Description : The term used to refer to acts of omission or commission by the entity being audited, either intentional or unintentional, which are contrary to the prevailing laws and regulations is a. Misappropriation. b. Fraud. c. Illegal acts. d. Noncompliance
Last Answer : Noncompliance
Description : While assessing the risk of material misstatement, the auditors identity risks, relate risk to what could go wrong, consider the magnitude of risks and: a. Assess the risk of ... Consider the likelihood that the risks could result in material misstatements. d. Determine materiality level.
Last Answer : Consider the likelihood that the risks could result in material misstatements
Description : When management refuses to disclose in the financial statements noncompliance to laws and regulations which are identified by the independent auditor, the CPA may be charged with unethical conduct for ... and regulations during the prior audits. d. Reporting these activities to the audit committee.
Last Answer : Issuing a disclaimer of opinion
Description : An audit made in accordance with Philippine Standards on Auditing generally should a. Be expected to provide assurance that noncompliance with laws and regulations will be detected if the internal ... relied upon to provide assurance that all noncompliance with laws and regulations will be detected
Last Answer : Not be relied upon to provide assurance that all noncompliance with laws and regulations will be detected
Description : Generally, the decision to notify parties outside the client's organization regarding a noncompliance with laws and regulations a. Independent auditor. b. Management. c. Outside legal counsel. d. Internal auditors.
Last Answer : Management
Description : Required auditor communication to the Audit Committee concerning noncompliance with laws and regulations that were detected includes: a. All those which are not adequately addressed by management. b. All those that constitute management fraud. c. All material items. d. Any of such acts.
Last Answer : Any of such acts.
Description : The term noncompliance as used in PSA 250 refers to acts of omission or commission by the entity being audited, either intentional or unintentional, which are contrary to the prevailing laws ... misconduct (unrelated to the business activities of the entity) by the entity's management or employees
Last Answer : Personal misconduct (unrelated to the business activities of the entity) by the entity’s management or employees
Description : The responsibility for the detection and prevention of noncompliance with laws and regulations rests with a. The auditor b. The client's legal counsel c. The auditor’s legal counsel d. The client management
Last Answer : The client management
Description : Material misstatements in financial statements may arise from all of the following except a. Fraud b. Error c. Limitations of the audit d. Noncompliance with laws and regulations
Last Answer : Limitations of the audit
Description : The responsibility for the detection and prevention of errors, fraud and noncompliance with laws and regulations rests with: a. Auditor b. Client's legal counsel c. Internal auditor d. Client management
Last Answer : Client management
Description : What is the responsibility of an auditor who is engaged to audit the financial statements of a government entity? a. Assess control risk with respect to each component of internal ... the statements are free of material misstatements resulting from illegal acts having direct or indirect effects
Last Answer : Obtain an understanding of the possible financial statement effects of laws and regulations having direct and material effects on amounts reported.
Description : An intentional act by one or more individuals among management, employees, or third parties which results in misrepresentation of financial statements refers to a. Illegal acts b. Error c. Fraud d. Noncompliance
Last Answer : Fraud
Description : When planning the audit, if the auditor has no reason to believe that illegal acts exist, the auditor should a. Include audit procedures which have a strong probability of detecting illegal ... c. Still include some audit procedures designed specifically to uncover illegalities. d. Ignore the topic
Last Answer : Make inquiries of management regarding their policies and regarding their knowledge of violations, and then rely on normal audit procedures to detect errors, irregularities, and illegalities
Description : When planning the audit, if the auditor has no reason to believe that illegal acts exist, the auditor should a. Make inquiries of management regarding their policies and their knowledge of ... Ignore the topic. d. Include audit procedures which have a strong probability of detecting illegal acts
Last Answer : Make inquiries of management regarding their policies and their knowledge of violations, and then rely on normal audit procedures to detect errors, irregularities, and illegalities
Description : Fraudulent financial reporting is often called: a. Theft of assets b. Employee fraud c. Management fraud d. Defalcation
Last Answer : Management fraud
Description : Fraudulent financial reporting is often called a. Misappropriation or theft of assets b. Management fraud c. Defalcation d. Employee fraud
Description : Which of the following is an example of an error? a. Defalcation b. Misapplication of accounting policies. c. Suppression or omission of the effects of transactions from the records or documents. d. Recording of transactions without substance
Last Answer : Misapplication of accounting policies.
