Professional Documents
Culture Documents
AUDITING THEORY
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ATPW-7501
CPA Review
1. The Philippine Framework for Assurance Engagc!ments identifies two types of assurance
engagements a practitioner ts pernittec to pe rfc rm: a reasonable assurance engagement
and a limited assurance engagement. Which ot the follo"'!ing is the objective of a limited
assurance engagementi
A. A reduction in assurance engagement risk tc a very low level in the circu01stances of
the engagement as a basis for a diclaimer ot the practitioner's conclusion.
B. A reduction in assurance engagement r!.k to an acceptably low level in the
circumstances of the engagement as a basi for a positive form of expression of the
practitioner's conclusion.
practitioner's conclusion.
D. A reduction in assurance engagement ris1: to. a level that is acceptable in the
circumstances of the engagement s a basi for a modified form of expression of the
practitioner's conclusion.
2. The subject matter of an assurance eng2gemen1: can take the following forms, except
A. Historical or prospective financial statemel'lts.
B. Performance of an entity that could indicte effi,iency and effectiveness.
C. The entity's internal control.
D. Evaluation of a capital investment proposal.
3.
This refer; to the audit procedures that, in tile cuditor's judgment and based on the PSAs
are deemed appropriate in the circumstanc to Khieve the objective of an audit.
C. Audit sampling.
A. Analytical procedures.
B. Scope of an audit.
D. Dccumentation.
4. A firm of CPAs may use policies and procedure such as notifying professional personnel
as to the names of audit clients having publicly '1eld securities and confirming periodically
with such personnel that prohibited ii:l a tio ns do not exist. This is done to achieve
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effective quality control in which of the tollo'l'.!ing 9reas?
A. Acceptance and continuance of clients.
B. Human resources.
C. Ethical requirements.
D. Leadership responsibilities for quality within tne firm.
5 . The decision as to whether the criteria are s11itable involves considering whether the
subject matter of the assurance engagement is capable of reasonably consistent
evaluation or measurement using such criteria. Which of the following characteristics is
not considered necessary in determinin! whethe the criteria are suitable?
A. Relevance.
C. Reliability.
B. Neutrality.
D. Sufficiency.
6. Which of the following conditions most i1keiy w< 1U1d pose the greatest risk in accepting a
new audit engagement>
A. Staff will need to be rescheduled to rnver thi0; new client.
B. There will be a client-imposed scope limitatio1.
C. The firm will have to hire an expert in one acdi;: area.
D. The client's financial reporting s1stem has be::n in place for 10 years.
7.
As a condition of obtaining a Joan from Metro Ma n i !:3 Be l.:, Maasim Corp. is quired to submit
.
ated statements of income, changes
an audited statement of financial position but not te
in equity, or cash flows. Maasim would like to e-1qa,;e ,j CPA to audit only its statement of
financial position. Under these circumstances. rl1e :PA
It May not audit only Maaslm's statement: f fir ,'. i ncia l position if the amount of tlie loan is
material to the financial statements t<iKen as 2 .vhole.
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ATPW-7501
B. May not audit only Maasim's statement of i'inoncial position if Maasi is not a listed ntity.
.
.
C. May audit only Masim's statement of financi2 I position if the CPA d1scla1ms an opinion
on
D. May audit only Maasim's statliment of fina11Cial position if access to: the information
underlying the basic financial statements is no1: limited.
8.
risk, contr ol
Using your knowledge of the relationships amon acceptable audit risk, in erent
_ ne tJ
he
risk, planned detection risk, tolerable. misstaterr.ent, and planned evidence, detrmi
factors,
effect on planned evidence (increase or decrease) of changing each of the following
while the other factors remain unchanged.
ir.crec.se
4.
5.
Decrease
Decrease . Decrease
Increase
lncrec:se
.
,Decrease
Increase
lncre1se
Increc1se
Increase.
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Increase
Decrease
Decrease
9. Which of the following payroll control activities would most effectively ensure that
payment is made only for v1ork performed?
A. Require all employees to record amval ad departure by using the time clock.
B. Have a payroll clerk recalculate all time earns
C. Require all employees to sign their-time cards.
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D. Require employees to have their direct supervisors approve their time cards.
10. Which. of the following statements ordinarily is not included among the written client
representations made by the chief executi>;e off cer and the chief financial officer?
A. "Sufficient evidential matter has been ma,je available to the auditor to permit the
C.
"We have no plans or intentions that m<iy materially affect the carrying value or
classification of as:ets and liabilitie;."
11.
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normally
12. When CPA firms do an audit of historical financial statements, part of the audit usually
benefit the audit client. The recommenaation; can be rnade orally but they are typically
made by use of a
.
A. Letter of represemations.
C. :'-lanagement letter.
B.
13.
Engagement letter.
D. Client letter.
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B. Reasonable assur<nce.
D. Compliance .
14. Which
of the tollowinq is not considered amon. i:he fraud risk fac.tors?
.
A The need to meet expectations of third parties tD obtain additional equity financing.
B. The granting of significant bonuses if unrelistic profit targets are met.
C. Ineffective control environment.
0
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l5. When the auditor issues an erroneOL1s opini0:1 as the result of an underlying failure to
comply with the requirements of standards.on 3Uditing, it results in
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ATPW-7501
C. , \udit r isk.
D. /\II of the above.
Business failure.
B. Audit failure.
16.
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need to be available to the intended JJSers in an ass u aric! 'eng ag em ent o allow
them to understand how the subject mat'ter r.as been evaluated or measured. Which of.
the following is not among the ways by whic.1 these criteria could be made available to
17. Criteria
D.
information.
18. The most reliable procedure for an auditor to use to test the existence of a client's
inventory at an outside lo cation woulu be to:
A.
B. Trace the total on the inventory liring rn tt1e generai ledger inventory account.
ng
co in
20. The primary purpose of performing analytical prxedures in the planning phase of an audit is
to
A. Help the auditor ootain an understa ding of 1.ne client's industry and business.
B. Assess the going concern assumption.
C. Indicate possible misstatements.
D. Reduce d eta il ed te sts .
21. Which of the following circumstances would <.n auditor most likely consider a risk faCtor
stock.
C. The entity distributes financial forecasts tc
anci l analysts that predict conservative
o erating esults .
D. Manageent 1s interested 111 n .<iim:a1n1119 thE entity's earn i ng
s trend by using
fin
cti
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standards.
procedure
D. The results of the subsequent period's tes.:s of controls make the omitted
less important.
23.
The auditor's risk assessment procedures shoulj always include the following, except
A. Inquiries of management and .of others within the entity.
B. Analytical procedures.
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C. Are designed to detect material misstatements at the assertion level fur classes of
transactions, account balances and disclosures.
D. Are designed to test the effectiveness of th< entity's controls.
25.
The auditor should obtain an understanding ol the entity's objectives and strategies, and
those business risks that may result in risk5 of material misstatement. Which of the
following statements concerning file entity's business risk is incorrect?
