately?

ANSWER: FALSE – included

23. Other legal and regulatory requirements are presented in auditor’s report if
applicable?

ANSWER: TRUE

24. In audit process, corroborating evidence is necessary to support a proposition

that is already supported by initial evidence?

ANSWER: TRUE

25. In completing the audit, going concern assumption is ignored?

ANSWER: FALSE – considered and it is important

1. A test of details is a form of audit procedure that test on a company's internal

control. ANSWER: FALSE- CONTROLS

2. Only test the operating effectiveness if the design is strong. ANSWER: TRUE

3. Attribute sampling is a statistical process used in audit procedures that aims to

analyze the characteristics of a given population. ANSWER: TRUE

4. If you detect significant deficiencies while testing controls, it doesn’t necessarily

mean that there is material misstatement. ANSWER: TRUE

5. If you see significant deficiencies and material weaknesses while testing controls,
you don’t need to communicate it to the management and those charged with
governance. ANSWER: FALSE- DO
6. In communicating your recommendations and findings regarding the test of
controls to the management and those charged with governance, according to the
standard, you are required to do it orally. ANSWER: FALSE- WRITTEN

7. Management Letter is the same with Management Representation Letter.

ANSWER: FALSE- DIFFERENT

8. Management Representation Letter is a letter made by the auditor to the

management. ANSWER: FALSE- MANAGEMENT LETTER

9. Management Letter is a letter made by the management to the auditor. ANSWER:

FALSE- MANAGEMENT REPRESENTATION LETTER

10. Management Letter means a letter prepared by the auditor which discusses
findings and recommendations for improvements in internal control. ANSWER: TRUE

11. Substantive testing or substantive procedure is the technique used by the auditor
to obtain the audit evidence in order to support auditor opinion. ANSWER: TRUE

12. Analytical procedures are used as a substantive test to obtain evidential matter
about particular assertions related to account balances or classes of transactions.
ANSWER: TRUE

13. In conducting substantive test procedures you can do either Analytical

Procedures or Substantive Test of Details of Transactions and Balances, or both.
ANSWER: TRUE

14. Corroborating evidence is evidence that tends to support a proposition that is

already supported by some initial evidence, therefore confirming the proposition.
ANSWER: TRUE

15. It is also important to search for the Unrecorded Liabilities in completing the
audit. ANSWER: TRUE

16. Dual-dating means using three dates for the audit report. It refers to dating the
audit report as of the end of field work along with an ad-ditional later date attached
to disclosure of a significant Type II subsequent event. ANSWER: TWO

17. According to PSQC, you can issue Audit Report even if there’s no Engagement
Quality Review Report yet. ANSWER: FALSE- CANNOT

18. There are 3 different types of auditor opinions. ANSWER: FALSE- 4

19. An unqualified opinion is an independent auditor's judgment that a company's

financial statements are fairly and appropriately presented, without any identified
exceptions. ANSWER: TRUE

20. A qualified opinion is a written statement by a certified public accountant in an

audit report, stating that the financial statements of a client are fairly presented,
except for a specified issue. ANSWER: TRUE

21. An adverse opinion is a professional opinion made by an accountant indicating

that a company's financial statements are misrepresented, misstated, and do not
accurately reflect its financial performance and health. ANSWER: FALSE- AUDITOR

22. A disclaimer of opinion is a statement made by an auditor that no opinion is

being given regarding the financial statements of a client. ANSWER: TRUE

23. An adverse opinion is the most common type of auditor's report. ANSWER: FALSE
– UNQUALIFIED OPINION

24. Unmodified opinions are the types of audit opinions that issue to entity's
financial statements when auditors found that those statements are not prepared
and present fairly in all material respect in accordance with the accounting
framework that they are using. ANSWER: FALSE- MODIFIED

25. Key Audit Matters are defined as those matters that, in the auditor's
professional judgment, were of most significance in the audit of the financial
statements of the current period. ANSWERS: TRUE

