AT SECOND MONTHLY QUIZ

1. Audits of historical financial information are governed by:

I. Philippine Standards on Auditing
II. Philippine Standards on Assurance Engagements
III. Philippine Standards on Quality Control
A. I and II only
B. II and III only
C. I and III only
D. I, II, and III

2. Which of the following types of audits is performed to determine whether an entity’s financial statements are fairly
stated in conformity with generally accepted accounting principles?
A. Operational audit
B. Compliance audit
C. Performance audit
D. Financial statement audit

3. An auditor’s overall objective in a financial statement audit is to

A. Determine that all individual accounts and footnotes are fairly presented.
B. Employ the audit risk model.
C. Express an opinion on the fair presentation of the financial statements in accordance with generally accepted
accounting principles.
D. Detect all errors and fraud.

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4. The auditor's opinion
A. Enhances the credibility of the financial statements.

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B. Is an assurance as to the future viability of the entity.
C. Is an assurance as to the efficiency with which management has conducted the affairs of the entity, but
not effectiveness.
D. Certifies the correctness of the financial statements.

5.
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A difference between the amount, classification, presentation, or disclose of a reported financial statement item and
the amount, classification, presentation, or disclosure that is required for the item to be in accordance with the
applicable financial reporting framework.
A. Misstatement
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B. Fraud
C. Error
D. Non-compliance
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6. Which does not describe the level of assurance provided in a financial statement audit?
A. High
B. Above average
C. Reasonable
D. Positive

7. Which of the following statements does not properly describe a limitation of an audit?
C

A. Many financial statement assertions cannot be audited.

B. Many audit conclusions are made on the basis of examining a sample of evidence.
C. Some evidence supporting peso representations in the financial statements must be obtained by oral or written
representations of management.
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D. Fatigue and carelessness can cause auditors to overlook pertinent evidence.

8. Absolute assurance is rare in practice due to limitations of assurance engagement. Which of the following does not
describe such limitation?
A. Use of selective testing
B. Inherent limitation of internal controls
C. The fact that most evidence are merely persuasive
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D. The procedures applied to reasonable assurance engagement are usually comprehensive

9. Auditors of the Commission on Audit perform the role of

A. Internal auditors.
B. Independent auditors.
C. Financial consultants.
D. Management accountants.

10. Which of the following is the best reason why audits are necessary?
A. Several regulations require financial statements to be audited
B. So that management and the auditor will share the responsibility for the financial statements
C. So that additional confidence is available to users of financial statements through the audit report
D. So that responsibility for the financial statements is transferred from management to the auditor

11. Audit procedures to detect material misstatements at the assertion level.

A. Risk assessment procedures
B. Substantive procedures
C. Tests of control
D. Analytical procedures

12. With regard to independence, which of the following statements is correct?

 A. Audit engagements provide assurance to a wide range of potential users; consequently, both independence in
mind and independence in appearance are of particular importance.
B. Only the engagement partner is required by the Code of Ethics to be independent from their assurance clients.
C. In case of audits of financial statements, the Code of Ethics requires member of the assurance team, the firm
but not network firms to be independent of the client.
D. In case of audits of financial statements, the Code of Ethics requires the auditor to be independent from their
assurance team from the start of performing procedures required by the engagement up to the issuance of the
report.

13. Prior to beginning the fieldwork on a new audit engagement in which a CPA does not possess expertise in the
industry in which the client operates the CPA should
A. Reduce audit risk by lowering the preliminary levels of materiality.
B. Design special substantive tests to compensate for the lack of industry expertise.
C. Engage financial experts familiar with the nature of the industry.
D. Obtain knowledge of matters that relate to the nature of the entity's business.

14. In making arrangements for an audit, there should be a clear understanding between the auditor and the client as
to the following except:
A. The type of audit to be performed
B. Assurance of auditor’s independence
C. Terms of settlement for audit services
D. Official to whom audit report shall be addressed

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15. An auditor's engagement letter most likely would include a statement that:
A. Lists potential significant deficiencies discovered during the prior year's audit.
B. Explains the analytical procedures that the auditor expects to apply.

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C. Describes the auditor's responsibility to evaluate going concern issues.
D. Limits the auditor's responsibility to detect errors and fraud.

16. Which of the following statements is a basic element of the auditor's standard report?

B. The auditor evaluated the overall internal control.

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A. The disclosures provide reasonable assurance that the financial statements are free of material misstatement.