A.
Business risk is broader than the risk of material misstatement of the financial
statements, though it includes the latter.
B. An understanding of the business risks facing the entity increases the likelihood of
26
D. Business risk may arise from the developr.ient of new products or services that may
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fail.
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A retailing entity uses the Internet to execute arid record its purchase transactions. The
entity's auditor recognizes that the documentatipn of details of transactions will be
. retained for only a short period of .time. To compensate for this limitation, the auditor
most likely would:
A. Compare a sample of paid vendors' invoice:; to the receiving records at year-end.
C. Perform tests several times during.the v.ear, rather than only at year-end.
D. Increase the sample of transactions to .be selected for cutoff tests.
.
27. Which of the followinr statements concerning itUdit risk and its components is incorrect?
A. Regardless of the assessed levels of inhE!rent and control risks, the auditor shQuld
always perform some substantive proce.jures for material account balances and
classes of transactions.
B. The higher the assessment of inherent :ind control risks, the more evidence the
auditor should obtain from the performano! of substantive procedures.
C. The assessed level of inherent risk need n)t be considered in determining the nature,
When obtaining an understanding of control!; that relevant to the audit, the auditor is .
required to
A. Evaluate the design of those controls.
B. Determine whether those controls have ben implemented.
etermine whether they have been implemented
C. Evaluate the design of those controis and
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ATPW-7501
ar d
rols.
30. A client makes test counts on the bats of J s: 1tistical plan. The auditor observes such
counts as are deemed necessary and is ab1e to : i ecome satisfied as to the reliability of the
client's procedures. In reporting on the results .: r tile audit, the auditor
A. Must qualify the opinion if the inverli:Ories w-cre material.
B. Can express an unmodifted o pin ion.
.
C. Must comment in an Emphasis of Matter par,1graph as to the inability to observe year
end inventories.
31.
Which of the following audit procedures most l1<ely would assist an auditor in identifying
conditions and events that may indicate sub5 :antial doubt about an entity's ability to
co ntinu e as a g oi ng concern?
A. Confirming with third parties the details gf ar raagements to maintain financial support.
Reconciling the cash balance per books witi1 the cutoff bank statement and the ba1k
confirmation.
D. Inspecting title documents to verify whether any assets are pledged as collateral.
32. Which of the following factors would most !ikely influence an auditor's consideration of ttie
reliability of data when performing analytical pre cedures?
A. Whether the data were developed m a computerized or a manual accoun tin g sy stem .
B. Whether the data were prepared on the cast 1 basis or in conformity with PFRS.
C. Whether the data were developed unjer a ' stern with adequate controls.
D. Whether the data were processed 1n an '?n111. system or a batct\111try system.
33.
c.
An entity's management is responsible for thE preparation and fair presentation of the
34.
B.
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"ATPW-7501
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relationships amonJ data exist and continue n the absence of known conditions to the
contrary.
37. The reliability of data is influenced by its source and by its nature and is dependent on the
Circumstances under which it is obtained . Which of the following should the auditor
consider in determining whether data is reliat:e for purposes of designing substantive
analytical procedures?
I.
inforrr ation.
38. The confirmation of customers' accounts receivc:ble rarely provides reliable evidence about
is not
confirmation form?
A. The principal amount paid on adirect liabilit(.
B. Maturity date of a direct liability.
C Description of collateral for a direct liability.
D. The interest rate of a direct liability.
41.
When using confirmations to proviae eviden:e about the completeness assertion for
i ely is
accounts payable, the appropriate population most
! dger.
iu
bs1d1ary
able
A. Amounts recordea in tr.e accounts par:
,
ss.
busine
done
B. vendors with whom the entity has previousy
fi!t!.
c. Invoices filed in the entity's open invoice
,
.
quent to t'1e balance sheet date.
D. Payees of checks drawn in the month subs,:
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C. Purchases are made from parties re:lated to tuyers or other company offi cials .
D. Purchases are made against blanket or open purchase orders for certain tyQes of
items.
.
43. When outside firms of nonaccoun tants soecializing in the taking of physical inventories are
used to count, list, price, and subsequently compute the total peso amount of inventmy
on hanq at the date of the physical count, the aL.ditor will ordinarily
A. Co nside r the reduced audit effort with l'eSpect to the physical count of inventory as a
s co pe l i m itatio n .
B. Make or observe some physical col!nts of tt e inventory, recompute certain inventory
:aking
44.
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V\lhi ch of the following most likely would ca se n auditor to consider whether a client's
financial statements contain material misstatemE nts?
A. Management did not disclose to the auditor that it consulted with other acco untan ts
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45.
Which of the followin1 is the best audit test o evaluate the accuracy of the inventory
records for materials inventory in a production OJeration?
A. Reconcile quantities on hand per physical counts of selected items with perpetual
inventory records and verify pricing.
B. Trace selected inventory receipts tc, perpetu<,I inventory records.
C. Vouch selected postings in the perpet ual i nv : ntory records to source docunients.
D. Perform turnover tests for materials inventor)'
its suppliers.
47:
After issuing an auditor's report, an au itor has :-io obligation to make continuing inuiries
48.
One payroll audit ob_jective is to det::rmine vhether the employees received pay in
amounts recoroed in the payroll journal. To acn eve this objective, the auditor should
- Determine whether a proper segreqatiori o;'duties exists tiet:Y.A!(!i recording P.ayroll
and reconciling the payroll bank accounC.
B. Requesting that a company official distribute: all pa ychecks.
C. Reconcile the payroll bank account.
D. Compare canceled payroll chec with the pavroll journal.
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49. The following statements relate to the forrr. and wntent of working papers.
0false?
Which is
p :s
\
1\
I
obtained.
C. Working papers should include documentation of every matter the au
I
during the audit.
D. Working papers shcu!d include the auditor's :easoning on all sign ifican t matters which
lir-!y
!It:
\.
r misstat m ent .
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work; the nature, timing, and extent of tr.e audit procedures perf rm:d ad the
results of such procedures; and the conclusions drawn from the audit ev1denc
51.
52. The following are examples of special purpose frc .meworks, except
A. A tax basis of accounting for a set' cf financi:1l statements that accompany an entity's
tax return.
B. The cash receipts and oisbursemer.ts basis of accouming for cash fiow information
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by
53.
B.
statements.
The materiality determined for a specif c eterrient of a financial statement may be
lower than the materiality determined for the entity's complete set of financial
statements.
c. Such a report can only be issued if the audit)r is also engaged to audit the entire set
of financial statements.
D. The attention devoted to the specific eleme1t is usually less than it would be if the
e me nt as a w hole were audited
financial
stat
A.
s;'lttr;1ent
..
x:i:wf'te
.
.
The date of the review report should
.
lil tne financial statements were approved by
A. Not be e arI.1er than the date on whic
.
management.
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B. Be earlier than the date on whicr, the tinancial statements were approved by
management.
