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ACC 139: Auditing and Assurance Student number: _____________________

Date: _____________________
Principles Score: _____________________
SY2023-2024, First Semester
Group Quiz no. 1

Class number: _____________________

1. The independent auditor lends credibility to c. Information risk.
client financial statements by d. Risk assessment.
a. Stating in the auditor’s management
letter that the examination was made in 5. Which of the following statements is/are correct?
accordance with PSAs. I. Assurance engagement means an
b. Maintaining a clear-cut distinction engagement in which a practitioner
between the management’s and the expresses a conclusion designed to
auditor’s representations. enhance the degree of confidence of the
c. Attaching an auditor’s opinion to the intended users other than the responsible
client’s FS. party about the outcome of the evaluation
d. Testifying under oath about client or measurement of a subject matter
financial information. against criteria.
II. Assurance refers to the practitioner’s
2. Which of the following statements refers to the satisfaction with the reliability of an
definition of auditing? assertion being made by one party for use
a. A service activity which function is to by another party.
provide quantitative information primarily
financial in nature about economic a. I only
enttites that is intended to be useful in b. II only
making economic decisions. c. Both I and II
b. The art of recording, classifying, and d. Neither I nor II
summarizing in a significant manner and
in terms of money, transactions and 6. Which statement does not accurately describe
events which are in part at least of a an assurance engagement?
financial character and interpreting the a. The objective of an assurance
results thereof. engagement is for a professional
c. The process of identifying, measuring, accountant to evaluate or measure a
and communicating economic subject matter that is he responsibility of
information to permit informed judgment another party against identified suitable
and decisions by users of the criteria, and to express a conclusion that
information. provides the intended user with a level
d. A systematic process of objectively of assurance about the subject matter.
obtaining and evaluating evidence b. Not all engagements performed by
regarding assertions about economic professional accounts are assurance
actions and events to ascertain the engagements.
degree of correspondence between c. A particular engagement, to be an
these assertions and established criteria assurance engagement, depends upon
and communicating the results thereof. whether it exhibits all the following
elements: a two-party relationship, a
3. Which of the following statements best subject matter, suitable criteria, and a
describes assurance services? conclusion.
a. Independent professional services that d. An engagement in form of agreed-upon
are intended to enhance the credibility procedures results in the expression of
of information to meet the needs of an factual findings.
intended user.
b. Services designed to express an opinion 7. A practitioner should accept an assurance
on the fairness of historical financial engagement only if
statements based on the results of an a. The subject matter is in the form of
audit. financial information.
c. The preparation of financial statements b. The criteria to be used are not available
or the collection, classification, and to the intended users.
summarization of other financial c. The practitioner’s conclusion is to be
statements. contained in a written report.
d. Services designed for the improvement d. The subject matter is the responsibility
of operations, resulting in better of either the intended users or the
outcomes. practitioner.

4. The risk that the information presented may be 8. Independence is required for which of the
materially false and misleading is referred to as following types of engagement?
the I. Compilation
a. Business risk. II. Review
b. Client risk. a. I only
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b. II only b. Appropriateness is the measure of the