C. An audit includes assessing significant estimates made by management.

D. The financial statements are consistent with those of the prior period.
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17. An auditor most likely would express an unqualified opinion and would not add explanatory language to the report
if the auditor:
A. Wishes to emphasize that the entity had significant transactions with related parties.
B. Concurs with the entity's change in its method of computing depreciation.
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C. Discovers that supplementary information required by FASB has been omitted.

D. Believes that there is a probable likelihood of a material loss resulting from an uncertainty that is sufficiently
supported and disclosed.

18. Financial statement assertions are:

A. Directly related to PSAs
B. Indirectly related to PSAs
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C. Directly related to GAAP

D. Indirectly related to GAAP

19. An auditor's engagement letter most likely would include:

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A. Management's acknowledgment of its responsibility for maintaining effective internal control.

B. The auditor's preliminary assessment of the risk factors relating to misstatements arising from fraudulent
financial reporting.
C. A reminder that management is responsible for illegal acts committed by employees.
D. A request for permission to contact the client's lawyer for assistance in identifying litigation, claims, and
assessments.
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20. The assertion of accuracy means that:

A. Transactions and events have been recorded in the proper accounts
B. All transactions and events that should have been recorded are recorded
C. Transactions and events have been recorded in the correct accounting period
D. Amounts and other data relating to recorded transactions and events have been recorded appropriately

21. The extent of planning will vary according to any of the following, except:
A. Size of the audit client.
B. Auditor's experience with the entity and knowledge of the business.
C. The nature and complexity of the audit engagement
D. The assessed level of control risk.

22. Which of the following statements is/are correct?

Statement 1: Obtaining knowledge of the entity business is an important part of the planning the audit work.
Statement 2: The auditor's knowledge of the entity's business assists in the identification of events, transactions
and practices which may have a material effect on the financial statements.
A. Only statement 1 is correct
B. Only statement 2 is correct
C. Both statements are correct
D. Both statements are incorrect
23. Which of the following statements is/are correct?
Statement 1: The overall audit plan and the audit program should not be revised during the course of the audit.
Statement 2: The auditor should develop and document an audit program setting out the nature, timing and extent
of planned audit procedures required to implement the overall audit plan.
A. Only statement 1 is correct
B. Only statement 2 is correct
C. Both statements are correct
D. Both statements are incorrect

24. An auditor should establish specific audit objectives relating to

A. Extent of audit procedures
B. Cost-benefit considerations
C. Assertions of financial statements
D. Performance of risk assessment procedures

25. For new audit clients, the incoming auditor requests the client to authorize the previous auditor to allow the review
of previous audit’s
I. Engagement letter
II. Audit documentation
III. Findings and observation
A. I and II only
B. II and III only
C. I and III only

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D. I, II, and III

26. What is the purpose of obtaining knowledge about a new client’s business and its industry?

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A. To be able to extrapolate misstatements noted in samples to the whole population
B. To understand events and transactions affecting the client’s financial statements
C. To detect fraudulent financial reporting
D. To obtain information about the latest internal controls in the industry

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27. In planning an audit, which of the following procedures would an auditor normally perform?
A. Sending of confirmation of transactions and balances to related parties
B. Comparison of anticipated performance to the financial statements
C. Obtaining the entity’s inventory count sheet
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D. Determination of sample sizes to examine occurrence of sales

28. In performing analytical procedures, set the following procedures in proper order.
I. Calculate predictions and compare them to recorded amount
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II. Develop an expectation

III. Define a significant difference
IV. Investigate significant difference
A. I, II, III, IV
B. I, II, IV, III
C. II, I, III, IV
D. II, I, IV, III
C

29. Which of the following are considered further audit procedures?

I. Test of controls
II. Test of details
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III. Substantive analytical procedures

A. I and II only
B. II and III only
C. I and III only
D. I, II, and III

30. The audit risk model is used primarily

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A. For planning purposes in determining how much evidence to accumulate.

B. While doing tests of controls.
C. To determine the type of opinion to express.
D. To evaluate the evidence which has been gathered.

31. Any person who shall violate any of the provisions of the Act, or any of its implementing rules and regulations as
promulgated by the Board subject to the approval of the Commission shall upon conviction, be punished by
A. Lethal injection.
B. A fine of not more than fifty thousand pesos.
C. Imprisonment for a period not exceeding two years.
D. A fine of not less than fifty thousand pesos or by imprisonment for a period not exceeding two years or both.