C. Coincide with the balance sheet date.
56. Which of the fol l owing is a false stiiJ te ment conctrning fraud?
A. Fraud generally involves incentive or pr ssure tu commit fraud, a perc eived
Fraud involves actions of management but <:<eludes the actions of employees or third
C.
parti es .
57.
Under which of the following conditions may an -auditor's observation procedure !'or
.
inventory be performed du ring or after the end ,:f the period under audit?
A.
B. When the auditor finds minimal variations in client records and test counts in prior
periods.
C. When total i. nventory has not variedmorE! th:m 5% in the last five years.
D. When well-kept perpetual inventory recerds are checked by the client periodically by
comparisons with physical counts.
designed to prevent initial infections, stop relication attempts, detect infections after
their occurrence, mark affected system compo1ents, and remove viruses from infected
components. The major risk in relying on antivirus software is that it may
A.. Consume too many system resources.
B.
59. Which of the following procedures most likely would give tM gtf.Gtest assurance that
security count.
Proceeds from the sale of investments are received by an employee who does net
have access to securities.
execution.
D. Access to securities requires the signatures rnd presence of two designated officials.
60. An auditor is determining if internal control rel<Eive to the revenue cycle of a wholesaling
entity is operating effectively in minimizing Ihe failure to prepare sales invoices. The
auditor most likely would select a ample of tra!1sactions from the population represented
Gl.
Which of the following procedures wuuld an auditor most likely perform prior to the
balance sheet date?
A. Review subsequent ever.ts.
62. An entity's contingency plans for computer infor 1nation systems should
include appropriate
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backup agreements.
CPAREYIEWSCHOOLOFTHEPHILIPPINES(CPAR)
ATPW-7501 .
63.
Which of the following factors would least- likely affect the extent of .the a uditor's
consideratio n of the client's internal controls?
64 . An auditor compared the current-year gross r.nargin with the prior-year gross margin to
determine if cost of sates is reasonable. What 1ype -0f audit procedure was performed?
C. :est of conttols.
A . Test of transactions.
B. Analytical procedures.
65.
D. ;est of details.
Image processing can be used to convert paper documents into electronic images. Which
of the following concepts distinguishes th retention of computerized audit doGuments
from the traditional hard copy form?
A. Analyses, conclusions, and recommendations are filed on electronic media and are
therefore subject to computer system controls and security procedures.
B. Evidential support for all findings is copied and provided to local management during
the closing conference and to each person eceiving the final report.
C . Computerized data files can be used irt corr puter audit proced ures.
D. Audit programs can be standardized to eliminate the need for a preliminary survey at
each location.
66. When erroneous data are detected by computer program controls, such data may be
excluded from processing and printed on an e rror repor:: . Who should review and follow
up this error report7
A. Systems analyst
C. c;omQuter operator ! ":'
B. Data control group
D computer programmer
.
67.
A receiving clerk keyed in a shipment from a remote terminal and inadvertently omitted
the purchase order number. Whi'h of the follJWing controls would most likely detect this
error?
A. Completeness check
B.
68.
C. iequence check
Compatibility check
D. 11.easonableness test
One common type of CAAT is the use of audit software to process data of audit
significance from the entity's information system . An audit software that ha widespread
popularity because it is easy to use and requin!S little computer background on the part of
the auditor; it can be used on troth mainframe and PC systems; it allows the auditor to
perform his/her tests independent of the enticy's comptJter pro essing personnel; and it
.
forrn.ts and st_ructures 1s called a
can be used to audit the data in most file
A. Customized program
B. Purpose-written program
c. Utility program
,.
software (GA. ,)
D . Package or generalized audit
69.
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500, i.e., the assertions should always fa.I into three categories: assertions abqut
classes of transactions and events, account l >alances, and presentation and discl osu re .
C. There should always be a separate asseit ion related to cutoff of transactions and
events .
D. The completeness assertion deals on;1 witt whether all transactions and events that
should have been recorded have been recoded.
7 1 . Which of the followin1 would least likely affec: the appropriateness of evidence available
to an auditor?
A. The sam p ling mett1od employed bv hE: aud1 :pr to obta i n a s9(ll ple of such evidence.
B. The relevance of such evidence to th e financral statement assertW being verifieil.
C. The relationship of the preparer of such evicence to the entity being audited.
D. The timeliness of such evidence.
.
72.
A uditors may use positive and/or 'neg ativ e forms of confirmation requests .
most likely will use
An a ud ito r
7 3 . To reduce the risks associated with accepting Nx responses to requests for confirmations
of accounts receivable, an auditor mo.st likely w.)uld
A. I nsp e ct the faxes for fo rge ri es or aiteratiu is and consider them to be acceptable if
none are noted
B.
Consider the faxes to be non response5 c.nc val uate them as u nadj usted di fferen ces.
.
Verify the sources and contents of tne faxes. in teleph0ne calls to the.senders.
D. Examine the shipping documents that proviu2,evit1ence for the existence asserti on .
C.
of"t:he
II. If the auditor has identified one or more creficiencies in inte rna l control, the auditor
shall determine, on the basis of the audit 1r1ork performed, whether, ind ivi d ual ly or in
combination, they constitute significant deficiencies.
m. The aud itor shall communicate, orally ar in wi ti ng , significant deficiencies in internal
control identified during the audit to those c iarged with governance on a timely basis.
C. m only.
A. I only.
D. Ai of the above.
II
o
nly
.
B.
'15 .
Audit efficiency may ne i m proved when the am piing unit is defined as the i ndividua l
monetary units that comprise the popu l ation . r his technique is called
C. S 1stematic selection
A. Stratification
B.
76.
Rand om selection
D:
In planni ng a statistical sample for a test of c< inrols, an auditor increased the expected
population deviation rate (EDR) from :he pnrn ,.-ear'. rate because of the results of the
prior year's tests of c0ntrols and tne overall. co1 1vo1 environm ent ! l auditor most likely
would then increase the planned
A. Risk of assessing control risk too low
B. Sample size
n.
controls?
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ATPW-7501
In determining the tolerable rate, an a ud i:? r considers detection risk and the sample
size.
Deviations
from
specific control
activities
at a
given
rate
ordinarily
result
iri
C. As the population size increases, the sample size should increase proportionately.
D. There is an inverse relationship between che expected population deviation rate and
the sample size.
78. The firm shall obtain written col'lfirmation of :ompliance with its policies and procedures
on independence fro m all firm personnel required to be independent by relevant ethical
requirements
A. At least annually
B.
At least monthly
C. At h!ast semi-annually
D. At t:1e completion of each engagement
79. On January 21 2015, the TANYA co. receivtd a notice from its primary suppliers that
effective immediatelv all wholesale prices would be increased 10%. On the bais of the
notice, TANYA revallled its December 3 1 , 201-l inventory to reflect the" higher costs. As a
result, the statement cf financial position ref!eCts inventory stated at an amount higher
than its net realizable value. The invento constituted a material proportion of total
. assets; however, the effect of the revaluaticx1 was matrial to current assets but not ta .
total assets or net income. In reporting on the company's financial statements for the
year ended December 31, 2014, in which inVE!ntory is valued at the adjusted amount, the
auditor would most likely
A.
