QUALITY CONTROLS PRACTICE SET 1. This quality control element. requires a CPA firm to procedures to provide it with reasonable assurance performed in accordance with professional standards al requirements, and that the firm or the engagement’ far are appropriate in the circumstances. a. Engagement performance ¢. Ethical requiremgnt: b. Monitoring d. Human Resources Regarding the assignment of engagement teams, which statements is INCORRECT? a. The identity and role of the engagement partner sho} to key members of client management and those char} b. Policies and procedures include systems to moniti availability of engagement partners so as enable t| establish policies and nat engagements. are \d regulatory and legal ner issue reports that of the following 1d be communicated ed with governance x the workicad and ese individuals to have a sufficient time to adequately discharge their responsibilities c. The firm should also assign appropriate staff wi capabilities, competence and time to perform engag with professional standards and regulatory and leg: to enable the firm or engagement partners to iss appropriate inthe circumstances a. The firm should assign responsibility for each engal manager ‘The firm should establish policies and procedures des reasonable assurance those individuals and firms main! required by the Code of Ethics). Such policies and p the firm to (select the exception): | a. Communicate independence regiixenents b. Take appropriate action to eliminate or c. Override independence requirements of PSQC1 a. Identify and evaluate circumstances and relatio threats to independence educe tl b In the necessary ments in accordance | requirements, and @ reports that are ment to the senior gned to provide it with lain independence (where ocedures should enable eats ships that create Ae a guidance for measuring the quality of the performance of an auditor, the auditor should refer to Generally Accepted Auditing Standards Statements on Quality Control Standards Statements of ‘the Financial Reporting Standazds pave Interpretations of the Philippine Standards on AbThe policies reasonable as regulatory an the fizm a. Internal c b. Code of Et ¢. Monitoring 4. Quality Co: PSQCl require: nd procedures adopted: by a firm designed to provide it with rance regarding compliaieywith professional standards and legal requireneiite; and appropriateness of reports issued by ntrols ics trols complaints and allegations against the firm to be dealt with approximately, Complaints and allegations may come from: | 1 “I III Vv + Firm personnel ves No ves ves + Cliengs ves ves No Yes + other) thiza parties No ves No ves hich combination is correct? a. iv c. IE bir 4.7 Monitoring of individuals ai +Appropriatent +EEfectivenes: a. No, no The following historical #1 engagements &! I. Leader: lthe firm’s system of quality control is performed by competent d cover ss-of the design of quality controls of the operation of quality controls b. Yes, no c. Yes, yes d. No, yes are the elements of quality ’control for audits and reviews of ancial information, and other assurance and related services stated in PSQC 1: hip responsibilities II. Ethical’ requirements III. Acceptance and continuance of client relationships IV. Human résources Vv. Assignment VI. Engagemé VII. Directii nt performance VIII. Supervision IX. | Review X. Monitoring a/%, IZ, 117) IV and x ¢. 3, 11, 11%, Iv, v, and vr b. 1, 11, 11, |1v, vi, and X ds Ty IT, EIT, IV, V, VE, VIZ, VIII, IX, and X10. a2. 13. Regarding identified threats to independence, appropria| and the relevant engagement partner includes the foll a. Expression of a qualified or adverse opinion on the| matter under audit . b. Application of safeguards to eliminate threats to ini ¢. Application to safeguards to reduce threats to indept an acceptable level d. Withdrawal from the engagement ‘The firm should obtain written confirmation of complia and procedures on independence from all firm personne. independent by the Code of Ethics a. Monthly b. Quarterly c. Every 3 years d. Annually ¢ action by the fizm ing, EXCEPT subject lependence ndence to ce with its policies required to be In a certain audit engagement, several key members of the engagement team had differences of opinion Zegarding a certain matter. In) this case a. The report shall not be issued until the matter is resolved b. An increase in the audit fee will be requested due of the time required to complete the engagements 0 the extension c. Documentation will be made regarding the unsolved matter, and the auditor will withdraw from the engagement altogether d. The engagement partner shall issue a disclaimer of scope limitation pinion due to a This quality control element requires a CPA firm to egtablish policies and procedures to provide it with reasonable assurance thi performed in accordance with professional standards and| requirements, and that the firm or the engagement partn| are appropriate in the circumstances. a. Monitoring c. Human resources b. Ethical requirements d. Engagement perform Reviewers consider C engagements are regulatory and legal x issue reports that Ince a. Consultation with experts has been made for all phases of the engagement b. The work performed supports the conclusions reached appropriately documented and is c. Whether the system of quality control is operating effectively and adequately | d. The work has been performed in accordance with GAAPla. 