c. Both I and II quality of evidence, that is, its reliability
d. Neither I nor II and persuasiveness.
c. The reliability of evidence is influenced
9. Which is correct concerning the concept of not by its nature but by its source.
professional skepticism? d. Obtaining more evidence is influenced
a. An assumption that the responsible by its source and its nature.
party is dishonest.
b. A critical assessment, with a questioning 15. Which is incorrect concerning evidence?
mind on the validity of evidence a. The higher the risk of material
obtained. misstatement involved, the more is
c. An assumption that responsible party is required.
trustworthy. b. The better the quality, the less is
d. Disregarding contradicting information required.
against several of consistent evidence. c. The volume of evidence can
compensate for its poor quality.
10. Which of the following is incorrect regarding the d. The reliability of evidence is influenced
practitioner? by its source and its nature.
a. The term practitioner is broader than the
term auditor. 16. Which is correct concerning the framework for
b. The practitioner is governed by ethical assurance engagements?
requirements (e.g., professional a. It provides a frame of reference against
competence) regarding the conduct of which audit engagements are evaluated.
the engagements. b. It establishes specific guidelines and
c. The practitioner must be independent to procedural requirements for the
the responsible party but not necessarily performance of assurance
to the intended users. engagements.
d. The practitioner is responsible for c. It provides a frame of reference for
determining the nature, timing, or extent accountants in public practice when
of procedures required by the performing assurance engagements.
engagement. d. It is intended for reference of public
accountants only.
11. The sufficiency and appropriateness of evidence
shall be determined by the 17. What is the proper organizational role of internal
I. Practitioner auditing?
II. Responsible party a. To serve as an independent, objective
III. Intended users assurance and consulting activity that
adds value to operations.
a. I only b. To assist the external auditor in order to
b. II only reduce external audit fees.
c. I and II c. To perform studies to assist in the
d. I, II, and III attainment of more efficient operations.
d. To serve as the investigative arm of the
12. Which of the following is not an assurance audit committee of the board of
engagement? directors.
a. Audit of prospective financial statements
b. Review of interim financial statements 18. An engagement is conducted to provide: (a) a
c. Comprehensive audit high level of assurance that the subject matter
d. Preparation of tax returns that use conforms in all material respects with identified
estimates suitable criteria; or (b) a moderate level of
assurance that the subject matter is plausible in
13. Internal auditing often extends beyond the circumstances.
examinations leading to the expression of an a. Audit engagement
opinion on the fairness of financial presentation b. Reasonable assurance
and includes audits of efficiency, effectiveness, c. Review engagement
and d. Assurance engagement
a. Internal control.
b. Evaluation. 19. The auditor’s satisfaction as to the reliability of
c. Accuracy. an assertion being made by one party for use by
d. Compliance. another is called:
a. Reliance factor.
14. Which of the following statements is true b. Materiality.
concerning evidence in an assurance c. Assurance.
engagement? d. Precision.
a. Sufficiency is the measure of the
quantity of evidence. 20. Which of the following statements is incorrect?
a. Assurance services report on the quality
of information.
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b. Assurance engagements encompass b. It involves objectively obtaining and

attestation engagement. evaluating evidence about assertions.
c. Not all engagement performed by c. It ascertains the degree of
professional accountants are assurance correspondence between assertions
engagements. and established criteria.
d. Non-assurance engagements include d. It includes communication of the results
agreed-upon procedures, compilation of to the management.
financial or other information,
preparation of tax returns where no 27. The predominant type of attestation service
conclusion is expressed, tax consulting performed by CPAs is
and review engagements. a. Audit.
b. Review.
21. Assurance services differ from consulting c. Compilation.
services that they d. Management consulting.
I. Focus on providing advice
II. Involve monitoring of one party by another 28. Which of the following types of auditing is
a. I only performed most commonly by CPAs on a
b. II only contractual basis?
c. Both I and II a. Internal auditing
d. Neither I nor II b. Government auditing
c. BIR auditing
22. “Subject matter information" as used in the d. External auditing
Framework to Assurance Engagement shall
mean 29. These audits are similar in most respects.
a. The subject which is to be measured a. Operational and compliance
against suitable criteria. b. Operational and government
b. Outcome of the evaluation or c. Financial and compliance
measurement of a subject matter. d. Financial and operational
c. The assertion of the responsible party.
d. Any data relating to the subject matter to 30. The best description of the scope of internal
be measured against the criteria. auditing is that it encompasses
a. Primarily operational auditing.
23. Which of the following is an incorrect phrase? b. Primarily financial auditing.
a. Auditing is a systematic process. c. Both financial and operational auditing.
b. Auditing objectively obtains and d. Primarily the safeguarding of assets and
evaluates evidence. verifying the existence of such assets.
c. Auditing evaluates evidence regarding
assurance. 31. To maximize independence, the director of
d. Auditing communicates results to internal auditing should report to the
intended users. a. Audit committee.
b. Controller.
24. Which of the following is not true about the c. Chief financial officer.
subject matter of an assurance engagement? d. Director of information systems.
a. It is the topic about which the assurance
is conducted. 32. A responsible party does each of the following
b. It could be information such as financial except:
statements, statistical information and a. Engages a practitioner.
non-financial performance indicators. b. Selects the criteria.
c. It could be International Financial c. Determines the subject matter.
Reporting Standards. d. Selects the audit procedures.
d. It could be systems and processes or
behavior. 33. Govnernmental auditing beyond examinations
leads to the expression of opinion on the
25. Which of the following is an example of a formal fairness of financial presentation and includes
criterion/criteria? audits of efficiency, economy, effectiveness, and
I. Philippine Public Sector Accounting also
Standards a. Accuracy.
II. Number of times a committee meets in a b. Evalaution.
year c. Compliance.
d. Internal control.
a. I only
b. II only 34. Which of the following is not a theoretical
c. Both I and II postulate framing an audit?
d. Neither I nor II a. Financial data can be subjected to
verification.
26. Which of the following is not mong the b. Long-term conflict between the auditor
characteristics of auditing? and client may exist.
a. It is a systematic process c. An audit benefits the public.
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d. The auditor is independent of the client. c. Is an assurance as to the efficiency with

