Auditing Theory - Questions And Accurate Answers
Independent professional services that are intended to enhance the credibility
of information to meet the needs of an intended user Correct Answer -
Which of the following statements best describes assurance services?
(Auditing Theory: Assurance Services)
Compilation of financial information Correct Answer - Which of the
following is NOT an assurance service?
(Auditing Theory: Assurance Services)
Neutral criteria contribute to conclusions that are free from bias. Correct
Answer - Suitable criteria are required for reasonably consistent evaluation
or measurement of the subject matter of an assurance engagement. Which of
the following statements concerning the characteristics of suitable criteria is
correct?
(Auditing Theory: Assurance Services)
Subject matter information Correct Answer - In an assurance
engagement, the outcome of the evaluation or measurement of a subject
matter against criteria is called
(Auditing Theory: Assurance Services)
Assertion-based engagements Correct Answer - In some assurance
engagements, the evaluation or measurement of the subject matter is
performed by the responsible party, and the subject matter information is in
the form of an assertion by the responsible party that is made available to
intended users. These engagements are called
(Auditing Theory: Assurance Services)
,Reasonable assurance engagement Correct Answer - What type of
assurance engagement is involved when the practitioner expresses a positive
form of conclusion?
(Auditing Theory: Assurance Services)
Limited assurance engagement Correct Answer - What type of
assurance engagement is involved when the practitioner expresses a negative
form of conclusion?
(Auditing Theory: Assurance Services)
Sufficiency is the measure of the quantity of evidence. Correct Answer -
Which of the following statements is true concerning evidence in an assurance
engagement?
(Auditing Theory: Assurance Services)
That the practitioner expresses an inappropriate conclusion when the subject
matter information is materially misstated. Correct Answer - Assurance
engagement risk is the risk
(Auditing Theory: Assurance Services)
C. The practitioner may not have the required assurance knowledge and skills
to gather and evaluate evidence. Correct Answer - Reducing assurance
engagement risk to zero is very rarely attainable or cost beneficial as a result
of the following factors, except
A. The use of selective testing.
B. The fact that much of the evidence available to the practitioner is
persuasive rather than conclusive.
C. The practitioner may not have the required assurance knowledge and skills
to gather and evaluate evidence.
D. The use of judgment in gathering and evaluating evidence and forming
conclusions based on that evidence.
,(Auditing Theory: Assurance Services)
Defines and describes the elements and objectives of an assurance
engagement, and identifies engagements to which PSAs, PSREs, and PSAEs
apply. Correct Answer - The Philippine Framework for Assurance
Engagements
(Auditing Theory: Assurance Services)
Both I and II Correct Answer - After accepting an assurance
engagement, a practitioner is not allowed to change the engagement to a non-
assurance engagement, or from a reasonable assurance engagement to a
limited assurance engagement, except when there is reasonable justification
for the change. Which of the following ordinarily will justify a request for a
change in the engagement?
I. A change in circumstances that affects the intended users' requirements.
II. A misunderstanding concerning the nature of the engagement.
(Auditing Theory: Assurance Services)
Reviews of any historical financial information by a practitioner other than
the entity's auditor. Correct Answer - PSRE 2400 (Engagements to
Review Financial Statements), as amended by the AASC in February 2008,
applies to
(Auditing Theory: Auditing and Related Services)
Obtain a general knowledge of the business and operations of the entity.
Correct Answer - When performing a compilation engagement, the
accountant is required to
(Auditing Theory: Auditing and Related Services)
Review Correct Answer - Inquiries and analytical procedures ordinarily
form the basis for which type of engagement?
(Auditing Theory: Auditing and Related Services)
, Yes No Yes Correct Answer - Independence is not a requirement for
which of the following engagements?
(Auditing Theory: Auditing and Related Services)
The practitioner's conclusion is to be contained in a written report.
Correct Answer - A practitioner should accept an assurance engagement
only if
(Auditing Theory: Auditing and Related Services)
Either I or II Correct Answer - A practitioner is associated with financial
information when...
I. The practitioner attaches a report to that financial information.
II. The practitioner consents to the use of his/her name in a professional
connection.
(Auditing Theory: Auditing and Related Services)
Both I and II Correct Answer - The auditor is required to comply with all
PSAs relevant to the audit of an entity's financial statements. A PSA is relevant
to the audit when
I. The PSA is in effect.
II. The circumstances addressed by the PSA exist.
(Auditing Theory: Auditing and Related Services)
I and II only Correct Answer - The overall objectives of the auditor in
conducting an audit of financial statements are:
I. To obtain reasonable assurance about
whether the financial statements as a whole are
free from material misstatement, whether caused
by fraud or error.
