AUDTHEO: Introduction to Auditing

The expertise that distinguishes auditors from accountants is in the

Accumulation and interpretation of evidence.

Independent auditing can best be described as a

Discipline that attests to the results of accounting and other operations and data

Which types of audit uses as its criteria laws and regulations?

Compliance Audit

An operational audit is designed to

Assess the efficiency and effectiveness of management's operating procedures

A review of any part of an organization's procedures and methods for the purpose of evaluating efficiency and effectiveness is classified as a (n)

Operational Audit

What operation is more difficult to evaluate objectively?

Efficiency and effectiveness of operations.

A governmental audit may extend beyond an examination leading to the expression of an opinion on the fairness of financial presentation to include

* Program result
* Compliance
* Economy and efficiency

An audit designed to determine the extent to which the desired results of an activity established by the legislative or other authorizing body are being achieved is a (an)

Program Audit

What best describes what is meant by the term PSA?

Measures of the quality of the auditor's performance

A financial statement audit:

Lends credibility to the FS.

What best describes the objective of an audit of financial statements?

To express an opinion whether the financial statements are prepared, in all material respect, in accordance with an identified financial reporting framework.

Accurately depicts the auditor's responsibility with respect to Philippine Standards on Auditing

The auditor is generally required to follow the guidance provided by the Standards, and should be able to justify any departures.

Who is responsible for an entity's financial statements?

The entity’s management

The best statement of the responsibility of the auditor with respect to audited financial statement is:

The auditor's responsibility is confined to his expression of opinion about the audited financial statements.

For an entity's financial statements to be presented fairly in conformity with PFRS, the principles selected should:

Reflect transactions in a manner that presents the financial statements within a range of acceptable limits.

As used in auditing, what statement best describes "assertions"?

Assertions are the representations of management as to the fairness of the financial statements.

The auditor communicates the results of his or her work through the medium of the

Audit report

Because an examination in accordance with generally accepted auditing standards is influenced by the possibility of material errors, the auditor should conduct the examination with an attitude of:

Professional skepticism

Certain fundamental beliefs called "postulates" underlie auditing theory. Which of the following is not a postulate of auditing?

An audit has a benefit only to the owners.

An audit can have a significant effect on

Information risk

It is an appraisal activity established within an entity as a service to the entity

Internal Auditing

To operate effectively, an internal auditor must be independent of

the line functions of the organizations

To provide for the greatest degree of independence in performing internal auditing functions, an internal auditor most likely should report to

Audit Committee

It is the relationship between internal auditing and the external auditor

Certain aspects of internal auditing may be useful in determining the nature, timing and extent of external audit procedures

This is NOT a distinction between independent auditing and internal auditing

Although independent auditors strive for both validity and relevance of evidence, internal auditors are concerned almost exclusively with validity.