Auditing Theory: Review of Audit Process
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Auditing Theoryrae
Introduction to Assurance and Non-assurance Engagements
1.Which of the following Philippine Standards are to be applied to compilation engagements, agreed-upon procedures and
other related standards as specified by the AASC?
a.PSAsb. PSREsc. PSAEsd. PSRSs
2.These are issued to provide interpretative guidance and practical assistance to professional accountants in implementing
PSAs and to promote good practice.
a. Practice statementsb. PREPSs, and PRSPSsc. PAPSs and PREPSsd. PAPSs
3.Assurance engagement
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.
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 likelihood that the
information will meet the needs of an intended user.
4.The single feature that most clearly distinguishes auditing, attestation, and assurance is
a.Type of service.c. Training required to perform the service
b.Scope of services.d. CPA's approach to the service
5.It refers to the auditor's satisfaction as to the reliability of an assertion being made by one party for use by another party.
a.Confidenceb. Reasonableness c. Assuranced. Tolerable
6.The three types of attestation services are:
a.Audits, review, and compilations
b.Audits, compilations, and other attestation services
c.Reviews, compilations, and other attestation services
d.Audits, reviews, and other attestation services
7.Assurance engagement include the following, except
a.An engagement conducted to provide a high level of assurance that the subject matter conforms in all material
respects with identified suitable criteria.
b.An engagement conducted to provide a moderate level of assurance that the subject matter is plausible in the
circumstances.
c.An engagement in accordance with the PhilippineStandard on Assurance Engagement[s] issued by the Auditing and
Assurance Standard Council as approved by the Board of Accountancy/Professional Regulation Commission.
d.An engagement to perform agreed-upon procedures.
8.Which of the following is an objective of a review engagement?
a.Expressing a positive opinion that the financial information is presented in conformity with generally accepted
accounting principles.
b.Expressing a limited assurance to users who have agreed as to procedures that will be performed by the CPA.
c.Reporting whether material modifications should be made to such financial statements to make them conform with
generally accepted accounting principles.
d.Reporting that the financial statements, in all materials respects, fairly present the financial position and operating
results of the client.
9.Not all engagements performed by professional accountants are assurance engagements. Other engagements
frequently performed by professional accountants that are not assurance engagements include the following, except
a.Agreed-upon proceduresc. Management consulting
b.Compilation of financial or other informationd. Examination of prospective financial information
10.Unlike consulting services, assurance services:
a.Make recommendations to managementc. Report on quality information
b.Report on how to use informationd. Are two-party contracts
11.The primary goal of the CPA in performing the attest function is to
a. Detect fraud
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AT by Raymund Francis A. Escala, CPA, MBA AT – 11th Batch – HQ02