Express an unmodified opinion . provided the nature of the adjustment and the
amounts involved are disclosed in notes to the financial statements.
B. Express a qualified opinion.
C. Disclaim an opinion.
80.
During the month o1 May 2013, the company charged to expense P46,000 for the cost of
advertising, a grand opening party, and tl'e advertising agency fee for planning the
campaign. At December 31, 2014, the statement of financial position reflected Pl75,000
of initial d irect costs incurred by the company including commissions and legal tees paid in
negotiating the lease. These initial direct co:.ts are shown as ah''at:ldition to the carrying
amount of the leased asset and is being recognized as an expense over the term of the
During your audit of the company's financial !;tatements for the year ended December 31,
2014 (conducted i n accordance with PSAs), no facts other than those described abov.e
came to your knowledge that would cause your opinion to be other than that the financial
statements were presented fairly in accordance with Philippine Financial Reporting
Standards.
n?
What type of opinio n should your report contai
C.
A
disclaimer of opinion.
A. An adverse opin ion
D
.
A
qualified opinion.
s. An unm odified opin ion
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B. Determine whether there is substantial aouc t about the entity's ability to continue
c1s a
going concern.
C . Scan the entity's records for the period iu t after the balance sheet date to tdentify
subsequent events requ ring disclosure.
_i
D. Consider whether the financial statements <ir.free from obvious material mistakes in
the application of c1ccounting principles.
the financial statements are fairly preented" but a compilation provides no such
assurance.
Which of the following procedures is usually the first step in reviewing the financial
statements of an entity?
A.
Make preliminary Judgments about risk ar.1 i materiality to determine the scope and
B.
entity's
oran1:.!alion,
its
operating
C. Assess the risk of material misstatement ans1ng from fraudulent financial reporting and
the misappropriation of assets ..
D. Perform a preliminary assessment of the o!Jerating efficiency of the entity's interrral
control activities.
4.
A.
B.
C.
accountiii
principres conforming
with
Philippine
5.
use?
Which
A.
B.
C.
D.
of
'
Financial forecast
Yes
Yes
No
No
Financial project10.1
'(es
is(are) appropriate
for general
No:
Yes
No
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Prior to commencing Held work, an auditor usually discusses the general audit strategy
with the client's management . Which of the following details do management and the
auditor usually agree upon at this time?
A. The specific matters to be included i.n the.communicatio n with the audit committ e.
B. The minimum amount of misstatements that may be considered to be reportable
6.
conditions.
C. The schedules and analyses that the client's 5taff should prepare.
D. The effects that inadequate controls may ha11e over the safeguarding of assets.
B. Entries i n the accounts receivable subsidiary ledger were for sales actually shipped.
C. Sales billed to customers were actually shipped.
D. No duplicate shipments to customers were rnade.
8.
Alternative
aud,f procedures
inventories, which
the auditor was able to examine satisfact ry evidence for all other items in the financial
statements. The auditor should issue a(an)
A. "EXcept for" qualified opinion.
B.
Disclaimer of opinion.
9. A client decides not to make an auditor's prop1 >sed adjustments that collectively are not
material, and wants the auditor to issue the r port based on the unadjusted numbers.
Which of the following statements is correct regarding the financial statement
presentation?
A. The financial statements are free from material misbtatement, and rlo disclosure is
1
required in the notes to the financial statemmts.
---
10
qualified opinion.
D. The financial statements are free f.-om ma0:erial misstatement, but disclosure of the
proposed adjustments is requi red in the notES to the financial statements.
.
An auditor concludes that there is a mateial in. :d11sistency in the other information in an
annual repon: to shcireholders containing aL.dited financial statements. The auditor
believes that the financial statements o not re 1uire- revision, but the client is unwilling to
revise or eliminate the material inconsistenc> in the ofher information. Under these
A.
financial statements.
Issue a n "except for" qualified optt1ion "aft<r discussing the matter with the elient's
audit comm ittee .
. c. Disclaim an opinion on the financial st3tements after explaining the material
r" p<1rag raph.
inconsistency in a separate "other matte
separate "other matter" paragraph describillg
a
include
to
report
auditor's
o. Revise the
y.
tenc
nsis
the .material inco
B.
11.
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ATPW-7 :illt
D. Withdraw from the audit because the i nterr.;il controls are ineffective.
13.
of
When an auditor tests the internal controls of e: computerized accounting system, whicll
the following is true 01 the test data approach /
..
A. Test data are coded to a dummy subsidiary so they can be extracted from the sysLem
under actual operating conditions.
B. Test data programs need not be r_c: llor-mJCJ by th auditor. for
e;ch
client's computer
applications.
.
C. Test data programs usually consist of all po;sible valid and invalid conditions regarding
compliance with internal controls.
.
D. Test data are processed with the c1ient's computer and the results are compared w1.th
the auditor's predetermined results.
14. An audit supervis r reviewed the work perforned by the staff to determine if the audit
was adequately performed. The supervisor acccmplished this by primarily reviewing which
of the following?
C. I\ 1 a lytica l procedures.
A. Checklists.
D. Fnancial statements.
B. Working papers.
15.
'
with governance?
'
A. Adjustments that were suggested by t:he .uditor and recorded by management i:hat
have a significant effect on the entity's finar. c1al teporting process.
B. The auditor's consideration of risk fad ors in aessing the risk of material
misstatement arising from the misappropria1 JOn of assets .
C. The results of the auditor's a nal yti ca l proce( lures performed in the review stage of th"e
engagement that indicate significant variances from expected amounts.
D. Changes in the auditor's preliminary judgm nt about materiality that were cal.l.5ed by
projecting the results of statistical sampling ror,tests of transactions.
17. Which of the fol lowing strategies mo$t l i kely could im prove the response rate of the
confirmations of accounts receivable?
A.
l8.
:o n
balances.
B. Include a list of items or invoices thut consti :ute the customers' account balances.
C. Explain to customers that discrepancies wi!I be investigated by an independent th ird
party.
D. Ask customers to respond to the cu nrl r ma ti c n requests directly to the auditor by fa>:.
A CPA
firm is compleung the fieldwor;. for an ::udit of Sweden Co. for the c urrent year
31. 1-h e manager in ch a rge or. the audit: is performg the final steps in
ended December
the ev_idence accumulat_ion phase of the audit and notes that there have
been several
h n ges in Swed en during the year under a1 1dit. Which of the following items would
md1cate there could be substantiI doubt about Sweden's
ability
concern for a reasonable period of time: ?
A. Cash infusion by a venture capital firm .
B . Recurring o :king capital shortage
.
C. A lack of significant contracts
with n ew cu stn mers.
