Question 1

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Match the terms to their definition.
A structured representation of historical financial
information, including related notes, intended to
communicate an entity’s economic resources or Answer 1
obligations at a point in time or the changes Financial statements
 
therein for a period of time in accordance with a
financial reporting framework
The person(s) or organization(s) (e.g., a corporate
trustee) with responsibility for overseeing the Answer 2
strategic direction of the entity and obligations Those charged w ith governance
 
related to the accountability of the entity.
a financial reporting framework that requires
compliance with the requirements of the
framework and: (i) Acknowledges explicitly or
implicitly that, to achieve fair presentation of the
financial statements, it may be necessary for
management to provide disclosures beyond those
Answer 3
specifically required by the framework; or (ii) Fair presentation framew ork
Acknowledges explicitly that it may be necessary  
for management to depart from a requirement of
the framework to achieve fair presentation of the
financial statements. Such departures are expected
to be necessary only in extremely rare
circumstances.
The risk that the auditor expresses an inappropriate
Answer 4
audit opinion when the financial statements are Audit risk
materially misstated.  
The person or persons conducting the audit,
usually the engagement partner or other members Answer 5
of the engagement team, or, as applicable, the Auditor
 
firm.
Information expressed in financial terms in Answer 6
relation to a particular entity, derived primarily
from that entity’s accounting system, about
economic events occurring in past time periods or Historical financial information
 
about economic conditions or circumstances at
points in time in the past.
The person(s) with executive responsibility for the Answer 7
conduct of the entity’s operations. Management
 
Information used by the auditor in arriving at the
Answer 8
conclusions on which the auditor’s opinion is Audit evidence
based.  
The financial reporting framework adopted by
management and, where appropriate, those
charged with governance in the preparation and
Answer 9
presentation of the financial statements that is Philippine Standards on Auditing
acceptable in view of the nature of the entity and  
the objective of the financial statements, or that is
required by law or regulation
The application of relevant training, knowledge
and experience, within the context provided by
auditing, accounting and ethical standards, in Answer 10
making informed decisions about the courses of Professional judgment
 
action that are appropriate in the circumstances of
the audit engagement
The risk that the procedures performed by the
auditor to reduce audit risk to an acceptably low
Answer 11
level will not detect a misstatement that exists and Detection risk
that could be material, either individually or when  
aggregated with other misstatements
A difference between the amount, classification,
presentation, or disclosure of a reported financial
statement item and the amount, classification, Answer 12
presentation, or disclosure that is required for the Misstatement
 
item to be in accordance with the applicable
financial reporting framework
The risk that the financial statements are Answer 13
materially misstated prior to audit. Audit risk
 
An attitude that includes a questioning mind, being
alert to conditions which may indicate possible Answer 14
misstatement due to error or fraud, and a critical Professional skepticism
 
assessment of audit evidence
The measure of the quality of audit evidence; that Answer 15
is, its relevance and its reliability in providing
support for the conclusions on which the auditor’s Appropriateness of audit evidence
 
opinion is based
In the context of an audit of financial statements, a Answer 16
high, but not absolute, level of assurance Reasonable assurance
 
Answer 17
The measure of the quantity of audit evidence Sufficiency of audit evidence
 
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Your answer is partially correct.
You have correctly selected 15.
The correct answer is:
A structured representation of historical financial information, including
related notes, intended to communicate an entity’s economic resources or
obligations at a point in time or the changes therein for a period of time in
accordance with a financial reporting framework → Financial statements,
The person(s) or organization(s) (e.g., a corporate trustee) with responsibility
for overseeing the strategic direction of the entity and obligations related to
the accountability of the entity. → Those charged with governance,
a financial reporting framework that requires compliance with the
requirements of the framework and: (i) Acknowledges explicitly or implicitly
that, to achieve fair presentation of the financial statements, it may be
necessary for management to provide disclosures beyond those specifically
required by the framework; or (ii) Acknowledges explicitly that it may be
necessary for management to depart from a requirement of the framework to
achieve fair presentation of the financial statements. Such departures are
expected to be necessary only in extremely rare circumstances. → Fair
presentation framework,
The risk that the auditor expresses an inappropriate audit opinion when the
financial statements are materially misstated. → Audit risk,
The person or persons conducting the audit, usually the engagement partner
or other members of the engagement team, or, as applicable, the firm. →
Auditor,
Information expressed in financial terms in relation to a particular entity,
derived primarily from that entity’s accounting system, about economic
events occurring in past time periods or about economic conditions or
circumstances at points in time in the past. → Historical financial
information,
The person(s) with executive responsibility for the conduct of the entity’s
operations. → Management,
Information used by the auditor in arriving at the conclusions on which the
auditor’s opinion is based. → Audit evidence,
The financial reporting framework adopted by management and, where
appropriate, those charged with governance in the preparation and
presentation of the financial statements that is acceptable in view of the
nature of the entity and the objective of the financial statements, or that is
required by law or regulation → Applicable financial reporting framework,
The application of relevant training, knowledge and experience, within the
context provided by auditing, accounting and ethical standards, in making
informed decisions about the courses of action that are appropriate in the
circumstances of the audit engagement → Professional judgment,
The risk that the procedures performed by the auditor to reduce audit risk to
an acceptably low level will not detect a misstatement that exists and that
could be material, either individually or when aggregated with other
misstatements → Detection risk,
A difference between the amount, classification, presentation, or disclosure
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 → Misstatement,
The risk that the financial statements are materially misstated prior to audit.
→ Risk of material misstatement,
An attitude that includes a questioning mind, being alert to conditions which
may indicate possible misstatement due to error or fraud, and a critical
assessment of audit evidence → Professional skepticism,
The measure of the quality of audit evidence; that is, its relevance and its
reliability in providing support for the conclusions on which the auditor’s
opinion is based → Appropriateness of audit evidence,
In the context of an audit of financial statements, a high, but not absolute,
level of assurance → Reasonable assurance,
The measure of the quantity of audit evidence → Sufficiency of audit
evidence