QUIZ 1 -AUDTHEO Ireneo MCQ reviewer

False

Practitioner's satisfaction

Assurance refers to the responsible party's satisfaction as to the reliability of an assertion being made by one party for use by another party.

True

The degree of satisfaction achieved (the level of assurance which may be provided) is directly related to the scope of procedures performed and their results.

False

Assurance engagements do not require independence on the part of the auditor.

True

Assurance engagements performed by professional accountants are intended to enhance the credibility of information.

True

An engagement may be classified as an assurance engagement once it meets all five elements required by the Framework for Assurance Engagements.

False

The responsible party and the intended user need to be from separate organizations.

True

The term practitioner is broader in scope compared to the term auditor

False

A professional accountant may agree to perform an assurance engagement which they are not competent to carry out.

True

The responsible party or parties is the person(s) responsible for the subject matter.

False

The responsible party is always the one who engages the professional accountant.

False

The responsible party is always the one who engages the professional accountant.

True

The responsible party may also be one of the intended users.

True

The subject matter of an assurance engagement may be presented as a point in time or covering a period of time.

True

Criteria are the standards or benchmarks used to evaluate or measure the subject matter Of an assurance engagement.

True

In the case of an audit of financial statements, the suitable criteria to be used are Philippine Standards on Auditing (PSAs).

False

Appropriateness refers to quantity, while sufficiency refers to quality, of evidential matter.

False

Evidence obtained directly by the practitioner is less reliable than evidence obtained indirectly or by inference.

False

The responsible party expresses a conclusion that provides a level of assurance as to whether the subject matter conforms, in all material respects, with the identified suitable criteria.

False

In an attestation engagement, the professional accountant expresses a conclusion on the subject matter based on suitable criteria, regardless of whether the responsible party has made a written assertion on the subject matter.

True

The CPA'S conclusion provides a level of assurance about the subject matter.

False

Absolute assurance is attainable owing to the fact that much or the evidence available to the CPA is persuasive rather than conclusive.

False

Professional standards prohibit CPAs from performing non-assurance engagements.

False

An agreed- upon procedures engagement is an assurance engagement.

False

Non-assurance engagements include: compilations, consulting, and compliance audits.

True

Consulting services are two party contracts.

A. Assurance services.

These are independent professional services that improve the quality of information for decision-makers, such as management and external users.

A. Assurance services.

B. Audit services.

C. Attestation services.

D. Management consulting.

C. Assurance level.

This refers to the level of auditor's satisfaction as to the reliability

of an assertion being made by one party for use by another party.

A. Confidence level.

B. Reasonableness level.

C. Assurance level.

D. Tolerance level.

Engagement process

Which of the following is not an element of assurance engagements?

Professional Accountant

Persons who hold valid certificates as CPAs, whether they be in public practice, commerce & industry, government, or education:

B. Responsible party

The person, or class of persons, whether as individuals or representatives of an entity, responsible for the subject matter.

A. Professional accountant

B. Responsible party

C. Intended user(s)

D. None of the answers.

C. Intended user(s)

The person or class of persons for whom the professional accountant prepares the report for a specific use or purpose.

A. professional accountant

B. Responsible party

C. Intended user(s)

D. None of the answers.

D. All of them

Which of the following forms may the subject matter of an assurance engagement take?

A. Historical and prospective financial information.

B. Systems and processes.

C. Behavior.

D. All of them.

A. Criteria

These are the standards or benchmarks used to evaluate or

measure the subject matter Of an assurance engagement:

A. Criteria.

B. Engagement process.

C. Assertions.

D. Generally accepted auditing standards.

D. Sufficiency.

Which of the following characteristics is NOT considered necessary

in determining whether the criteria are suitable?

A. Relevance.

B. Neutrality.

C. Reliability.

D. Sufficiency.

Efficiency and effectiveness of operations.

10. Which of the following is more difficult to evaluate objectively?

Efficiency and effectiveness of operations.

Compliance with government regulations.

Presentation of financial statements in accordance with GAAP.

All the three above are equally difficult.

C. Expresses a conclusion about an assertion.

11. In performing an assurance engagement, a professional accountant typically:

A. Supplies litigation support services.

B. Assesses control risk at a low level.

C. Expresses a conclusion about an assertion.

D. Provides management consulting advice.

C. Reasonable assurance.

12. When a CPA has obtained sufficient appropriate evidence to conclude that the subject matter conforms, in all material respects, with identified suitable criteria, he/she can provide a(n):

A. Limited assurance.

B. Absolute assurance.

C. Reasonable assurance.

D. No assurance.

D. Audits, reviews and other assurance services.

13. The three commonly-sought types of assurance services are:

Audits, review, and compilations.