II. To report on the financial statements.
Independent professional services that are intended to enhance the credibility
of information to meet the needs of an intended user Correct Answer -
Which of the following statements best describes assurance services?
(Auditing Theory: Assurance Services)
Compilation of financial information Correct Answer - Which of the
following is NOT an assurance service?
(Auditing Theory: Assurance Services)
Neutral criteria contribute to conclusions that are free from bias. Correct
Answer - Suitable criteria are required for reasonably consistent evaluation
or measurement of the subject matter of an assurance engagement. Which of
the following statements concerning the characteristics of suitable criteria is
correct?
(Auditing Theory: Assurance Services)
Subject matter information Correct Answer - In an assurance
engagement, the outcome of the evaluation or measurement of a subject
matter against criteria is called
(Auditing Theory: Assurance Services)
Assertion-based engagements Correct Answer - In some assurance
engagements, the evaluation or measurement of the subject matter is
performed by the responsible party, and the subject matter information is in
the form of an assertion by the responsible party that is made available to
intended users. These engagements are called
(Auditing Theory: Assurance Services)
,Reasonable assurance engagement Correct Answer - What type of
assurance engagement is involved when the practitioner expresses a positive
form of conclusion?
(Auditing Theory: Assurance Services)
Limited assurance engagement Correct Answer - What type of
assurance engagement is involved when the practitioner expresses a negative
form of conclusion?
(Auditing Theory: Assurance Services)
Sufficiency is the measure of the quantity of evidence. Correct Answer -
Which of the following statements is true concerning evidence in an assurance
engagement?
(Auditing Theory: Assurance Services)
That the practitioner expresses an inappropriate conclusion when the subject
matter information is materially misstated. Correct Answer - Assurance
engagement risk is the risk
(Auditing Theory: Assurance Services)
C. The practitioner may not have the required assurance knowledge and skills
to gather and evaluate evidence. Correct Answer - Reducing assurance
engagement risk to zero is very rarely attainable or cost beneficial as a result
of the following factors, except
A. The use of selective testing.
B. The fact that much of the evidence available to the practitioner is
persuasive rather than conclusive.
C. The practitioner may not have the required assurance knowledge and skills
to gather and evaluate evidence.
D. The use of judgment in gathering and evaluating evidence and forming
conclusions based on that evidence.
,(Auditing Theory: Assurance Services)
Defines and describes the elements and objectives of an assurance
engagement, and identifies engagements to which PSAs, PSREs, and PSAEs
apply. Correct Answer - The Philippine Framework for Assurance
Engagements
(Auditing Theory: Assurance Services)
Both I and II Correct Answer - After accepting an assurance
engagement, a practitioner is not allowed to change the engagement to a non-
assurance engagement, or from a reasonable assurance engagement to a
limited assurance engagement, except when there is reasonable justification
for the change. Which of the following ordinarily will justify a request for a
change in the engagement?
I. A change in circumstances that affects the intended users' requirements.
II. A misunderstanding concerning the nature of the engagement.
(Auditing Theory: Assurance Services)
Reviews of any historical financial information by a practitioner other than
the entity's auditor. Correct Answer - PSRE 2400 (Engagements to
Review Financial Statements), as amended by the AASC in February 2008,
applies to
(Auditing Theory: Auditing and Related Services)
Obtain a general knowledge of the business and operations of the entity.
Correct Answer - When performing a compilation engagement, the
accountant is required to
(Auditing Theory: Auditing and Related Services)
Review Correct Answer - Inquiries and analytical procedures ordinarily
form the basis for which type of engagement?
(Auditing Theory: Auditing and Related Services)
, Yes No Yes Correct Answer - Independence is not a requirement for
which of the following engagements?
(Auditing Theory: Auditing and Related Services)
The practitioner's conclusion is to be contained in a written report.
Correct Answer - A practitioner should accept an assurance engagement
only if
(Auditing Theory: Auditing and Related Services)
Either I or II Correct Answer - A practitioner is associated with financial
information when...
I. The practitioner attaches a report to that financial information.
II. The practitioner consents to the use of his/her name in a professional
connection.
(Auditing Theory: Auditing and Related Services)
Both I and II Correct Answer - The auditor is required to comply with all
PSAs relevant to the audit of an entity's financial statements. A PSA is relevant
to the audit when
I. The PSA is in effect.
II. The circumstances addressed by the PSA exist.
(Auditing Theory: Auditing and Related Services)
I and II only Correct Answer - The overall objectives of the auditor in
conducting an audit of financial statements are:
I. To obtain reasonable assurance about
whether the financial statements as a whole are
free from material misstatement, whether caused
by fraud or error.
II. To report on the financial statements.