1. Should we always conduct a test of control? False

2. Test of control is used to check the effectiveness of the internal control. True

3. Conducting a test of control is to increase the substantive test. False

4. In conducting a test of control, should we check all the controls? False

5. High but not absolute is the highest assurance that an auditor can give. True

6. Significant deficiencies is less than material weaknesses but are important to management and
those charged with governance. True

7. Management letters or letters from the management on how to improve the internal control.
False

8. Substantive testing of the heart of other things because this is where we gather the evidence.
True

9. Analytical procedure in analyzing plausible relationship and detecting irregularities in the

internal control. True

10. We only have to choose one between the analytical procedure and substantive test of details
of transactions and balances in performing substantive tests. False

11. It is called variable sampling in a substantive test because it deals with the amounts. True
12. In gathering evidence, one is enough in corroborating evidence. False

13. In completing the audit, final analytical procedure is required. True

14. Subsequent events after the audit report date is excluded. False

15. We can extend the date of an audit report. True

16. Extending the date does not include significant events in between the initial audit date to the
extended audit date. False

17. PSQC & PSA prohibits the issuance of an audit report if there is no Engagement Quality
Review Report and Management Representation Letter. True

18. Qualified opinion is issued when the financial statement is presented fairly, in all material
respects. False

19. Adverse opinion is issued when the financial statement is not presented fairly. True

20. Disclaimer of opinion forms part of the standard opinion. False

21. When the client agrees to correct detected misstatements, an unqualified opinion is issued.
True

22. The Basis for Opinion is the first portion of an audit report. False

23. Key Audit Matters contains of utmost significance regarding the audit engagement with the
client. True

24. Emphasis of the Matter paragraph comes after the Auditor's Responsibilities when inserted.
False

25. Scope and limitations are found in the Other Matter paragraph. True

1.The performance of analytical procedures is often used by an auditor as a

procedure to gather certain types of audit evidence. True

2.If management corrects the misstatements that were detected during an audit, the
auditor must still perform additional audit procedures to determine whether
misstatements remain. True

3.Assertions are not relevant to an audit because the financial statements are
management's responsibility instead of the auditor's. False

4.Test of Control is design to evaluate the operating effectiveness of control in

preventing or detecting and correcting material misstatements at the assertion
level. True
5.If internal control is satisfactory, external evidence is more reliable than internal
evidence. False

6.Some audit procedures may be performed prior to the close of the year under
audit. True

7.There are only three types of audit reports: unqualified , qualified and a disclaimer
of opinion. False

8.Qualified opinion is the best type of report a business can receive. False

9.Auditor's Report is an official opinion issued by an external or internal auditor as to

the quality and accuracy of the financial statements prepared by a company. True

10.Written representation by management as to the quality of inventory is

substitute for verification. False

11.If the completion stage is not adequately performed, there is a risk that an
inappropriate opinion is given on the financial statements. True

12.Every auditor of a company shall have a right of access at all times to the books of
account and vouchers of the company kept at the registered office of the company
only. False

13.Substantive procedures are designed to obtain audit evidence as to completeness,

accuracy, and validity of data produced by the accounting system. True

14.Purchase invoice is an example of internal evidence. False

15.Audit procedures are the processes, techniques, and methods that auditors
perform to obtain audit evidence which enables them to make a conclusion on the
set audit objective and express their opinion. True

16.Inquiries of client personnel are not an effective means of evidence gathering by

an auditor. False

17.The amount of evidence gathered is not important to an auditor since the quality
of evidence is of primary importance. False

18.The objective of an auditor performing an audit is to limit audit risk to a low

level. True

19.The auditor shall express an adverse opinion if the auditor is unable to obtain
sufficient audit evidence regarding opening balances. False

20.Tests of details of account balances and disclosures focus on the items that are
contained in the financial statement- account balances and disclosures. True

21.There is no need of written consent of the auditor for appointing him as an

auditor in a company. False

22.The three types of substantive tests are analytical procedures, a test of details of
transactions, and tests of details of balances. True

23.Auditor must send audit report to every member of company. False

24.Where the accounts of the company " do not present fairly " the auditor should
express adverse opinion. True

25.In the audit planning phase, analytical procedures serve as attention directing
device. True

1.Test the operating effectiveness only if the design is strong

Answer: True

2.Substantive test is costly than test of control.