Audits, compilations, and other assurance services.

Reviews, compilations and other assurance service.

Audits, reviews and other assurance services.

B. An engagement which involves the evaluation of the quality of health care, medical services and looks into the health care delivery system.

14. Which of the following best describes health care performance measurement service?

A. An engagement which provides assurance about whether financial and non-financial information being reported from the entity's performance measurement system is reliable.

B. An engagement which involves the evaluation of the quality

of health care, medical services and looks into the health

care delivery system.

C. An engagement which Identifies a set or risks that affect the client organization. It involves the study Of the link between risks and the Organization's vision, mission, objectives and

strategies and the development of new and relevant measures.

D. None of these.

All engagements performed by professional accountants are assurance engagements.

Which of the following statements is incorrect?

Assurance services report on the quality of information.

Assurance engagements encompass attestation engagements.

All engagements performed by professional accountants are assurance engagements.

16. Absolute assurance is generally not attainable as a result of such factors as:

A. The use of selective testing

B. The inherent limitations of control systems

C. The use of judgment

D. All of these.

16. Absolute assurance is generally not attainable as a result of such factors as:

A. The use of selective testing

B. The inherent limitations of control systems

C. The use of judgment

D. All of these.

A. Compliance audits

17. Which of the following is an assurance engagement?

A. Compliance audits.

Agreed-upon procedures engagements.

C. Management consulting.

D. Preparation of tax returns where no conclusion is expressed.

A. Compilation.

18. This engagement involves the application of accounting expertise, as opposed to auditing expertise, in collecting, classifying and summarizing financial information:

A. Compilation.

B. Agreed-upon procedures engagement.

C. Tax consulting.

D. Management consulting.

B. Tax planning.

19. A service that includes the determination of the tax consequences

of planned or potential transactions, followed by making

suggestions on the most desirable course of action (to legally

minimize the tax liability while achieving the client's objectives):

A. Tax evasion.

B. Tax planning.

C. Tax shelter.

D. Tax compliance.

20. At the end of this engagement, the CPA provides a report of factual findings as a result of undertaking procedures previously agreed With the client:

A. Tax consulting.

B. Management consulting.

C. Compilation.

20. At the end of this engagement, the CPA provides a report of factual findings as a result of undertaking procedures previously agreed With the client:

A. Tax consulting.

B. Management consulting.

C. Compilation.

D. Agreed upon procedures engagement

True

The person or persons conducting an audit engagement is known as the auditor

False

The essence of an independent audit is to determine whether the client's financial statements complied with generally accepted auditing standards.

False

The primary objective of a financial statement audit is to determine compliance with internal and external requirements, and seek necessary improvements to maximize the reliability Of accounting data and company efficiency.

False

An independent auditor may participate in preparing financial statement including accompanying notes.

True

The independent audit is important to readers of financial statements because it involves the objective examination of and reporting on management prepared statements.

False

An independent audit aids in the communication or economic data because the audit guarantees that financial data are fairly presented.

False

After conducting an audit and release of the auditor's report, the primary responsibility on the fairness of the financial statements is shifted to the auditor

True

Financial statements are assertions by an organization's management and therefore, the responsibility of management

True

Information risk is the risk that information provided to users may be materially misstated.

True

One of the primary reasons for an independent audit is the inherent potential conflict between an entity's management and other users of financial statement.

False

11. Today, the most cost-beneficial option to reduce information risk is to have users directly verify the information.

False

12. An audit, if properly conducted, ensures that fraud is prevented.

True

The use of selective testing is one of the reasons why auditors can provide reasonable (but not absolute) assurance on the fairness of financial statements

False

Compared to the auditor of the past, the auditor of today focuses on the detection.

True

A typical objective of an operational audit is for the auditor to make recommendations for improving performances.

False

Compliance audits are used to determine adherence to rules and regulations set by the auditor.

True

External auditing refers to financial statement audits performed by independent auditors.

True

Internal auditing is a managerial control which functions by measuring and evaluating the effectiveness of other controls.

False

An operational audit conducted by an internal auditor is intended to provide an aid in the independent auditor examining the financial statements.

False

The major beneficiaries of an internal audit are management and third-party users of the financial statement.

False

An independent auditor need not be a CPA.

False

Auditing requires that data should be externally-generated.

True

Auditors must have independence and freedom from management constraint.

True

An audit benefits the public.

False

The main difference between auditors and accountants is the auditor's ability to

interpret PSAs.