Professional Documents
Culture Documents
12. As defined in the Code of Ethics, __________ is the communication to the public of
information as to the services or skills provided by professional accountants in public
practice with a view to procuring professional business.
a. Advertising
b. Publicity
c. Solicitation
d. Marketing professional services
13. As defined in the Code of Ethics, __________ is the communication to the public of facts
about a professional accountant which are not designed for the deliberate promotion of that
professional accountant
a. Advertising
b. Publicity
c. Solicitation
d. Marketing professional services
14. The following statements relate to the provisions of the Code of Ethics that deal with the
professional accountant’s marketing of professional services. Which is false?
a. When a professional accountant in public practice solicits new work, through
advertising or other forms of marketing, a self-interest threat to compliance with the
principle of professional behavior may be created.
b. The professional accountant should be honest and truthful when marketing
professional services
c. Advertising and publicity are generally unacceptable
d. When marketing professional services, the professional accountant should not make
exaggerated claims for services offered, qualifications possessed or experience
gained.
15. A professional accountant in public practice is allowed to
a. Refer to, use or cite actual or purported testimonials by third parties
b. Publish services in billboard (e.g., tarpaulin, streamers, etc.) advertisements
c. Publish and compare fees with other CPAs or CPA firms or compare those services
with those provided by another firm or CPA practitioner
d. Inform interested parties through any medium that a partnership or salaried
employment of an accountancy nature is being sought
16. Which element of a system qualify control is addressed by the establishment of policies and
procedures designed provide the firm with reasonable assurance that it has sufficient
personnel with the competence, capabilities, and commitment to ethical principles?
a. Monitoring
b. Leadership responsibilities for quality within the firm
c. Human resources
d. Engagement performance
17. The firm shall establish policies and procedures designed to provide it with reasonable
assurance that the firm and its personnel comply with relevant ethical requirements/ the Code
of Ethics for Professional Accountants in the Philippines establishes the fundamental
principles of professional ethics which include the following, except
a. Integrity
b. Objectivity
c. Relevance
d. Professional behavior
18. The audit work performed by each assistant should be reviewed by personnel of at least equal
competence to determine whether it was adequately performed and to evaluate whether the
a. Firm’s system of quality control has been maintained at a high level.
b. Work performed and the results obtained have been adequately documented
c. Audit procedures performed are approved in the professional standards.
d. Audit procedures performed are in accordance with Philippine Standards on Auditing
(PSAs)
19. In determining whether the work of the internal auditors is likely to be adequate for purposes
of the audit, the external auditor shall evaluate the internal auditor’s
a. Efficiency and experience
b. Independence and review skills
c. Training and supervisory skills
d. Competence and objectivity
20. In assessing the technical competence of an internal auditor, an external auditor most likely
would obtain information about the
a. Quality of working paper documentation, reports, and recommendations
b. Organizational level to which the internal auditor reports
c. Influence of management on the internal auditor’s duties
d. Entity’s commitment to integrity and ethical values.
21. Which of the following is a false statement about the use of the internal auditor’s work by the
external auditor?
a. The PSAs do not allow the external auditor to use the work of the internal auditor
b. PSAs do not allow the external auditor to substitute the work of the internal auditor,
the external auditor in critical judgments
c. The PSAs state that, when specific work of the internal auditor is to be used, it should
be evaluated and tested.
d. PSAs state that, when considering whether to use the work of the internal auditor,
the external auditor should consider the internal auditor’s competence and
objectivity
22. The coordination of activities between internal and external auditors
a. Eliminates duplication of audit efforts
b. Includes the exchange of audit reports and management letters
c. Prevents external auditors from having access to the programs used by internal
auditors.
d. Prohibits the internal auditor from using the same audit techniques as external
auditors and vice versa.
23. Which of the following are included in the activities of the internal function?
i. Monitoring of internal control
ii. Examination of financial and operating information
iii. Review of operating activities
a. I and II only
24. General IT controls are policies and procedures that relate to many applications and support
the effective functioning of application controls. General IT controls commonly included
controls over the following, except.
a. Data center and network operations
b. Manual follow-up of exception reports
c. Access security
d. Program change
25. Application controls are
a. Manual or automated procedures that typically operate at a business process level
and apply to the processing of transactions by individual applications
b. Policies and procedures that relate to many applications
c. Controls that maintain the integrity of information and security of data such as
controls over system software acquisition, change and maintenance
d. Controls that relate to many applications and support the effective functioning of
general controls
26. Under PSA 315, monitoring of controls is an internal control component that involves a
process of assessing the quality of internal control performance over time. It involves
assessing the design and operation of controls on a timely basis and taking necessary
corrective actions. Monitoring of controls is accomplished through ongoing monitoring
activities, separate evaluations, or a combination of the two. An entity’s ongoing monitoring
activities often include
a. Periodic reporting by the entity’s internal auditors about the functioning of internal
control
b. Reviewing the purchasing function
c. Periodic audits by the audit committee
d. The audit of the annual financial statements.
