The document discusses key concepts in auditing:
1. It defines the subject matter of an audit as including financial statements, economic data, assertions, and operating data.
2. It states that the primary responsibility for the fairness of financial statement representations lies with the client's management.
3. It explains that an auditor's work in forming an opinion on financial statements involves studying internal controls, obtaining evidence, and comparing recorded accountability to assets.
4. It notes that audits should be conducted in accordance with Philippine Standards on Auditing.
The document discusses key concepts in auditing:
1. It defines the subject matter of an audit as including financial statements, economic data, assertions, and operating data.
2. It states that the primary responsibility for the fairness of financial statement representations lies with the client's management.
3. It explains that an auditor's work in forming an opinion on financial statements involves studying internal controls, obtaining evidence, and comparing recorded accountability to assets.
4. It notes that audits should be conducted in accordance with Philippine Standards on Auditing.
The document discusses key concepts in auditing:
1. It defines the subject matter of an audit as including financial statements, economic data, assertions, and operating data.
2. It states that the primary responsibility for the fairness of financial statement representations lies with the client's management.
3. It explains that an auditor's work in forming an opinion on financial statements involves studying internal controls, obtaining evidence, and comparing recorded accountability to assets.
4. It notes that audits should be conducted in accordance with Philippine Standards on Auditing.
The internal auditor’s span of coverage goes beyond
1. Broadly defined, the subject matter of any audit consist of financial auditing to encompass operational and a. Financial statements performance auditing. b. Economic data c. Assertions 10. Which of the following has the primary responsibility for the d. Operating data fairness of the representations made in the financial statements? a. Client’s management 2. An audit of financial statements is conducted to determine if the b. Audit Committee a. Organization is operating efficiency and effectively c. Independent auditor b. Auditee is following specific procedures or rules set d. Board of Accountancy down by some higher authority c. Overall financial statement statements are stated in 11. An audit of the financial statements of KIA Corporation is being accordance with the applicable financial reporting conducted by an external auditor. The external auditor is framework expected to d. Client’s internal control is functioning as intended a. express an opinion as to the fairness of KIA’s financial statements. 3. Most of the independent auditor’s work in formulating an b. express an opinion as to the attractiveness of KIA for opinion on financial statement consist of investment purposes. a. Studying and evaluating internal control c. certify the correctness of KIA’s Financial Statements. b. Obtaining and examining evidential matter d. examine all evidence supporting KIA’s financial c. Examining cash transaction statements. d. Comparing recorded accountability with assets 12. Which of the following statements about independent financial 4. In financial statement audits, the audit process should be statements audit is correct? conducted in accordance with a. The audit of financial statements relieves management a. The audit program of its responsibilities for the financial statement b. Philippine standard on auditing b. An audit is designed to provide limited assurance that c. Philippine accounting standards the financial statements taken as a whole are free from d. Philippine Financial Reporting Standards material misstatement c. The procedures required to conduct an audit in 5. Which of the following best describe the operational audit? accordance with PSAs should be determined by the a. It requires the constant review by internal auditors of client who engaged the services of the auditor. the administrative controls as they relate to operations d. The auditor’s opinion is not an assurance as to the of the company. future viability of the entity as well as the b. It concentrates on implementing financial and effectiveness and efficiency with which management accounting control in a newly organized company. has conducted the affairs of the entity. c. In attempts and is designed to verify the fair presentation of a company’s results of operations. 13. The reason an independent auditor gathers evidence is to d. It concentrates on seeking out aspects of operations in a. Form an opinion on the financial statements which waste would be reduced by the introduction of b. Detect fraud controls. c. Evaluate management d. Evaluate internal controls 6. The auditor communicates the results of his or her work through the medium if the 14. An attitude that includes a questioning mind and critical a. Engagement letter assessment of audit evidence is referred to as b. Audit report a. Due professional care c. Management letter b. Professional skepticism d. Financial statement c. Reasonable assurance d. Supervision 7. Which of the following types of auditing is performed most commonly by CPA’s on a contractual basis? 15. Jack has been retained as auditor of EVC Company. The a. Internal Auditing function of Jack’s opinion on financial statements of EVC b. Income tax auditing Company is to c. Government auditing a. Improve financial decisions of company management d. External auditing b. Lend Credibility to management’s representation c. Detect fraud and abuse in management operations 8. Independent auditing can best be describe as a d. Serve requirements of BIR, SEC, or Central Bank a. Professional activity that measures and communicates financial accounting data 16. Which of the following is not one of the limitations of an audit? b. subset accounting a. The use of testing c. Professional activity that attest to the fair presentation b. Limitations imposed by client of financial statement c. Human error d. Regulatory activity that prevents the issuance of d. Nature of evidence that the auditor obtains improper financial information 17. Which of the following statements does not properly describe a 9. Which of the following statements is not a distinction between limitation of an audit? independent auditors and internal auditors? a. Many audit conclusions are made on the basis of a. Independent auditors represent third party users examining a sample of evidence. external to the auditee entity, whereas internal auditors b. Some evidence supporting peso representation in the report directly to management. financial statement must be obtained by oral or written b. Although independent auditors strive for both validity representation of management. and relevance of evidence, internal auditors are c. Fatigue can cause auditors to overlook pertinent concerned almost exclusively with validity. evidence. c. Internal auditors are employees of the auditee, d. Many financial statement assertions cannot be audited. whereas independent auditors are independent contractors. 18. Which of the following is not one of the general principles governing the audit of financial statements? a. The auditor should plan and perform the audit with an attitude of professional skepticism. b. The auditor should obtain sufficient appropriate evidence primarily through inquiry and analytical procedure to be able to draw reasonable conclusions. c. The auditor should conduct the audit in accordance with PSA. d. The auditor should comply with the Philippine Code of Professional Ethics.
19. Which of the following statements does not describe a condition
that creates a demand for auditing? a. Conflict between an information preparer and a user can result in biased information. b. Information can have substantial economic consequence for a decision-maker. c. Expertise is often required for information preparation and verification. d. Users can directly assess the quality of information.
20. Which of the following statements does not properly describe an
element of theoretical framework of auditing? a. The data to be audited can be verified. b. Short-term conflicts may exist between mangers who prepare the data and auditors who examine the data. c. Auditors act on behalf of the management. d. An audit benefits the public