TEST BANK 1 AUDITING THEORY Auditing Theory 100
Questions
82102017
1. Under the PRC BOA Resolution No. 2-2016, which of the following
shall be submitted by the individual CPA, firms, and partnerships of
CPAs engaged in the practice of public accountancy to the
Professional Regulation Commission thru the Standards and
Inspection Division?
A. Engagement Reports.
B. Engagement Budgets.
C. Engagement Letters.
D. Engagement Contracts.
2. The following information shall be included in the Engagement
Report (ER), except
A. Type of engagement
B. Engagement fee
C. Start date and completion date of engagement.
D. Audit opinion rendered, if the type of engagement rendered is
Compilation of Financial Statements.
3. Which of the following shall be prepared and signed by the CPA who
is tasked to assist management in the preparation and presentation of
financial information of an entity in accordance with an applicable
financial reporting framework? A. Auditor’s Report.
B. Practitioner’s Review Report.
C. Certificate on the Compilation Services for Preparation of
Financial Statements D. Review Report
,4. BOA Resolution No. 263 Series of 2015 approves the adoption of
_________________ (subject to changes of certain provisions) as the
Code of Ethics for Professional Accountants in the Philippines.
A. IFAC 2010 Code of Ethics for Professional Accountants B. IFAC
2012 Code of Ethics for Professional Accountants C. IFAC 2013
Code of Ethics for Professional Accountants
D. IFAC 2015 Code of Ethics for Professional Accountants
5. When an audit client becomes a Public Interest Entity (PIE), the
length of time the individual has served the audit client as a key audit
partner before the client becomes a PIE shall be taken into account in
determining the timing of the rotation. If the individual has served
the audit client as a key audit partner for five (5) years or less when
the client becomes a PIE, the number of years the individual may
continue to serve the client in that capacity before rotating off the
engagement is
A. Seven (7) years
B. Seven (7) years less the number of years served
C. Maximum of two (2) additional years
D. Five (5) years
6. If the individual has served the audit client as a key audit partner for
six (6) or more years when the client becomes a PIE, the partner may
continue to service in that capacity for ________________ before
rotating off the engagement.
A. Seven (7) years
B. Seven (7) years less the number of years served
C. Maximum of two (2) additional years
pg. 2
, D. Five (5) years
7. Professional Accountant refers to an individual who holds a valid
Certificate of Registration and current Professional Identification
Card issued by the Board of Accountancy (i.e., CPA) and the
Professional Regulation Commission (PRC) if he/she is in A. Public
practice or education only.
B. Public practice or industry or commerce only.
C. Public practice or public sector only.
D. Public practice, industry or commerce, public sector, or education.
8. PSA 700 (Revised) states that the first section of the auditor’s report
shall have the heading
A. Opinion
B. Basis for Opinion
C. Responsibilities for the Financial Statements
D. Auditor’s Responsibilities for the Audit of the Financial
Statements
9. PSA 700 (Revised) states that the Opinion section of the auditor’s
report shall also identify the entity whose financial statements have
been audited and
A. State that the financial statements have been audited and identify
the title of each statement comprising the financial statements.
B. Specify the date of, or period covered by, each financial statement
comprising the financial statements.
C. Refer to the notes, including summary of significant accounting
policies. D. All of the above
pg. 3
, 10. PSA 700 (Revised) states that for audits of complete sets of general
purpose financial statements of listed entities, the auditor shall
communicate ______________ in the auditor’s report.
A. Significant deficiencies in the entity’s internal control system.
B. Matters of interest to those charged with governance.
C. Other non-assurance services performed
D. Key audit matters
11. 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 has widespread popularity because it is easy to use
and requires little computer background on the part of the auditor; it
can be used on both mainframe and PC systems; it allows the auditor
to perform his/her tests independent of the entity’s computer
processing personnel; and it can be used to audit the data in most file
formats and structures is called a
A. Customized program
B. Purpose-written program
C. Utility program
D. Package or generalized audit software (GAS)
12. Which of the following factors is most relevant when an auditor
considers the client's organizational structure in the context of control
risk?
A. Management's attitude toward information processing and
accounting departments.
