Module 1 Exercises - AT Answers To Chap 1 To 3

ANSWER KEY – CHAPTER 1 : Fundamentals of Assurance Services
1-1
1 TRUE
2 TRUE
3 FALSE Assurance refers to the practitioner’s satisfaction
4 TRUE
5 FALSE There are five, not six, elements
6 FALSE The responsible party and the intended user need not be from separate organizations.
7 TRUE The term practitioner is broader in scope compared to the term auditor.
8 FALSE A professional accountant shall not agree to perform an assurance engagement which
they are not competent to carry out.
9 TRUE
1 FALSE The intended user may be the one who engages the professional accountant.
0
1 FALSE See note in number 10. The intended user is the person or class of persons for whom the
1 practitioner prepares the report.
1 TRUE
2
1 TRUE
3
1 TRUE
4
1 FALSE The criteria in an FS audit is PFRS or GAAP.
5
1 FALSE Appropriateness refers to quality, while sufficiency refers to quantity...
6
1 FALSE Evidence obtained directly by the practitioner is more reliable...
7
1 FALSE The practitioner expresses a conclusion that provides a level of assurance...
8
1 FALSE This statement describes a direct reporting assurance engagement.
9
2 TRUE
0
2 FALSE Absolute assurance is generally not attainable...
1
2 FALSE CPAs may perform non-assurance engagements.
2
2 FALSE Agreed-upon procedures lack a written assurance report or conclusion. It is a
3 non-assurance engagement.
2 FALSE Compliance audits are classified as assurance engagements.
4
2 TRUE
5
1-2
1 A
2 C
3 B Engagement process is an element according to the superseded PSA 100.
4 D Auditors must be alert regarding inconsistent evidence
5 B
6 C
7 D Subject matter may include financial or non-financial information, physical characteristics,
systems and processes, and behavior.
8 A
9 D Sufficiency is an attribute of audit evidence.
1 A Efficiency and effectiveness may involve subjective factors.
0
1 C
1
1 C
2
1 D Compilations are non-assurance engagements.
3
1 B Choice C refers to Business Risk Assessment service.
4
1 C
5
1 D
6
1 A
7
1 A
8
1 B
9
2 D
0
ANSWER KEY – CHAPTER 2 : Audits of Financial Statements : An Introduction
2-1
1 TRUE
2 FALSE ...complied with generally accepted accounting principles or PFRS
3 FALSE This refers to operational audits.
4 FALSE Preparation of financial statements is the responsibility of management.
5 TRUE
6 FALSE An audit aids in the communication of economic data because it provides reasonable
assurance that the financial statements are fairly stated.
7 FALSE The financial statements remain management’s responsibility.
8 TRUE
9 TRUE
1 TRUE
0
1 FALSE The most cost-beneficial option to reduce information risk is to have the financial
1 statements audited.
1 FALSE An audit does not provide assurance regarding the prevention of fraud.
2
1 TRUE
3
1 FALSE The auditor of the past focused on detecting fraud, while the auditor of today focused on
4 expressing an opinion on the fairness of financial statements.
1 TRUE
5
1 FALSE The rules and regulations are set by a higher authority (such as legislation).
6
1 TRUE Note however, that external auditing may also refer to operational audits and compliance
7 audits that are performed by independent auditors.
1 TRUE
8
1 FALSE Internal audits are intended to serve the needs of management, not to aid the external
9 auditor.
2 FALSE The major beneficiary of internal audits is management.
0
2 FALSE
1
2 FALSE Auditing requires that data should be verifiable.
2
2 TRUE
3
2 TRUE
4
2 FALSE The main difference between auditors and accountants is the ability to gather and
5 evaluate evidence.
2-2
1 D Degree of correspondence between assertions and established criteria.
2 C
3 D
4 D
5 B This refers to the completeness assertion
6 B
7 B
8 B
9 C
1 D
0
1 C
1
1 B Choice A is wrong because independent auditing is not a branch of accounting. Choice C
2 refers to accounting. Choice D is incorrect because auditing cannot assure the accuracy
of financial statements.
1 A
3
1 A Line functions are positions that exercise decision-making powers or responsibilities.
4
1 B
5
1 A
6
1 D
7
1 B
8
1 C
9
2 C
0
2 B
1
2 A Information risk is the likelihood that information presented is false or misleading.
2
2 B The best reason for audits is the conflict of interest between preparers and users of
3 financial statements.
2 B Choice B refers to the objective of a financial statement audit, not a reason for audits.
4
2 C
5
2 B Statement 1 is false because CPAs have as their primary responsibility the performance of
6 the audit function on published financial statements of publicly traded corporations.
2 B
7
2 C
8
2 D
9
3 B Some evidence supporting peso representations in the financial statements must be
0 obtained by oral or written representation of management.
ANSWER KEY – CHAPTER 3 : The Professional Practice of Accounting