32. The Commission upon the recommendation of the Board shall within ninety (90) days from the effectivity of the
IRR, create an accounting standard setting body to be known as the
A. Accounting Standards Council
B. Financial Reporting Standards Committee
C. Financial Reporting Standards Council
D. Accounting Standards Committee

33. Specifically, the board of accountancy is officially represented in the AASC by:
A. Secretary of the BOA
 B. Chair, PRC
C. Chair, BOA
D. BOA member who handles Auditing theory subject

34. All of the following are qualifications to be appointed to the Board. Which one is not?
A. Filipino citizenship (natural-born) and residence
B. Must not be a member of the APO at the time of appointment
C. Ten (10) years of experience as a CPA in any scope of practice
D. Must not be convicted of crimes involving moral turpitude

35. Which of the following is not among the specific powers, functions and responsibilities of the Board?
A. To investigate violations of the Philippine Accountancy Act of 2004
B. To conduct an oversight into the quality of audits of financial statements
C. To prescribe and/or adopt a Code of Ethics for the practice of accountancy
D. To determine the minimum standard curriculum for the study of accountancy

36. When preparing or presenting information, a professional accountant shall perform the following except
A. Prepare or present the information in accordance with a relevant reporting framework
B. Prepare or present the information in a manner that is intended neither to mislead nor to influence contractual
or regulatory outcomes inappropriately;
C. Exercise professional skepticism to represent the facts accurately and completely in all material respects
D. Not omit anything with the intention of rendering the information misleading or of influencing contractual or
regulatory outcomes inappropriately

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37. A professional accountant has a professional duty or right to disclose confidential information in each of the following,
except

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A. To comply with technical standards and ethics requirements.
B. To disclose to BIR fraudulent scheme committed by the client on payment of income tax.
C. To comply with the quality review of a member body or professional body
D. To respond to an inquiry or investigation by a member body or regulatory body.

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38. A professional accountant in business who is responsible for the financial reporting of the employing organization
when an immediate or close family member employed by the organization makes decisions that affect the financial
reporting of the organization may create
A. Intimidation Threat
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B. Self-review Threat
C. Self-interest Threat
D. Familiarity Threat
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39. Which of the following is least likely to create a threat to independence?

A. The fees generated by the assurance client represent a large proportion of the revenue of an individual partner.
B. The firm charges a contingent fee to an assurance client.
C. Accepting gifts or hospitality, the value of which is clearly insignificant, from an assurance client.
D. When litigation takes place, or appears likely, between the firm or a member of the assurance team and the
assurance client.
C

40. The CPA should not undertake an engagement if his fee is to be based upon
A. Per diem rates plus expenses
B. The findings of a tax authority
C. A percentage of audited net income
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D. The complexity of the service rendered

41. An engagement conducted to provide: (a) a high level of assurance that the subject matter conforms in all material
respects with identified suitable criteria; or (b) a moderate level of assurance that the subject matter is plausible in
the circumstances.
A. Reasonable assurance
B. Audit engagement
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C. Review engagement
D. Assurance engagement

42. Which of the following is incorrect regarding the "three-party relationship" element of assurance engagements?
A. Professional accountants are those persons who are members of an IFAC member body, which should be
in public practice.
B. The responsible party and the intended user will often be from separate organizations but need not be.
C. The responsible party is the person or persons, either as individuals or representatives of an entity,
responsible for the subject matter.
D. The intended user is the person or class of persons for whom the professional accountant prepares the
report for a specific use or purpose.

43. The ___ is the outcome of the evaluation or measurement of a (an) ____.
A. Subject matter; subject matter information
B. Subject matter information; subject matter
C. Subject matter; evidence
D. Evidence; subject matter

44. Criteria that are embodied in laws or regulations or issued by authorized bodies of expert are called
A. Legal criteria
B. Suitable criteria
 C. Established criteria
D. Specifically-developed criteria

45. In an agreed-upon engagement, which of the following statements is incorrect?

A. Management, the auditor and any appropriate third-party user agree on the procedures to be performed.
B. Although procedures required are of an audit nature, independence is not required.
C. No assurance is rendered in the report.
D. The report is provided to a wide range of users for decision making.

END OF QUIZ

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1. Which of the following is not one of the main objectives of the Philippine Accountancy Act of 2004?
A. The standardization and regulation of accounting education
B. The examination for registration of certified public accountants
C. The supervision, control, and regulation of the practice of accountancy in the Philippines
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D. The prescription and/or adoption of a Code of Ethics for the practice of accountancy

2. A member of the Board shall, at the time of his/her appointment, must possess the following qualifications, except
A. Must be a Filipino citizen and a resident of the Philippines
B. Must be a duly registered CPA with at least ten (10) years of work experience in any scope of practice of
accountancy.
C. Must be of good moral character and must not have been convicted of crimes involving moral turpitude
C

D. Must not have any pecuniary interest, directly or indirectly, in any school, college, university, or institution
affecting the provision of BS Accountancy.