Page ;:; of 12 P;1 es
to continue as a going
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CPAREVIEWSCHOOLOFTHE PHILIPPINES(CPAR)
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ATY\V-7502 .
19. Which of the following procedu res would an "auditor most likely perform in o btaining .
20.
On March 1, Gu an zon , CPA, expres sed an unm odified opinion on the fin a n c ial sta teme nts
of Apex Co. On July l, Guanzon's internal inspection program discovered that engagement
personnel failed to observe Apex's physical inv1?ntory. Guanzon believe s that this qmission
impairs Guanzon's ability to support the un ,11odified opinion. If Apx's creditors re
cu rrently relying on G uanzbn 's opinion, G1,Janzo. t>pould first:
A. Request Apex's management to com rn un io te to its creditors that Guanzon's op i n i on
should not be relied on.
B.
Reissue Guanzon's auditor's report with a,1 " other matter" paragraph describing the
C. Undertake to apply the al tern ative procedures that would provide a satisfactory ba!:ois
for Guanzon's opinion.
D. Advise Apex's board of directors todisclose this development in its next interim report.
2L A client is a defendant in a patent infrtnge ;,ent lawsuit against a major competitor. Which
of the following items wou ld least likely be i 1cluded in the attorney's response to the
auditor's letter of inquiry?
A. A decription of potentia l litigation in other natters or related to an unfavorable verdict
22.
! 11
.rn assessing the competence of internal quditors, an independent CPA most likely would
obta in inform atio n about th e :
A. Influence of management on the scope of tne internal a ud itors' d uties.
B. Policies limiting internal auditos from communicating with th e audit committee.
23. A client maintains a large data center where 3ccess is iimited to authorized employE!'es.
How may an auditor best determine the effectiveness of this co ntrol a ctivity?
A. Inspect the policy m anual establishi ng this control activity.
s.
B. Ask the chief technology officer about known problem
ored.
is
c. Observe whether the data center monit
loyees.
er
emp
cent
data
nt
e
curr
of
list
a
D. Obtain
24.
t a possible understatement of
.
.
test of details. is . to detec
If the obJect1ve of an aud '1tor ' s
s fron: th e..
uld tr:a ce tran s: i ct1o n
sales, the aud ito r most likely wo
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ATPW-7502
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A.
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26.
Which of the following circumsta ces would permit a n independent a uditor to accept a n
engag emen t after the dose of the fisca: year?
A. Issuance of a disclaime r of opinion as a r=sult of inability to conduct certain tests
required by generally accepted auditing sta1 1dards due to the timing of acceptance f>f
the engagement.
B.
C. Receipt of an assertion from the precedin auditor that the entity will be zible to
continue as a goin9 concern.
Remedy of lim itations resulting from accepti n ttie engagement after the close of the
D.
27.
e aluated to
C. The risk that the audit proceciures irr plemented will not detect a material
misstatement of a rinanciat statement assert on.
D. The susceptibility of a financial statemert assertion to a material m isstateme0nt
assuming there are no related controls.
;s.
Which of the following factors is most reieva11t when an auditor considers the cl ient's
organizational structur0. in the context oi' cont;c.: risk?
A.
S:
29. Which of the following statements mos( likely \/11ould be included in an engagement letter
from an auditor to a client?
A. The CPA firm will provide absQlute assurance about whether the financial statements
audit.
D. The CPA firm will adjust the financial sta::ements to correct misstatements befoe
issuing a report.
30. Which of the following represents an inherent lin itation of internal controls?
A. Bank reconciliations are not per-formed on a :imely basis.
B. The CEO can request a check with no ourchc:.se order.
C.
Customer credit
checks are
31. An auditor's tests of controls for conpletene:;s for the revenue cycle usually include
determining wnether:
A. Each receivable is collected subsequent tei tl 1 2 year end.
B. An invoice is prepared fr each shippinQ doo 11Vent.
32. An auditor is testing the reasonableness of div1c;end income from investments in publicly
.
.
held companies. The auditor most likely would compute the amount that should have
been received and recorded by the cliem by:
A. Reading the details of the board of directors' meetings.
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33: An auditor who uses the work of an ex'pert ma' refer to the expert in the auditor's.report
if the:
A.
Auditor bel ieves that the expert's findings ar reasonable in the circumstances.
C. Auditor modifies the report because of the difference between the client's and the
expert's valuations of an asset.
D . Expert's findings provide the auditor" wit1 greater assurance of reliability about
management's representations.
34 . . In attri bute sampling, a 25% change in which of the fol lowing factors will have the
smallest effect on the size of the sample?
A. Tolerable rate of deviation .
B. Number of items in the population.
C. Degree of assurance desired.
35.
1:
A. The deviation rate in the auditor's sample is less than the tolerable rate, but the
deviation rate in the population exceeds the tolerable rate.
.
.
B. The deviation rate in the auditor's samp!e e>:ceeds the tolerable rate, but the deviation
.
rate in the population is less than th to:erable rate .
C. The deviation rates of both the auditor's sample and the population xceed the
tolerable rate.
D. The deviation rates of both th auditor's sample and the population are less than the
tolerable rate.
36.
For which of the following audit tests would a CPA most likely use attribute sampling?
A. Identifying entries posted to incorrect accow1ts.
B. Estimating the amount in an expense accour1t.
.
confirmations rnay
. '
38.
An accountant agrees r.o the client's request. to i:ha nge an engagement from a review to a
.
compilation of financial statements. Thfl compilation report should include:
.
A. No reference to the origin al engag ement:
regarding:
1ty
1 .
.
dgment a bot ma tena
a n JU
1t nk
.
A. The predecessor's evalu ation of au?
, s audit rep rt wa issued.
essor
edec
p
;:he
s1.nce
red
occur
that
ts
even
B. Subs eque nt
as to the r<!asons for the chan ge in auditors.
C. The p1-e decessor 's 1.inderstand ing
i
g 1natter 01 con tmu11J g.g rnf1cance.
D . Th e predecessor's l<nowledge of accountin
Which
ttie
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A.
ATPW-7502
B.
C.
entity.
A.
of principal
stockholders.
C. Borrowing funds at an interest rate siqnificar :tly below prevailing ma rket rates.
D. Writing off obsolete inve nto ry to rn:::: rea!:zc; !?. value just before year end.
! ti
42. Which of the following factors is most Hkely to affect the extent of the documentation of
operates.
C. The relationship
stakeholders.
between
management,
board
the
of di rectors,
aCld
external
D. The degree to which the auditor intends to use internal audit personnel to perfor'm
substantive tests.
B. An auditor evaluates whether a g2neral jurnai ent.-y was recorded at the proper
amount.
,..
44.
'
" The auditor's allow;:ible risk of asses::;i:ig
conirol
risk is
too
of
low.
45. An auditor reconciles the total of the acc ou nts r =ceivable subsidiary ledger to the general
ledger control account as of October 3l, 20XJ .