3-1
1 FALSE
2 FALSE Should be RA 9298
3 FALSE There are 10 signatories, all members of ASEAN, of the MRA.
4 FALSE The CPA teaching is practicing the profession in the education sector.
5 FALSE ...has paid-up capital of at least FIVE million and/or annual revenue of at least TEN
million.
6 FALSE A CPA may practice in more than one sector, provided such practice does not impair the
quality of services rendered in all sectors involved.
7 FALSE The FRSC is the official accounting standard setting body in the Philippines. For auditing
standards in the Philippines, the Auditing and Assurance Standards Council is the
responsible body.
8 TRUE
9 FALSE The BOA consists of a chairman and six members, all appointed by the Philippine
President.
1 TRUE While the IRR to RA 9298 says 15 national directors, there are 25 actual national
0 members.
1 TRUE
1
1 FALSE Such candidate shall be required to take a refresher course of at least 24 units of subject
2 given in the CPA Board exams. After the refresher course, the candidate may be allowed
to take the CPA Board Exams again.
1 FALSE The CPA certificate is a one-time issuance only. The professional identification card shall
3 be renewed every 3 years.
1 FALSE Generally, foreign CPAs are not allowed to practice in the Philippines.
4
1 TRUE
5
1 FALSE Only the courts of law can mete out imprisonment sentences.
6
1 TRUE
7
1 FALSE This refers to integrity.
8
1 FALSE PSAs contain basic principles and essential procedures...
9
2 TRUE A CPA shall earn 120 CPD units beginning 2019; 100 CPD units during 2018.
0
2 FALSE Practice Statements, while having authority, serve only as providers of technical guidance
1 in implementing the requirements of PSAs.
2 FALSE The minimum CPD units per year of 15, not 20 units, is no longer required by PRC.
2
2 FALSE Permanent exemption shall be granted upon reaching age 65.
3
2 FALSE The PRC CPE Council...
4
2 FALSE PD 692 has already been superseded by Republic Act No. 9298, the Philippine
5 Accountancy Act of 2004
3-2
1 D
2 D
3 C
4 D To be considered as practicing the profession, the CPA must be using his/her knowledge
or expertise in accounting.
5 A
6 C Fundamental principles refer to ethical requirements that must be complied with in all
engagements of the CPA. Independence, while being an ethical requirement, is not
necessary in some CPA services (such as compilation of financial statements).
7 D
8 C Representation of clients before government agencies on tax and other matters must be
related to accounting.
9 A
1 C
0
1 B
1
1 A
2
1 D Must not have any pecuniary interest, direct or indirect...
3
1 B
4
1 D
5
1 D
6
1 C
7
1 A
8
1 B Tolerance of violations of the Philippine Accountancy Act is a ground for suspension or
9 removal of a member of the BOA.
2 D
0
2 C
1
2 C
2
2 D
3
2 C
4
2 B
5
2 A Naturalized Filipino citizens may take the CPA Board Exams.
6
2 B
7
2 C
8
2 A
9
3 B
0
3 D
1
3 A
2
3 B
3

Module 1 Exercises - AT Answers To Chap 1 To 3

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Module 1 Exercises - AT Answers To Chap 1 To 3

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ANSWER KEY – CHAPTER 1 : Fundamentals of Assurance Services

ANSWER KEY – CHAPTER 3 : The Professional Practice of Accounting

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