Answer: True

3.Attribute sampling is not included in the test of control

Answer: included; False

4.Management representation letter is the same with the management letter.

Answer: not the same; False

5.Management letter came from the auditor and submitted to management as a suggestion

Answer: True

6.Analytical procedures is not a substantive test procedures

Answer: is a ;False

7.When you say substantive test of details, it is investigating documents of transactions and

balances

Answer: True

8.Unqualified opinion , "present fairly except for"

Answer: Qualified ;False

9.Adverse, " do not present fairly"

Answer: True

10. According to PSQC and standards in auditing, it is prohibited to issue an audit report

without engagement quality review report

Answer: True

11. Under review of subsequent events, you can extend the dates and dual dating

Answer: True

12. If the internal control design is effectively operating you can minimize the substantive test

Answer: True

13.If the internal control design is not effectively operating, just directly use the

test of details of balances and transactions.

Answer: True

14.Under test of control, attribute sampling is one of the reason why auditors provide a high

level of assurance in an audit because we test based on selection not the overall

Answer: True

15.Under test of control, attribute sampling is testing based on the overall characteristics not

the amount

Answer: based on selected: False

16.Material weaknesses is the possibility of having material misstatements

Answer: True

17. Disclaimer, “present fairly in all material respect”

Answer: Unqualified ; False

18.Material misstatements and significant deficiencies are not necessary to be communicated

to the management and those charged with governance.

Answer: are necessary; False

19.Those charged with governance means the audit committee

Answer: True

20.Theoritically, management representation letter came from the management and submitted

to the auditor

Answer: True

21.Test of control is the heart of audit because this is the stage where the auditor gather

evidence

Answer: Substantive test; False

22. Under substantive test, variables sampling test the characteristics

Answer: amount ; False

23. In the contents of audit report, first that you will notice will be the opinion.

Answer: True

24.In reviewing the minutes of the meeting, you can see the major and non recurring

transactions.

Answer: True

25.In the last stage, analytical procedure is required in the substantive test

Answer: optional ;False

1. We should perform test of control only if the design of internal control is strong.

Answer: True

2. When internal control is weak, you still have to perform test of controls.

Answer: False

3. It is possible to reduce substantive test when internal control is strong.

Answer: True

4. Management letter and management representation are the same.

Answer: False

5. Management letter is intended to provide management and those charged with

governance with valuable information regarding their organization.

Answer: True

6. Substantive tests are not needed as evidence to support the assertion that the

financial records of an entity are complete, valid, and accurate.

Answer: False

7. Substantive tests procedures include substantive test of details of transactions and

balances.

Answer: True

8. When performing test of controls we use variables sampling.

Answer: False

9. Corroborating evidence (or corroboration) is evidence that tends to support a

proposition that is already supported by some initial evidence, therefore confirming the

proposition.

Answer: True

10. When performing substantive test, we use attribute sampling.

Answer: False.

11. The last stage of audit process is completing the audit and audit report.

Answer: True

12. The last step in completing the audit is to search for unrecorded liabilities.

Answer: False

13. Analytical procedure is required in performing risk assessment.

Answer: True

14. Analytical procedure is required in performing substantive tests.

Answer: False

15. Analytical procedure is required in completing the audit.

Answer: True

16. You are allowed to issue audit report even when there’s no engagement quality

review report yet.

Answer: False

17. An engagement quality control review is an objective evaluation of significant

matters, including identified risks and significant judgments made by the engagement

team, and the team’s conclusions reached in formulating the engagement report.