which management has conducted the
35. Auditing assumes that the financial data are affairs of the entity, but not
verifiable. Data are verifiable when two or more effectiveness.
qualified individuals, d. Certifies the correctness of the financial
a. Working together, can prove, beyond statements.
doubt, the accuracy of the data.
b. Working independently, each reach 41. When the auditor issues an erroneous opinion
essentially similar conclusions. as the result of an underlying failure to comply
c. Working independently, can prove, with the requirements of generally accepted
beyond reasonable doubt, the auditing standards, it results in
truthfulness of the data. I. Audit failure
d. Working together, can agree upon the II. Audit risk
accuracy of the data. III. Business failure

36. An audit of historical financial statements most a. I only

commonly includes the. b. I and II
a. Statement of cash flows, the statement c. II and III
of financial position, and the statement d. I, II, and III
of retained earnings.
b. Statement of financial position, the 42. Primary responsibility for the assertions in the
statmeent of comprehensive income, financial statements rests with the
and the statement of cash flows. a. Audit partner assigned to the
c. Statement of comprehensive income, engagaement
the statement of cash flows, and the b. Senior auditor in charge of field work
statement of net working capital. c. Staff auditor who drafts the statements
d. Statement of financial position, d. Client’s management
statement of comprehensive income,
the statement of cash flows, and the 43. The auditor communicates the results of his or
statement of changes in equity. her work through the medium of the
a. Engagement letter
37. The auditor is required to comply with all PDSs b. Management letter
relevant to the audit of an entity’s financial c. Audit report
statements. A PSA is relevant to the audit when d. Financial statements
I. The PSA is in effect.
II. The circumstances addressed by the PSA 44. Which of the following statements does not
exist. properly describe a limitation of an audit?
a. Many financial statement assertions
a. I only cannot be audited.
b. II only b. Many audit conclusions are made on the
c. Both I and II basis of examining a sample of
d. Neither I nor II evidence.
c. Some evidence supporting peso
38. An audit of historical financial statements is most representations in the financial
often performed to determine whether the: statements must be obtained by oral or
a. Organization is operating effeciently and written representations of management.
effectively. d. Fatigue and carelessness can cause
b. Entity is following specific procedures or auditors to overlook pertinent evidence.
rules set down by some higher authority.
c. Management team is fulfilling its 45. The trait that distinguishes auditors from
fiduciary responsibilities to accountants is the auditor’s:
shareholders. a. Ability to interpret accounting principles
d. None of the other choices. generally accepted in the Philippines.
b. Education beyon the bachelor’s degree.
39. Subject matter and subject matter information of c. Ability to interpret accounting and
an assurance engagement can take all of the auditing standards.
following forms except: d. Accumulation and interpretation of
a. Litigation planning evidence related to a financial
b. Physical characteristics statements.
c. Non-financial performance or conditions
d. Financial performance or conditions 46. An auditor’s overall objective in a financial
statement audit is to
40. The auditor’s opinion a. Determine that all individual accounts
a. Enhances the credibility of the financial and footnotes are fairly presented.
statements. b. Employ the audit risk model.
b. Is an assurance as to the future viability c. Express an opinion on the fair
of the entity. presentation of the financial statements.
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d. Detect all errors and fraud. 49. In the audit of historical financial statements,
which of the following accounting bases is the
47. Which of the following types of audits is most common?
performed to determine whethr an entity’s a. Regulatory accounting principles
financial statements are fairly stated in b. Cash basis accounting
conformity with generally accepted accounting c. Generally accepted accounting
principles? principles
a. Operational audit d. Liquidation basis of accounting
b. Compliance audit
c. Financial statement audit 50. Which of the following is incorrect?
d. Performance audit a. Consistent evidence obtained from
various sources or of different nature is
48. Financial statements need to be prepared in more reliable.
accordance with one, or a combination of: b. It is generally more difficult to obtain
I. Philippine Standards on Auditing assurance about subject matter
II. International Financial Reporting information at a point in time than about
Standards subject matter information covering a
III. Other authoritative or comprehensive period of time.
financial reporting framework c. When it is cost prohibitive or difficult to
IV. GAAP in the Philippines obtain an evidence, the auditor may shift
to obtain from other alternatives.
a. I, II, III, and IV d. The practitioner considers the
b. II, III, and IV relationship between cost of obtaining
c. II and IV the evidence and the usefulness of the
d. I only information.

*** End of Quiz ***

“We were born in order to see and listen to the world. It’s a powerful notion, with the potential to subtly reshape our view of
everything.”
-Durian Sukegawa, Sweet Bean Paste