Description : Criteria that are embodied in laws or regulations, or issued by authorized or recognized bodies of experts that follow a transparent due process are called: a. Suitable criteria b. General criteria c. Established criteria d. Specifically developed criteria
Last Answer : Established criteria
Description : Financial statements audits: a. Reduce the cost of capital b. Report on compliance with laws and regulations c. Assess management's efficiency d. Overlook information risk
Last Answer : Reduce the cost of capital
Description : The criteria to be used for a particular engagement can either be established or specifically developed. Established criteria are those a. Designed for the purpose of the engagement. b. Embodied in laws or ... c. Made available to the intended users. d. Not made available to the intended users.
Last Answer : Embodied in laws or regulations or issued by authorized or recognized bodies of experts that follow a transparent due process
Description : Which of the following types of audit uses as its criteria laws and regulations? a. Financial statement audit b. Operational audit c. Compliance audit d. Financial audi
Last Answer : Compliance audit
Description : The principle professional competence and due care imposes which of the following obligations on professional accountants? a. To maintain professional knowledge and skill at the level required to ensure that a ... , conflict of interest or undue influence of others. d. To be fair and truthful.
Last Answer : To maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service.
Description : Which of the following types of audit uses laws and regulations as its criteria? a. Operational audit b. Financial statement audit c. Compliance audit d. Performance audit
Description : The review of unaudited financial statements consists of: a. Inquiry of management and analytical procedures. b. Inquiry of management and documentation of internal controls. c. Analytical ... and compliance with laws and regulations. d. Internal control evaluation and management representation.
Last Answer : Inquiry of management and analytical procedures
Description : The auditor's responsibility for failure to detect fraud arises a. Whenever the amounts involved are material. b. When such failure clearly results from noncompliance to generally accepted auditing ... part of the auditor. d. Only when the examination was specifically designed to detect fraud
Last Answer : When such failure clearly results from noncompliance to generally accepted auditing standards.
Description : Auditor’s responsibility for detecting noncompliance is limited to those: a. Direct-effect noncompliance. b. Material direct-effect noncompliance. c. Material indirect-effect noncompliance. d. All noncompliance since they affect the financial statements directly or indirectly
Last Answer : Material direct-effect noncompliance
Description : The ordinary examination of financial statements is not primarily designed to disclose defalcations and other irregularities although their discovery may result. Normal audit procedures are more likely to ... . Failure to record cash receipts for services rendered. d. Forgeries on company checks
Last Answer : Theft of inventories
Description : Which of the following statements is true? a. It is usually easier for the auditor to uncover irregularities than errors. b. It is usually easier for the auditor to uncover errors than ... the auditor to uncover errors or irregularities. d. Usually, none of the given statements is true
Last Answer : It is usually easier for the auditor to uncover errors than irregularities
Description : The ordinary examination of financial statements is not primarily designed to disclose defalcations and other irregularities although their discovery may result. Normal audit procedures are more likely to ... receipts for services rendered. c. Forgeries on company checks. d. Theft of inventories
Description : Which of the following statements is true? a. It is usually equally difficult for the auditor to uncover errors or irregularities. b. It is usually easier for the auditor to uncover irregularities ... auditor to uncover errors than irregularities. d. Usually, none of the above statements is true.
Last Answer : It is usually easier for the auditor to uncover errors than irregularities.
Description : Auditors focus on a. Areas where the risk of material errors and irregularities is least. b. Areas where the risk of material errors and irregularities is greatest. c. All areas equally. d. A random selection of all areas
Last Answer : Areas where the risk of material errors and irregularities is greatest
Description : Audit programs generally include procedures to test actual transactions and resulting balances. These procedures are primarily designed to a. Detect irregularities that result in misstated financial ... control. c. Gather corroborative evidence. d. Obtain information of informative disclosures
Last Answer : Gather corroborative evidence
Description : Which of the following is an incorrect statement relating to the theoretical framework of auditing? a. Effective internal control structure reduces the probability of fraud or irregularities in ... collecting evidence, auditors should maintain an attitude of trust about their clients' assertions.
Last Answer : In collecting evidence, auditors should maintain an attitude of trust about their clients' assertions.
Description : The overriding objective of the International Auditing Standards that are issued by the International Auditing Practices Committee of the IFAC is a. To override a country's regulations governing ... audit procedures that are acceptable worldwide. d. To replace generally accepted auditing standards.
Last Answer : To improve the uniformity of auditing practices and related services throughout the world
Description : The overriding objective of the International Auditing Standards that are issued by the International Auditing Practices Committee of the IFAC is a. To override a country's regulations ... specific audit procedures that are acceptable worldwide. d. To replace generally accepted auditing standards
Last Answer : To improve the uniformity of auditing practices and related services throughout the world.