46.
Auditors try to identify pred i ctab le rlationsh1p3 when applying analytical procedures.
Relationship involving transactions from which o : the following accounts most likely would
yield the highest level of evidence?
A. Interest exnse.
B. t-.llowance for doubrful accoun'; .
47.
management
management representation letter?
Which
of
the following
Ac :ounts receivable.
C.
. . ' =
A. Management has the responsibility h.'r the dsign of controls to detect fraud.
B. Management_ communicates its \Aiews on eth11:al behavior to its employees.
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CfA..MYIEWSCHOOLOF THEPHILIPPINES(CPARl
48.
11:
What type of evidence would provide the h i1nest levei of assurance in an assurance
engagement?
A.
C.
B.
ATPW-7502
be m ost appropriate
for testing
the
50. Whi c of the followin1 activiti=s perforr.iec! by . 1 department supervisor most likely would
help in the prevention or detection of a payroll t rauc1?
A. Distributing paychecks directly to de::iartmer t employees.
B. Setting the pay rate for .departmental emplo 1ees .
C.
b1! dded
to payroll .
D. Approving a summary o f hours each er:iploy-:e worked during the pay period.
51. An auditor is concerned about a policy If i!ian gement ove rride as a limitation of internal
control. Which of the following tests would oest assess the validity of the auditor's
concern?
i2. When an auditor plans to rely on controls that 1ave changed since they were last teste d,
which of the following courses of action wouid be most appropriate?
A. Test the operating effectiveness of s u ch ccn:rnls in the current audit.
B. Document that reliance and proceed with th1! original audit strategy.
C.
S3.
55.
In whicfl of the following circumstances wouic1 an auditor expect to find that an entity
Which of tile followin1 explanations best describes why an auditor may decide to reduce
objective?
tests of details for a particular audit
soon aftr the :)alance sheet date.
A. The audit is being performed
ced in performing thf planned proced ures.
B. Audit staff are experien
s have revea l ed no unusJ al or unexpected results.
C A lytical -1roce dure
ns posted to the account during the period.
re wer ma ny transactio
0.
c.
D.
No
No
Yes
Nu
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ATPW-7502
56. When a company's stock record books are maintained by an outside registra r or tran;fer
agent,. th e auditor should obtain confirmation from the registrar or tran sfe r agent
concerning the:
A. Amount of divid ends paid to relate
d parti es.
B. Expected proceeds from stock s ubscri o ion s receivable.
t
C. Numb er of share s issued and outsta nd
i na .
D. Proper authorization of stock rights and arrants.
57
t1 likely t eneftt
D.
58.
When an auditor has substantial douot about: an entity's ability to continue as a going
concern because of the probable discontinua.1Ce of operations, the auditor most likely
would express a qualified opinion if:
A. The effects of the adverse financial conditio 1s likely will cause a bankruptcy filing.
B. Information about the entity's ability to cont inue as a going concern is not disclosed.
C. Management has no plans to reduce or del<1y future expenditures.
D. Negative trends and recurringoperating los!ies appea: to be irreversible.
59. An auditor plans to apply substantive tests to r.1e details of asset and liability accounts as
of an interim date rather than as of th e balanc :l sheet date. The auditor should be aw8:re
B. Presumes that the auditor will repeforrn chi ! tests as of the balance heet date.
'
.
C. Should be especially cotisidered when here .ar rapidly changing economic conditions.
D. Potentially increases the risk that error th 1t exist at the balance sheet date will not
be detected.
60. A practitioner's report on agreed-upon procedures that is in the form of procedures and
findings should contain:
A. Negative assurance that the procedures c:id not necessarily disclose all reportable
conditions.
31. Which of the followin9 statements is corre.c:t about the sample size in statistical sampling
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63. A successor auditor is required to attempt c;m m1..1 nication with the predecessor auditor
'
prior to:
A. Performing test ot controls.
64:
65.
66 .
Which ol' the followinq factors most lii-:eiy woLld cause a CPA to decline to accept a new
! 1:
audit engagement?
A. The CPA does not understand the entity's cperations and ind ustry.
B. Management acknowledges that the entity 1as had recurring operating losses.
.
o'.
67.
As a result of tests of controls, an auditor as>esses control risk too high. Zhis i ncorrect
A. Control risk based on the auditor's sample :S less than the true operating effectiveness
of the client's control activity.
----
B. The auditor believes that the control activity relates to the client's assertions when, in
fact, it does not.
C.. The auditor believes that the controi activity will reduce the extent of substantive
testing when, in fact, it will not.
D. Control risk based on the auditor's sar,1 ple is greater than the true operating
effectiveness of the client's control activity.
68. An auditor's report on financial statements prepared in accordance with the financial
reportin9 provisions of a contract (that is, a pecial p urpose framework) to comply with
the provisions of that contract should incluc!e o .I of the following, except
A. An opinion as to whetner the financi I staif!Qle11ts are presented fai rly, in a l l material
respects, in accordance with the financial npo'rting provisions of the contract.
B. A statement that indicates the basis of acc(unting used.
c. An opinion as to whether the basis of ;iccounting .used is appropriate under the
circumstances.
o. Reference to the note to the financial statements that describes the basis -0f
presentati on.
. 69.
When an auditor reports on financial state r;ien-:s repared on an entity's income ta'x basis,
the audi tor's report shou ld
financial statements.
A . . State the basis of presentation of the
whether
the
statEments were examined in accordance with
B. Disclaim an opinion on
s).
(PSA
Phili ppin e Standards on Audi ting
.
.
te statements are presented in accordance with
whether
on
opinion
an
c. Not express
.
the tax basi s of accounting used
results of operations differ from the cash receipts
the
how
of
ation
explan
D. Include an
accounting .
and disb ursements bas is of
70.
require
me nts, inc lud ing
au dit.
the
to
t
van
rele
s
ts an d a 11 PSA
stateme nt aud it eng age men
.
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,CTAREVI EWSCHOOL OF THE PHILIPP INES(l"'.f'Af{J
ATPW-7502
C. Not accept the engageme nt uniess also en(.aged to audit the full financial stateme nts
of the entity.
71 .
An auditor has i den ti fie d the controller:; revie of the bank reconciliation a s a control to
test. In connection wi-ch this test, the auditor !11terviews (he controller tu understand the
specific data reviewed on the reconciliation. In 3dition, the auditor verifies that the bank
reconciliation 1s properly prepared by the accc;ntant and reviewed by the controller as
evidenced by the i r respective si gn -offs. Which )f the following types of a udit p roced u res
(lo these acti o ns il lustrate?
'
C.
lr temal co ntrols
D. M 3nagement
".73. Two overriding considerations affect the man y v ays an a u d itor can accumul ate evidence:
1. Sufficient appropriate evidence must b1 accumulated to meet the auditor's
professional responsibility.
A.
B.
74.
. . . ":
Wh ich of the following is not ordinarily performd in response to the risk of managem erit
override?