Answer: True

18. You are allowed to issue audit report even when there’s no management

representation letter yet.

Answer: False

19. Management representation letter is the acknowledgement of the management of

its responsibilities and that evidences provided are true.

Answer: True

20. Auditor’s report doesn’t include opinion.

Answer: False.

21. Unqualified opinion- “present fairly, in all material aspects”.

Answer: True

22. Adverse opinion- “present fairly”.

Answer. False

23. Qualified opinion- “not pervasive”.

Answer: True.

24. Adverse opinion-“material and not pervasive”.

Answer: False

25. Disclaimer opinion- “does not express opinion”.

Answer: True

1. Test of control means obtaining evidence about the effectiveness of internal control.

Answer: TRUE

2. Understanding the internal control of the entity is not necessary.

Answer: FALSE

3. If the internal control is weak , substative test will done directly.

Answer: TRUE

4. Test of Control is done to lessen substantive tests.

Answer. TRUE

5.Test of Control is costly than Substantive Test in gathering evidence.

Answer: FALSE

6. Test the operating effectiveness only if the design is weak.

Answer: FALSE

7.All controls needs to be tested when conducting test of control.

Answer: FALSE

8. Audit provide high level of assurance but not absolute.

Answer: TRUE

9. Test of Control uses variable sampling.

Answer: FALSE

10.Significant deficiencies is when a possibility of material misstatement exist.

Answer: FALSE

11. Material weakness is less than significant deficiencies.

Answer: FALSE

12. When material weakness is detected, there is a need to communicate to

management and those charged with governance.

Answer: TRUE

13. Management letter is the same as Management Representation Letter.

Answer: FALSE

14. Management Letter is made by the auditor.

Answer: TRUE

15. Substantive test is defined as obtaining evidence about substantive details of

accounts, transactions and disclosures.

Answer: TRUE

16. Analytical procedure helps an auditor understand the client's business and identify
potential risk areas.

Answer: TRUE

17. Analytical Procedures and Substantive Test of details of transactions is sometimes

combine in performing substantive test.

Answer: TRUE

18. Substantive Test uses attribute sampling.

Answer: FALSE

19. Collecting one evidence is enough in conducting audit.

Answer: FALSE

20. Substantive tests is the last stage of audit process.

Answer: FALSE

21. Searching for Unrecorded Liabilities is done in Test of Control.

Answer: FALSE

22. Final Analytical Procedure is done in the last stage of audit process.

Answer: TRUE

23. Analytical procedure is optional in substantive test.

Answer: TRUE

24. Dates after audit report does not need to be considered while reviewing

subsequent events.

Answer: FALSE

25. Dual dating is not possible in audit report.

Answer: FALSE

1. Management Letter is the recommendation of the management to the

auditor.

Answer: FALSE
2. Management Representation Letter is the acknowledging of the

responsibilities of the auditor towards the management.

Answer: FALSE

3. Variable Samplings mean that the characteristics are tested.

Answer: FALSE

4. Attribute Sampling means testing the amounts instead of the

characteristics.

Answer: FALSE

5. Test of Controls is the most costly in gathering evidence.

Answer: FALSE

6. Conducting test of controls means to lessen the substantive test.

Answer: TRUE

7. Those charged with governance usually pertains to the audit

committee.

Answer: TRUE

8. Having analytical procedures in Substantive Test Stage is optional.

Answer: TRUE

9. Qualified opinion is not pervasive.

Answer: TRUE

10. The Standard Opinion is Unqualified Opinion.

Answer: TRUE

11. If there is Emphasis of the Matter Paragraph then it is put right after

the Basis for Opinion.

Answer: FALSE

12. Adverse Opinion present fairly except for material misstatements,

scope limitation or uncertainty.

Answer: FALSE

13. Having analytical procedures in Risk Assessment Stage is optional.

Answer: FALSE

14. According to the standard it is either oral or written in

communicating the management.