B. The organization's recruiting and hiring practices.
C. Physical proximity of the accounting function to upper
management.
pg. 4
Questions
82102017
1. Under the PRC BOA Resolution No. 2-2016, which of the following
shall be submitted by the individual CPA, firms, and partnerships of
CPAs engaged in the practice of public accountancy to the
Professional Regulation Commission thru the Standards and
Inspection Division?
A. Engagement Reports.
B. Engagement Budgets.
C. Engagement Letters.
D. Engagement Contracts.
2. The following information shall be included in the Engagement
Report (ER), except
A. Type of engagement
B. Engagement fee
C. Start date and completion date of engagement.
D. Audit opinion rendered, if the type of engagement rendered is
Compilation of Financial Statements.
3. Which of the following shall be prepared and signed by the CPA who
is tasked to assist management in the preparation and presentation of
financial information of an entity in accordance with an applicable
financial reporting framework? A. Auditor’s Report.
B. Practitioner’s Review Report.
C. Certificate on the Compilation Services for Preparation of
Financial Statements D. Review Report
,4. BOA Resolution No. 263 Series of 2015 approves the adoption of
_________________ (subject to changes of certain provisions) as the
Code of Ethics for Professional Accountants in the Philippines.
A. IFAC 2010 Code of Ethics for Professional Accountants B. IFAC
2012 Code of Ethics for Professional Accountants C. IFAC 2013
Code of Ethics for Professional Accountants
D. IFAC 2015 Code of Ethics for Professional Accountants
5. When an audit client becomes a Public Interest Entity (PIE), the
length of time the individual has served the audit client as a key audit
partner before the client becomes a PIE shall be taken into account in
determining the timing of the rotation. If the individual has served
the audit client as a key audit partner for five (5) years or less when
the client becomes a PIE, the number of years the individual may
continue to serve the client in that capacity before rotating off the
engagement is
A. Seven (7) years
B. Seven (7) years less the number of years served
C. Maximum of two (2) additional years
D. Five (5) years
6. If the individual has served the audit client as a key audit partner for
six (6) or more years when the client becomes a PIE, the partner may
continue to service in that capacity for ________________ before
rotating off the engagement.
A. Seven (7) years
B. Seven (7) years less the number of years served
C. Maximum of two (2) additional years
pg. 2
, D. Five (5) years
7. Professional Accountant refers to an individual who holds a valid
Certificate of Registration and current Professional Identification
Card issued by the Board of Accountancy (i.e., CPA) and the
Professional Regulation Commission (PRC) if he/she is in A. Public
practice or education only.
B. Public practice or industry or commerce only.
C. Public practice or public sector only.
D. Public practice, industry or commerce, public sector, or education.
8. PSA 700 (Revised) states that the first section of the auditor’s report
shall have the heading
A. Opinion
B. Basis for Opinion
C. Responsibilities for the Financial Statements
D. Auditor’s Responsibilities for the Audit of the Financial
Statements
9. PSA 700 (Revised) states that the Opinion section of the auditor’s
report shall also identify the entity whose financial statements have
been audited and
A. State that the financial statements have been audited and identify
the title of each statement comprising the financial statements.
B. Specify the date of, or period covered by, each financial statement
comprising the financial statements.
C. Refer to the notes, including summary of significant accounting
policies. D. All of the above
pg. 3
, 10. PSA 700 (Revised) states that for audits of complete sets of general
purpose financial statements of listed entities, the auditor shall
communicate ______________ in the auditor’s report.
A. Significant deficiencies in the entity’s internal control system.
B. Matters of interest to those charged with governance.
C. Other non-assurance services performed
D. Key audit matters
11. 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 has widespread popularity because it is easy to use
and requires little computer background on the part of the auditor; it
can be used on both mainframe and PC systems; it allows the auditor
to perform his/her tests independent of the entity’s computer
processing personnel; and it can be used to audit the data in most file
formats and structures is called a
A. Customized program
B. Purpose-written program
C. Utility program
D. Package or generalized audit software (GAS)
12. Which of the following factors is most relevant when an auditor
considers the client's organizational structure in the context of control
risk?
A. Management's attitude toward information processing and
accounting departments.
B. The organization's recruiting and hiring practices.
C. Physical proximity of the accounting function to upper
management.
pg. 4