27. Control activities relate to the following, except
a. Segregation of duties
b. Performance reviews
c. An internal audit function
d. Authorization
28. The following are examples of monitoring activities, except
a. Information Technology (IT) management regularly generates exception reports for
unusual transactions or volumes of transactions and follows up with investigation as
to causes
b. Management has asked internal auditing to perform regular audits of the controls
over cash processing.
c. Management regularly compares divisional performance with budgets for the division
d. IT management regularly reconciles batch control totals for items processed with
batch controls for items submitted.
29. Proper segregation of duties reduces the opportunities for persons to be in positions to both
a. Establish internal control and authorize transactions
b. Perpetrate and conceal errors or fraud
c. Record cash receipts and cash disbursements
d. Record transactions and prepare financial statements
30. Control activities include those that relate to physical controls over access to and use of assets
and records. A departure from the purpose of physical controls is that
a. The mail room clerk compiles a list of the checks received in the incoming mail
b. Access to safe-deposit box requires two officers
c. Only warehouse personnel and production supervisors have access to raw materials
storeroom
d. Only sales personnel use department vehicles
31. Which of the following most likely would not be considered an inherent limitation of internal
control?
a. Management override
b. Incompatible functions
c. Mistakes in judgment
d. Collusion among employees
32. A basic concept of internal control is the concept of reasonable assurance, which recognizes
that
a. Establishing and maintaining internal control is an important responsibility of
management
b. Internal control may be ineffective due to collusion among employees
c. The cost of an entity’s internal control should not exceed the benefits expected to be
derived
d. Adequate safeguards over access to assets and records should permit an entity to
maintain proper accountability
33. All the information used by the auditor in arriving at the conclusions on which the audit
opinion is based is called
a. Audit information
b. Audit evidence
c. Accounting records
d. Corroborating information
34. As defined in PSA 500, _________ is an individual or organization possessing the expertise in
a field other than accounting or auditing, whose work in that field is used by the entity to
assist the entity in preparing the financial statements
a. Auditor’s expert
b. Management’s expert
c. Auditor’s internal expert
d. Auditor’s external expert
35. Which of the following statements concerning the management’s expert’s competence,
capabilities, and objectivity is correct?
a. Objectivity relates to the ability of the management’s expert to exercise the
competence in the circumstances
b. Competence relates to the possible effects that bias, conflict of interest or the
influence of others may have on the professional or business judgment of the
management’s expert.
c. Capability relates to the nature and level of expertise of the management’s expert
d. The management’s expert’s competence, capabilities, and objectivity are important
factors in relation to the reliability of any information prepared by the management’s
expert
36. Which of the following statements concerning audit evidence is false?
a. The auditor uses professional judgment and exercises professional skepticism in
evaluating the quantity and quality of audit evidence, and thus its sufficiency and
appropriateness, to support the audit opinion
b. The auditor ordinarily finds it necessary to rely on audit evidence that is persuasive
rather than conclusive.
c. In forming the audit opinion, the auditor does not examine all the information
available because conclusions ordinarily can be reached by using sampling
approaches and other means of selecting items for testing
d. The difficulty and expense of obtaining audit evidence concerning an account balance
is a valid basis for omitting the test
37. The following are assertions about account balances at the period end, except
a. Existence
b. Rights and obligations
c. Valuation and allocation
d. Cutoff
38. The following statements relate to the use of analytic procedures. Which is false?
a. Substantive analytic procedures are applicable when there is only a small volume of
transactions
b. The application of substantive analytic procedures is based on the expectation that
relationships among data exist and continue in the absence of known conditions to
the contrary
c. The presence of relationships among data provides evidence as to the completeness,
accuracy, and occurrence of transactions captured in the information produced by the
entity’s information system
d. Reliance on the results of substantive analytical procedures will depend on the
auditor’s assessment of the risk that the analytic procedures may identify
relationships as expected when, in fact, a material misstatement exists.
39. In the audit of which of the following general ledger accounts will tests of controls be
particularly appropriate?
a. Bank charges
b. Equipment
c. Bonds payable
d. Sales
40. Which of the following might be detected by an auditor’s review of the entity’s sales cutoff?
a. Inflated sales for the year
b. Lapping of year-end accounts receivable
c. Unrecorded sales discounts
d. Excessive goods returned for credit