3. The president of the Philippines, upon the recommendation of the Commission, may suspend or remove any member
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of the Board of Accountancy. Which of the following is not a valid ground for suspension or removal of members of
the Board of Accountancy?
A. Neglect of duty or incompetence.
B. A member of the Board manipulated the CPA licensure examination results.
C. A member of the Board has violated RA9298.
D. A member of the Board has been sued for crimes involving moral turpitude.
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4. The following statements relate to CPA examination ratings. Which statement is incorrect?
A. To pass the examination, candidates should obtain a general weighted average of 75% and above, with no
rating in any subject less than 65%.
B. Candidates who obtain a rating of 75% and above in at least four (4) subjects shall receive conditional credit
for the subjects passed.
C. Conditioned candidates shall take an examination in the remaining subject within three (3) years from the
preceding examination.
D. Candidates who fail in two (2) complete CPA examinations may be allowed to take examinations a third time
provided he or she submits evidence to the satisfaction of the Board that he/she enrolled in and completed at
least twenty-four (24) units of the subject given in the board exam.

5. The following statements relate to the roster of CPAs. Identify the incorrect statement:
A. A roster showing the names and place of business of all registered CPAs shall be prepared and updated by the
Board
B. Copies of the roster shall be made available to any party as may be deemed necessary
C. The Board, upon approval of the Commission, may delegate the preparation of this roster to the APO
D. The publication of the roster in the official gazette or any major newspaper of public circulation shall be deemed
in compliance with the requirement of RA 9298

6. The creation of FRSC and AASC is intended to assist the BOA in carrying out its function to
 A. To monitor the conditions affecting the practice of accountancy and adopt such measures, rules, and
regulations, and best practices as may be deemed proper for the enhancement and maintenance of high
professional, ethical, accounting and auditing standards.
B. To supervise the registration, licensure, and practice of accountancy in the Philippines.
C. To prescribe and adopt the rules and regulations necessary for carrying out the provisions of RA 9298.
D. To prepare, adopt, issue, or amend the syllabi of the subjects for examinations.

7. Which is a correct statement concerning the FRSC?

A. The chairman must have been or is presently a senior practitioner in public accountancy.
B. A total of six representatives must come from the public practice sector of the accredited national professional
organization.
C. It is created within 60 days upon the effectivity of the IRR to RA 9298.
D. The Bureau of Internal Revenue has one representation in the Council.

8. All registered CPAs whose names appear in the roster of CPAs shall be united and integrated through their
membership in
A. a one and only registered and accredited national professional organization of registered and licensed CPAs,
which shall be registered with SEC as a nonprofit corporation and recognized by the Board, subject to the
approval of the chairman of BOA.
B. a one and only registered and accredited national professional organization of registered and licensed CPAs,
which shall be registered with SEC as a nonprofit corporation and recognized by the Board, subject to the
approval by the Commission.
C. a one and only registered and accredited national professional organization of registered and licensed CPAs,

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which shall be registered with SEC as a profit corporation and recognized by the Board, subject to the approval
of the President of the Philippines.
D. a one and only registered and accredited national professional organization of registered and licensed CPAs,

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which shall be registered with SEC as a nonprofit partnership and recognized by the Board, subject to the
approval by the Commission

9. The 1986 Constitution provides that the Chairman and Commissioners of the Commission on Audit shall be
A. All lawyers
B. All Certified Public Accountants
C. Two lawyers and one CPA ev
D. One or two lawyers and one or two CPAs for a total of three
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10. Which of the following agencies is least likely to affect the public accounting profession?
A. Department of Trade and Industry
B. Insurance Commission
C. Bangko Sentral ng Pilipinas
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D. Bureau of Internal Revenue

11. This is the distinguishing mark of the accountancy profession as noted in the 2018 Code of Ethics
A. Acceptance of the responsibility to act in the public interest
B. Ability to sign audit reports of clients in various industries
C. Satisfaction of the needs of an individual client or employing organization
D. Competence and capability to execute and conform with auditing and accounting standards
C

12. The following actions shall be taken when a professional accountant identifies a breach of the provisions of the Code
except
A. Evaluate the significance and impact of the breach on compliance with fundamental principles
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B. Take whatever actions to address the consequences

C. Determine whether to report it to relevant parties
D. End the employment or engagement immediately

13. This is a fundamental principle of ethics which is characterized as “to comply with relevant laws and regulations and
avoid any conduct that the professional accountant knows or should know might discredit the profession.”
A. Integrity
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B. Objectivity
C. Professional Behavior
D. Professional Competence and Due Care