A. Evaluating the rationale for significant unusual transactions.
B.
C.
75. In aud i ting an entity's computerized payroll tra11sactions, an auditor would be least likely
to use test data to test controls concerning:
i'6.
An auditor established a P180,000 tole rab l e rn sstatement for an asset with an account
th
B. The asset account is fairly stated because th total projected misstatement is less than
the tolerable misstatement.
C. There is an unacceptably high ris k. th at . tl11! actual misstatements in the population
exceed the tolerable misstatement ::iecause the total projected misstatement exceeds
the tolerable misstatement.
D. There is an unacceptably hig h risk that the tolerable misstatement is more than
the
sum of actual overstatements and understatl!ments.
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77.
ATPW-7502
A.
Review engagements
of financial
statements
accordance
prepared i n
with
framework.
purpose financial
the
st:itements,
auditor
i
p
s ecial
shall
purpose
obtain
an
understanding of
I.
IL
lll.
The steps taken by manage m e nt to d etern 1 i n e that the applicable financial reporting
A. I and HI only
, ,
' 1
79. Whenever a report, fi l ed on a printed form designed by authorities, calls upQn t:he
independent auditor to make an asse n:io n i:hat the audiror believes is riot justified, the
auditor should
'
80.
An auditor may express an opinion on an entity s accounts receivable balance even if the
. auditor has disclaimed an opinion on the financ,af statements taken as a whole provided
the
81.
A. The auditor has been engaged to conduct m audit in accordance with PSAs of the
financial statementr. from which the sumrn<i r\ fi r. an cia l statements are derived.
.
B S u m m a ry fi na ncial statements are distn utej. on l y .to manaemtlEt and the board of
d irecto rs.
c. Auditor describes che additional review procedures performed on the sum m<lry
financ ial statem ents
D. Summary financial statements ate presented in comparative form with the prior year'6
summ ary finan cial stateme nts .
.
82.
basis of accountin g .
.
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AUDITING THEORY
ATPW-7503
Ja
CPA Review
RANDOM NOTES
A. SRC Rule
C. SRC Rule @8
ai:
2.
SRC Rule 68, as amended, is effective for audit-:d financial statements covering periods
ended D ecembe r 31, 2011 and onwards, and for interim fi n a nci a l statements starting
the first quarter of 2012, and thereafter.
3.
Covered Entity
a. Stock corporations
b.
pJ1d
Non-stock corporations
c.
Branch offices
corporations
e.
of non-stock
5.
tot; ii
Pl
of foreign corporations
4.
Thresholds
up capital stock of PS0,000 or more
corporations
d.
Rule 68, as amended, deleted the term "Gem rally Accepted Accounting Principles (or
GAAP)" and replaced it with Financial
eporting Framework.
Large and/or publicly accountable entities snail llse.as their financial reporting fra mework
'the
6.
If an SME that uses the PFRS for SMEs in a cw rent year breaches the floor or ceiling 9f
the size criteria at the end of that current year, and the event that caused the change is
considered "significant and continuing", the mtity shall transition to the applicable
financial reporting framework in the next accouming period.
: I I
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, .
a.
c.
1311 be
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CPAREY
. IEWSCHOOLOrTHEPHILIPl'INES(CPAR)
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The failure of any of t'le prescribed signatories to sign tile SMR constitutes a material
'
deficiency in the financial statements.
8.
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the Philippines.
10. The SMR of the entities covered undei:; Pa rt II of 'Rule 68, as amended, shall be signed
under oath.
11.
Report .of Independent Auditor when the Compa!1y Incurred Capital Deficiency
The external auditor at' a company which h s in:urred a capital deficiency shall provide in
b. A brief discussion of a concrete plan of the :ompany to address the capital deficiency
and reference to ti 1e note to financial stater nents that provides a complete disclosure
c.
proc'i:Jures
In case the company fails to prese,nt to the ex;:ernal auditor a concrete plan or sufficient
supporting documen; to address the capital -deficiency, the auditor shall provide an
emphasis paragraph indicating that the company is no longer a going concern and
should use liquidation basis in the preparation of its financial statements.
12. It is considered as a violation of Rule 68, as amended, if the audited financial statements
covered by Part II of tl1e Rule with an auditor's opinion ocher than unqualified arising from
the following:
a. Deviation(s) from the required t'inanci<1I reporti ng framework; or
b. Scope limitations imposed by the comJ:ia ny.
1 3 . Under Rule 68, as amended, fraud means an intentionai act by one or more individual
among management, employees, or. third par:ies that results in a misrepresentation ,of
financial statements which reduces or inrn! ses the consolidated total assets, total
liabilities or income of the company by 50/o.
14.
Under Rule 68, as ame11ded, error means m unintentional mistak i n the finandal
statements which reduces or increases the ojrtsolidated total assets, total liabilities or
income of the company by 5/o .
15. 0The financial statement of companies not cove"ed by SRCRule 68 should be accompanied
st
ts
stat
but are covered t i nder Ru le 6 :
.
16. Companies with no operation
emen
mu. be
year, a cotn P l ute set of fm a nc1a I
a) If no operation only for 1
_ its non-)peration.
te d by the company despite
su b mil
years tti e income stateme nt need not be included in
b) If' no operat'ion for the last 2
_
tements .
the aud ited fina nci al sta
It
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19.
audit information req ui reme nts with .ma mger n ent and/or those cha rged with
govern ance.
B. Discuss if the audit information requirem nts can be revised to meet adequately the
needs of the a uditor .
C. Express a qualified or an adverse opinion.
D . Discuss with management and/or those charged with governance the possibility of
outsourcing the completion of the Information to third .party service provi ders .
20. The term "tentative financial statements" is generally used at present to refer to a s-et
of incomplete or unaudited financial statement:; accompanied by a report of an external
auditor who has not yet completed his audit of ! uch financial statements.
n.
A. The form and content of a confirmation fequst letter will d enM1n the purpose fo r
which it is requirea, on local practices a"nd 01 the requesting bank's account.
Not all information for which confirmation is usually sought will be required at the
B.
same time.
C. The confirmation request shoul
22.
.
.
BSP?
r. Any material finding during the audit involving fraud or d is honesty which .will reduce
23.
BANKING RISKS:
a.
. '
The risk of foreign customers and counterparti> failing to settle their obligations because of
economic, political and social factors oi' countenarty;s home country and external to the
customer or counterparty.
b.
--
Countryrisk
The risk of loss arising from future movements 1n the exchange rates applicable to foreign
currency assets, liabilities, rights and obligation i.
Currency risk
c.
The risk of loss arising from factors s ch as 0fail Jre to maintain safe custody or negligellce in
the management or assets on behalf ?f ottler p3rties. Fiduciary risk
d.
The risk that a movement in interest rates wou d have an adverse effect on the value of assets
and liabilities or would affect interest cash flow. Interest rate risk
Pae 3 of 6 P 1ges
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e.