Description : Which of the following is not a function of the Board of Accountancy as specified in the Philippine Accountancy Act of 2004? a. To investigate violations of the Accountancy Law ... determine and prescribe minimum requirements leading to the admission of candidates to the CPA licensure examination
Last Answer : To create and direct accrediting agencies that are entrusted the functions of reviewing higher educational institutions' policies and practices leading to accreditation/reaccreditation of BSA program.
Description : Which of the following best describes why publicly-traded corporations follow the practice of having the outside auditor appointed by the board of directors or elected by the stockholders? a. ... opportunity to voice their opinion concerning the quality of the auditing firm selected by the director
Last Answer : To emphasize auditor independence from the management of the corporation
Description : The criteria for evaluating quantitative information vary. For example, in the audit of historical financial statements by CPA firms, the criteria are usually: a. Generally accepted auditing ... Regulations of the Securities and Exchange Commission d. Regulations of the Bureau of Internal Revenue
Last Answer : Acceptable financial reporting framework
Description : Which of the following is not an objective of requiring registration of individual CPAs and Firms of partnership of CPAs engaged in public accounting practice? a. The required registration will ... will help PRC and BOA to identify and impose corresponding sanctions and penalties on individual CPAs
Last Answer : The required registration will give equal opportunities to CPAs in the practice of their profession.
Description : Which of the following is more difficult to evaluate objectively? a. Compliance with government regulations b. Efficiency and effectiveness of operations c. All of the above are equally difficult d. Presentation of financial statements in accordance with the PFRS
Last Answer : Efficiency and effectiveness of operations
Description : Foreign CPAs a. Are allowed to practice accountancy in the Philippines without restriction. b. Are never allowed to practice accountancy in the Philippines. c. May be allowed to practice ... be allowed to practice accountancy in the Philippines, subject to the rules and regulations on reciprocity
Last Answer : May be allowed to practice accountancy in the Philippines, subject to the rules and regulations on reciprocity
Description : The criteria for evaluating quantitative information vary. For example, in the case of an independent audit of financial statements by CPA firms, the criteria are usually the: a. ... Financial Reporting Standards c. National Internal Revenue Code d. Securities and Exchange Commission Regulations
Last Answer : Philippine Financial Reporting Standards
Description : Which of the following statements is true? a. An independent auditor must be a CPA. b. Compliance audits are conducted to determine adherence to rules and regulations set by the auditor. c. ... s report, the primary responsibility on the fairness of the financial statements is shifted to the auditor
Last Answer : An independent auditor must be a CPA.
Description : The National Educational Policy of 1979, recommended also about the public schools Options: A) their uniquencies and traditions have to preserved the interests of the best talents of the country B) they ... D) suitable ratio has to be maintained for admission of middle class and poor student also.
Last Answer : D) suitable ratio has to be maintained for admission of middle class and poor student also.
Description : When the auditor knows that an illegal act has occurred, the auditor must a. Issue an adverse opinion. b. Withdraw from the engagement. c. Report it to the proper government authorities. d. Consider the effects on the financial statements, including the adequacy of disclosure.
Last Answer : Consider the effects on the financial statements, including the adequacy of disclosure.
Description : .If specific information comes to an auditor's attention that implies the existence of possible illegal acts that could have a material, but indirect effect on-the financial statements, the auditor ... d. Discuss the evidence with the client's audit committee, or others with equivalent authority.
Last Answer : Apply audit procedures specifically directed to ascertaining whether an illegal act has occurred
Description : Which of the following statements is correct concerning the auditor's responsibility with respect to illegal acts? a. An auditor must design tests to detect both direct-effect and indirect- ... auditor must design tests to detect both material direct-effect and material indirect-effect illegal acts
Last Answer : An auditor must design tests to obtain reasonable assurance of detecting material direct-effect illegal acts.
Description : An auditor's examination performed in accordance with generally accepted auditing standards generally should a. Be expected to provide assurance that illegal acts will be detected where internal control is ... aspects. d. Not be relied upon to provide assurance that illegal acts will be detected
Last Answer : Not be relied upon to provide assurance that illegal acts will be detected
Description : Which of the following most accurately summarizes what is meant by the term material misstatement? a. Fraud and direct-effect illegal acts. b. Fraud involving senior management and material fraud. ... error, material fraud, and certain illegal acts. d. Material error and material illegal acts.
Last Answer : Material error, material fraud, and certain illegal acts.
Description : Which of the following relatively small misstatements most likely could have a material effect on an entity's financial statements? a. A piece of obsolete office equipment that was not retired. ... that was not properly authorized. d. An uncollectible account receivable that was not written off.
Last Answer : An illegal payment to a foreign official that was not recorded.