14. The principle of objectivity would still be complied with if the professional judgment is affected by
A. Bias
B. Undue influence
C. Conflict of interest
D. Sufficient appropriate evidence

15. The reasonable and informed third-party test

A. Considers whether different conclusions would likely be reached by the other party
B. Is based on facts and events subsequent to the conclusion reached
C. Needs to be from a professional accountant
D. Is from a perspective that weighs all relevant facts and circumstances

16. The accountant shall eliminate or reduce threats to compliance with fundamental principles to an acceptable level
through the following except
A. Eliminating the circumstances, including interests or relationships, that are creating the threats
B. Reporting the threat to the relevant regulatory authority
C. Applying safeguards, where available and capable of being applied, to reduce the threats to an acceptable level
 D. Declining or ending the specific professional activity

17. What threat might be created when a professional accountant regularly takes a customer or supplier to a sporting
event
A. Self-interest threat
B. Self-review threat
C. Familiarity threat
D. Intimidation threat

18. If a professional accountant pays or receives a referral fee or receives a commission relating to a client, a self-
interest threat to which principles is created?
A. Objectivity and professional competence and due care
B. Confidentiality and integrity
C. Professional behavior and professional competence and due care
D. Professional competence and due care and integrity

19. Which of the following fee arrangements would violate the Code of Professional Ethics?
A. A fee based on the approval of a bank loan.
B. A fee based on the outcome of a bankruptcy proceeding.
C. A per-hour fee that includes out-of-pocket expenses.
D. A fee based on the complexity of the engagement.

20. The term professional accountant in public practice includes the following, except

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A. A sole proprietor providing professional services to a client.
B. Each partner or person occupying a position similar to that of a partner staff in a practice providing professional
services to a client.

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C. Professional accountants employed in the public sector having managerial responsibilities.
D. A firm of professional accountants in public practice.

21. Assurance engagement

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A. Is an engagement in which a practitioner is engaged to issue, or does issue, a written communication that
expresses a conclusion about the reliability of a written assertion that is the responsibility of another party.
B. Is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic
actions and events to ascertain the degree of correspondence between those assertions and established criteria
and communicating the results to interested users.
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C. Is an engagement in which the auditor provides a moderate level of assurance that the information subject to
the engagement is free of material misstatement.
D. Is an engagement intended to enhance the credibility of information about a subject matter by evaluating
whether the subject matter conforms in all material respects with suitable criteria, thereby improving the
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likelihood that the information will meet the needs of an intended user.

22. One of the elements of an assurance engagement is the appropriate subject matter. For the subject matter to
be considered appropriate, it
I. May or may not be identifiable, and capable of consistent evaluation or measurement against the identified
criteria.
II. Can be subjected to procedures for gathering sufficient appropriate evidence to support a reasonable assurance
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or limited assurance conclusion, as appropriate

A. I only
B. II only
C. Both I and II
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D. Neither I nor II

23. The measure of the quantity of evidence

A. Appropriateness
B. Sufficiency
C. Relevance
D. Reliability
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24. It refers to the level of auditor's satisfaction as to the reliability of an assertion being made by one party for use by
another party.
A. Confidence level
B. Reliability level
C. Assurance level
D. Tolerable level

25. Which of the following is not a component of engagement risk?

A. Control risk
B. Business risk
C. Inherent risk
D. Detection risk

26. Which is incorrect regarding the responsible party?

A. The responsible party and the intended party should not be from the same entity
B. The responsible party may be one of the intended users and may or may not be the engaging party
C. The responsible party ordinarily provides the practitioner with a written representation
D. The responsible party may be responsible for the subject matter information and may also be responsible
for the subject matter
27. Evidence is more reliable when it is obtained from ____________
A. Internal sources within the entity
B. Independent sources outside of the entity
C. Internal sources outside of the entity
D. Independent sources inside the entity

28. Which of the following primarily refers to the relevance and reliability of evidence?
A. Sufficiency
B. Appropriateness
C. Adequacy
D. Suitability

29. Which of the following statements is/are correct?

I. Audit is an assurance engagement while review is not.
II. More procedures are performed by a practitioner in a review than in an audit
A. I only
B. II only
C. Both I and II
D. Neither I nor II

30. Which of the following statements is/are correct?

I. Responsible parties and intended users may be from the same entity.
II. Responsible parties and intended users may be from different entities.

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A. I only
B. II only
C. Both I and II

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D. Neither I nor II

END OF QUIZ

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