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I I
The risk that contracts are documented incorrectly or are not legally enforceable in the relevant
jurisdiction in which the contracts are to be enfcrced or where the counterparties operate.
The risk of loss arising from the changes in the I >an k's ability to sell or dispose of an asset.
Liquidity risk
g.
The risk associated with the imperfections and subjectivity of valuation models used to
determine the values of assets or liabilities. Modeling risk
h.
The risk of direct or indirect loss resulting from inadequate or failed internal proceses, people
and systems or from external events. Operaticnal risk
i.
The risk of loss arising from adverse changes i n market prites, including interest rates, foreign
exchange rates, equity and commodity prices arid from movements in the market prices of
The risk o f loss arising from failure to comply with regulatory or legal requirements i n the
relevant jurisdiction in which the bank operates. Regulatory risk
k.
).
The nsk of failure or a customer or counterpart} to perforrn the terms of a ontract. This
failure creates the need tb replace the failed traspction with another at the current market
'
price. It is sometimes called performance risk. Replacement risk
The risk of losing business because
bank's reputation arising from failure to proper11 manage some of the above risks, or from
involvement in improper or illegal activities by the bank or its senior management, such as
money laundering or attempts to cover up lossEs. Reputational risk
m. The risk that one side of a transaction'will be Sf'ttled without value being received from.the
customer or counterparty. This will generally re suit in toss to the bank of the full principal
amount. Settlement risk
n.
o.
The
from the possi bility of th bank not having sufficient funds to meet 11'$
I:
obligations, or from the bank's inability to acces capital markets to raise required funds.
Solvency risk
The risk of loss arising when a counterparty's ohligation is not denominated In the
counterparty's home currency. The counterpany may not obtain the currency of the obligation
irrespective of the counterparty's particular fina,icial condition. Transfer risk
to conduct
De pa rtme nt of t he
an
Accountants (PICPA) co conduct an indepepderit study, appraisal; (tr. review of the quality
of
audit of financial statements.
C. Oversight Committee
D. Acceiu ntab i l ity Board
supervised by a/an
A. Executive Committee
B. sup ervisory Board
public
years .
e to be in active practice of
men: bers may continu
and
man
Chair
d
by the Boa rd.
ose
C. The
certain restrictions imp
.
their tem , su bect to
g
durin
y
ointees.
app
tanc
accoun
ll be from the Board'5"
sha
e
itte
J
Comm
ve
the E.xecua
' .
D. The Chairman of
.
Page 4 of 6 P;1ges
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ATPW-750:J
Chi ef of Administration
29.
30 .
D . Educaton/Academe
in p u bl ic practice are required to reg1!;ter with the QAR program under the
prescribed category. Those whose clients are pu bl ic -in te rest entities (listed and no t-lis te.d
but with pub lic accountability) should register un jer
A. Category A
C. Categ 1 iry C
CPAs
B. Category B
c. Categilry D
Section 19 provides that CPA practitioners sho ul d b1! registered in accordance with the following
categories:
:: n
Catego ry A - registration for CPA practitio1.1ers handling clients that use the full IFRS or
their Philippine equivalents. These would civer CPA pra cti tioners auditing ublic-interest
entities (listed and not-listed but With public ilCCOUntability).
Catego ry B - registration for CPA practitioners handling clients that. use the IFRS or their
Philippine equivalents for Small and Medium ;ized enterprises.
A. Ju ne
4, 2008
32.
prescribing the
C. Decei':1ber, 3 l , 2008
D. June W, 2008
Which of the following requirements for the accredi tation of acc0unting teachers shall not
apply to thos e CPAs cilready engaged in teachng as of the effe ctivity date of the Rules
and Regulations?
I. Poss essio n of relevant Master's degree.
IL
III.
IV.
schools.
Proof that the CPA has undergone Conti nuing Professional Education (CPE).
A. I and II o nly
8.
C. I and IV only
J. II only
33. The following statements relate to the req u ire m ent to complete 12 units of relevant
education subjects for the a ccredita tion of acco1 mting teachers. Which i s incorrect?
A. For purposes of compliance, the -2 unit:: may be earned from the undergraduate
education prograr.i or from a g1aduate .: gree ,progra m . of! ,flY Higher Education
Institution (HEI) duly recog n i zed by CH Eb .
.
B. The 12 units meiy be earned from in-srvice or in-house trainings on relevant .
educa tion subjects offered by schools or tra; ning centers.
D. CPAs who have passed the Teacners Bo.3 rd Exams and are licensed Profess iona l
Teachers should earn the 12 units through i i-service or in-house tra ini n gs:
34.
Which of the fol l o w i ng shall be considered proof of compliance with the CPE requirement
for accreditation of accounting teachers7
I. Certification of CPE units from accredited :PE provid e rs issued by the PICPA.
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l
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i
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! .
CPAREYIEWSCHOOLOFTHEPHILIPPlNES(CPARl
ATPW-7503
.'
II. Certificate of Attendance or other proofs >r meaningful participation in other CPE
programs as approved by the PRC/CPE Council 'llpon recommendation of the PICPA
.
of the individual CPA of a minim um of si)ty (60) cre"dit units earned for the past
I
.
immediate 3 years.
A. I only
B . II only
35
Either or II
D. Neither I nor II
C.
36. According to the Transitory Provisions of the BOA Resolution No. 88, any tenured/fu] I
time/full load faculty member who does not meec the accreditation requirements as of tile
effectivity date of the Rules and Regulations may be issued a Provisional Accreditation.
Choose the correct statement.
I. The Provisional Accreditation will be valid for a period not exceeding 3 years unless
earlit!r withdrawn, revoked, or cancelled for cause by the BOA.
II. The Provisional Accreditation may be issuec! Dnly once and is no1 1 tenewable.
The transitory provision shall also apply t> returning teachers who have not been
teaching for the last 5 years.
A. I only
C . II and III only
B. I and II only
D. I, II, c t;id III
iII.
37.
In case of an initial public offering ( I PC) ct seCL:rities by a company, the inter-irn financial
statements to accompany the Registration Statement (SEC Form 12-1, as amended) shall
be audited by an external auditor accredited by t he
A. Board of Accountancy ( BOA)
B. Professional Regulation Commission (PRC)
C. BOA/ PRC
D. BOA/PRC and SEC (Securities a'hd Exchange Commission)
38. The COA chairman and the two ( 2 ) commission.:!rs shall be appoi nted by the president: of
the Philippines with consent of the Commission on Appointments for a term of
5 years
C. 7 yea ..s
D. 9 yea s
B. 6 years
A.
]9.
40.
efers to a company's maintaining a steady rat. of earnings growth over a series of years,
thereby providing no reason for the financial markets to impute unexpected risk in the
41. All the components whose financia l ' inform2tion is included in 'the group financial
statements. Group
s
Group Fina ncia l Statement
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MAY 2014
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PRE WEEK AUDITING THEORY 7502
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