16. 17. ae. PSA 220, Quality Control for Audits of Financial Information (Revised), states, in part, that for audits of financial statements of listed entities, the engagement! partner should not issue the auditor’s report until the completion of |the a. management [review c. engagement quality control review b. engagement [team review d. engagement partner review The firm should establish policies and procedures requiring appropriate documentation |to. provide evidence of the operation of each element of its system of quality control. How such matters are documented is based on a. Philippine Audit Practice Statements b. The firm's [decision ©. PSA 220 d. PSQC No. 1 Information of matters mentioned in number 21 may come from a. Communication with existing ox previous providers of CPA services to the client b. Background |searchers of relevant databases c. Inquiry of éther firm personnel or third parties such as (bankers, legal’ counsel and industry peers) d. All of thege | In pursuing a CPA firm’s quality control objectives, a.CPA firm should adopt policies and procedures to enable it to identify and evaluate circumstances and relationsijips that create threats to independehce, and to take appropriate action to eliminate those threats or reduce them to an acceptable level by applying safeguards, or, if considered appropriate, to withdraw from the engagement. Which quality control element would this be most likely satisfy? a. Leadership|responsibilities for quality within the firm b. Ethical requirements ¢. Monitoring a. Human resol ees The engagemen} supervision, professional auditor's rep| Supervision i} a. Identifyint experience b. Informing responsibi| . Addressing| partner should take responsibility for the direction, nd performance of the audit engagement in compliance with tandards and regulatory and legal requirements, and for the rt that is issued to be appropriate’ in the circumstances. cludes the following, except matters for consultation or consideration by more engagement team members during the audit engagement. he members ‘of the engagement team of their ities. significant issues arising during the audit engagement, considering their significance, and modifying the planned approach appropriately d. Tracking pe progress of the audit engagement1g. 29. 21. 22. In relation to completed engagements, these are procedurps designed to provide evidence. of compliance by engagement teams with the £: policies and procedures Engagement quality control re Quality Control Monitoring . Inspection aoe In pursuing a CPA firm's quality objectives, a CPA firm and procedures to enable it to identify and evaluate xm’s quality control should adopt policies kircumstances -and relationships that create threats to independence, and to take appropriate action to eliminate those threats or reduce them to al applying safeguards, or, if considered appropriate, acceptable level by withdraw from the engagement. Which quality control element would this| be most likely to satisfy? a. Ethical requirements b. Leadership responsibilities for quality within thel c. Monitoring d. Human resources he nature, timing, and extent of an audit firm's qua and procedures depend on i. The CBA firm's size il. The nature of the CPA firm's practil ity control policies fe 4ii. Appropriate cost- benefit considerdtions a. Yes, Yes, "No c. Yes, No, Yes b. Yes, Yes, Yes d. No, No, No Which of the following is (are) proper when a change of ai or is in process? | a. The successor auditor should advise the client of hi: to contact the predecessor auditor and the contact. | b. All of the three other choices. | ¢. The integrity of the management should not be. subj) communication between the predecessor and successo! d. Communication between the predecessor and success! should take place only after the successor auditor the engagement. ditors has taken place s intention quest permission for ct of auditors. jr auditors las accepted23. 24. 25. fends Policies and procedures on documentation of the engagement quality contréi review should require documentation that: © The prégedures required by the firm's policies on engagement quality|control review have been performed © The eng: lgement quality control review has'been completed before the repgrt is issued © The rev: cause tl ewer is not aware of any unresolved matters that would le reviewer to believe that the significant judgments the engagement team made and the conclusions reached were not appropr: ate. Which combination is correct? a. Yes, yes, es c. Yes, no; yes b. No, yes, yes di No, no, yes criteria for be performed a. The nature jetermining whether an-engagement quality control review should include the following of the engagement, including extent of involvement of the public interest b. Unusual ci: c. Laws and x review a. All of the! Which of the a. Policies ai personnel b. Policies ti applied c. Policies t in fact ani d. Policies al actively ei cumstances or risks in an engagement or class of engagements egulations that may require an engagement quality control Be ‘ollowing is’ not an essential component of quality control? id procedures to ensure that the work performed by firm eet applicable professional standards jat ensure that monitoring activities are effectively ensure that personnel maintain their independence in appearance d procedures to ensure that firm personnel are gaged in marketing strategies