Answer: FALSE

15. In attribute sampling all items are tested.

Answer: FALSE

16. Test the operating effectiveness only if the design is strong.

Answer: TRUE
17. Having analytical procedures in Completing the Audit Stage is

required.

Answer: TRUE

18. According to the standard you can’t issue an Audit Report without

issuing Engagement Quality Review Report first.

Answer: TRUE

19. Substantive Test is also known as Test of Details of Balances and

Transactions.

Answer: TRUE

20. The last stage is Completing the Audit.

Answer: TRUE

21. Modified Opinion includes Qualified, Adverse and Disclaimer of

Opinion.

Answer: TRUE

22. Key audit matters include the utmost significance.

Answer: TRUE

23. Audit report may also include Other Matter Paragraph.

Answer: TRUE

24. Adverse Opinion is not pervasive.

Answer: FALSE

25. Disclaimer of Opinion contains low degree of scope limitation and

uncertainty.

Answer: FALSE

True or False

1. Test of control refers to the testing the operating effectiveness of the internal
control design always.
Ans: False-only when the internal design is strong
2. When the design of internal control is strong, you can proceed already to the
substantive tests.
Answer: False- is not strong
3. The purpose of test of control is to lessen the procedures in the test of details
of balances and transactions—substantive tests.
Answer: True
4. Substantive test is costly specifically when gathering evidence.
Answer: True
5. If proven, that the internal control design is implemented effectively, we can’t
lessen the substantive tests.
Answer: False-lessen
6. Revising the audit plan will make the audit procedure more intensive.
Answer: False-extensive
7. In attribute sampling, the whole population will be the sample and be tested.
Answer: False- it is selective
8. When we say there are significant deficiencies, it is more than material
weakness.
Answer: False-less
9. When we say material weakness, there is a possibility that there is material
misstatement.
Answer: True
10. Normally, those charged with governance points out to the audit committee.
Answer: True
11. In order to communicate with management and those charged with
 governance, the standard requires it to be written –management
representation letter.
Answer: False- Management letter
12. It is expected that there is delivery of management letter before reaching a
final decision on the opinion to be issued and a meeting is held with the
client.
Answer: False- isn’t
13. The auditor communicates the results of his or her work through the medium
of the management letter.
Answer: False- audit report
14. An auditor uses the knowledge provided by the understanding of internal
control and the final assessed level of control risk primarily to determine the
nature, timing and extent of the substantive test.
Answer: True
15. Audit sampling for substantive tests is appropriate when analytical
procedures is used.
Answer: False- Tests of details are performed
16. Analytical procedures may be helpful in identifying the existence of unusual
transactions or events, and amounts, ratios, and trends that might indicate
matters that have financial statement and audit implications.
Answer: True
17. Analytical procedures are more expensive to perform than tests of details.
Answer: False-less
18. Variable sampling is a method of sampling in which all the items in the
population are divided into two or more sub-population.
Answer: False-Stratified sampling
19. Test of transactions is a technique when obtaining an understanding of the
accounting and internal control system the auditor may trace a few
transactions through the accounting system.
Answer: False- Walk through test
20. Searching for unrecorded liabilities is least likely to be performed before the
balance sheet date
Answer: True
21. Significant transactions happened will be discovered whe we review the
minutes of the meetings
Answer: True
22. Minutes of meetings of the board of directors is an example of corroborating
information.
Answer: True
23. Test of transactions refers to evaluations of financial information made by a
study of plausible relationships among financial and nonfinancial date
 involving comparisons of recorded amounts to expectations developed by the
auditor.
Answer: False-analytical procedures
24. Test of details represents a procedure the auditor may use because plausible
relationships among financial" statement balances ore expected to exist.
Answer: False-Analytical procedures
25. The main purpose of risk assessment procedures is to obtain an
understanding of the entity and its environment, including its internal control,
to assess the risks of material misstatement at the financial statement and
assertion levels.
Answer: True