Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

AUDITING THEORY > AT - PROFESSIONAL STANDARDS > Flashcards

AT - PROFESSIONAL STANDARDS Flashcards

1
Q

Why are standards established?

A

Standards are established to MEASURE THE QUALITY OR PERFORMANCE OF AN INDIVIDUAL OR ORGANIZATION.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the Generally Accepted Auditing Standards (GAAS) promulgated by BoA? What is GAAS?

A

GAAS represent the measures of the quality of auditor’s performance and should be LOOKED AT AS THE MINIMUM STANDARD OF PERFORMANCE. The 10 GAAS are grouped into:

  1. General standards - TIP
  2. Fieldwork standards - PIE
  3. Reporting standards - GIDO
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the general standards under GAAS?

A
  1. Technical training and proficiency
  2. Independence
  3. Professional care
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the fieldwork standards under GAAS?

A
  1. Planning
  2. Internal Control Consideration
  3. Evidential Matter - Inspection/Observation/Inquiry/Confirmation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the reporting standards under GAAS?

A
  1. Generally accepted accounting principles (GAAP)
  2. Inconsistency - identification of circumstances in which principles have not been consistently observed
  3. Disclosure - regarded as reasonably adequate unless otherwise stated in the report
  4. Opinion
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the task of the Auditing and Assurance Standards Council (AASC)?

A

AASC is given the task of promulgating auditing standards/practices/procedures which shall be generally accepted by the accounting profession in the Philippines.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are Quality Controls?

A

Quality controls are policies and procedures adopted by CPAs to PROVIDE REASONABLE ASSURANCE OF CONFORMING WITH PROFESSIONAL STANDARDS IN PERFORMING AUDIT AND RELATED SERVICES.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are the elements of a system of quality control?

A
  1. Leadership responsibilities for quality on audits
  2. Ethical Requirements
  3. Independence - NOT INCLUDED ACCORDING TO PHILIPPINE STANDARDS ON QUALITY CONTROL
  4. Acceptance and continuance of client relationships
  5. Human Resources and Assignment
  6. Engagement Performance
  7. Monitoring
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Who is responsible for the overall quality on each audit engagement?

A

The ENGAGEMENT PARTNER is responsible for the overall quality on each audit engagement to which he is assigned. He has LEADERSHIP RESPONSIBILITIES FOR QUALITY ON AUDITS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the ethical requirements in a system of quality control?

A
  1. Integrity
  2. Objectivity
  3. Professional Competence and Due care
  4. Confidentiality
  5. Professional Behavior
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are the steps to be taken to be able to form the conclusion that independence has been maintained throughout the audit?

A
  1. Obtain relevant information to identify circumstances and relationships that CREATE THREATS TO INDEPENDENCE
  2. Evaluate information on identified breaches of independence to determine whether they create a threat to independence
  3. TAKE APPROPRIATE SAFEGUARDS to eliminate such threats or reduce them to an acceptable level
  4. DOCUMENT CONCLUSIONS AND BASIS FOR SUCH CONCLUSIONS regarding independence.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are the necessary procedures in the acceptance and continuance of client relationships?

A
  1. Consideration of INTEGRITY OF THE CLIENT
  2. Assess the firm’s COMPETENCE,CAPABILITIES,TIME AND RESOURCES TO PERFORM THE ENGAGEMENT.
  3. Assess whether it can COMPLY WITH ETHICAL REQUIREMENTS.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are the responsibilities of the audit engagement partner?

A

He is responsible for the direction,supervision,review, and overall performance of the audit engagement.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Discuss the engagement quality control review.

A

The engagement partner has to make sure that an engagement quality control review has been made before the issuance of the auditor’s report.

  1. An engagement quality control reviewer must have been appointed.
  2. Discuss significant matters arising during the engagement
  3. Not to issue report until the quality control review has been completed.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What happens when there are differences of opinion within the engagement team?

A

The engagement team must follow firm policies for dealing with differences of opinions. The AUDIT REPORT SHOULD NOT BE ISSUED UNTIL THE MATTER INVOLVING THE DIFFERENCES OF OPINION HAS NOT BEEN RESOLVED.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the Quality Review Committee (QRC)?

A

QRC, created by PRC, shall CONDUCT A QUALITY REVIEW ON APPLICANTS FOR THE REGISTRATION TO PRACTICE PUBLIC ACCOUNTANCY. It shall also recommend the REVOCATION OF CERTIFICATE OF REGISTRATIONS OF CPAs WHO HAVE NOT OBSERVED THE CONTROL MEASURES.

17
Q

In the auditing environment, failure to meet auditing standards is often:

a. an accepted practice
b. a suggestion of negligence
c. a conclusive evidence of negligence
d. tantamount to criminal behavior

A

C.

18
Q

Which of the following underlies the application of GAAS, particularly the standards of fieldwork and reporting?

a. elements of internal control
b. elements of materiality and risk
c. elements of reasonable assurance
d. element of corroborating evidence

A

B.

19
Q

The 4th GAAS (opinion) of reporting requires an auditor to render a report whenever an auditor’s name is associated with FS. The overall purpose of the 4th standard of reporting is to require that reports:

a. State that the examination of financial statements has been conducted in accordance with GAAS
b. Indicate the character of the auditor’s examination and the degree of responsibility assumed by the auditor
c. Imply that the auditor is independent in mind as well as in appearance with respect to the FS under examination
d. Express whether the accounting principles used in preparing the FS have been applied consistently in the period under examination.

A

B.

The audit report shall either contain an expression of opinion regarding the FS taken as a whole, or an assertion to the effect that an opinion cannot be expressed.

When an overall opinion cannot be expressed, the reasons therefore should be stated.

In all cases, WHERE AN AUDITOR’S NAME IS ASSOCIATED WITH THE FS, THE REPORT SHOULD CONTAIN A CLEAR-CUT INDICATION OF THE CHARACTER OF THE AUDITOR’S EXAMINATION IF ANY AND THE DEGREE OF RESPONSIBILITY HE IS TAKING

The objective of the 4th standard is to PREVENT THE AUDITOR FROM EXPRESSING DIFFERENT OPINIONS ON EACH OF THE BASIC FS.

20
Q

What are the approved announcements of AASC to attain uniformity with international auditing standards?

A

The following are issued by the International Auditing and Assurance Board (IASB) created by the International Federation of Accountants (IFAC):

  1. International Standards on Auditing
  2. International Standards on Assurance Engagements
  3. International Standards on Review Engagements
  4. International Standards on Related Services
  5. Practice Statements

AASC Pronouncements are grouped as follows:
1. FRAMEWORK FOR ASSURANCE ENGAGEMENTS
A. AUDIT
a. PSA - PH Auditing Practice Statements
B. REVIEW
b. PH Standards on Review Engagements - PH Review Engagements Practice Statements
C. OTHER ASSURANCE ENGAGEMENTS
c. PH Assurance Engagement Practice Statements

  1. RELATED SERVICES
    A. AGREED-UPON PROCEDURES ENGAGEMENTS
    B. COMPILATION ENGAGEMENTS
21
Q

What are practice statements?

A

These are issued to provide practical assistance to auditors in the implementation of the standards and to promote good practice in the accountancy profession

22
Q

Under Human Resources and Assignment Quality Control, what policies and procedures must be addressed by an audit firm?

A

a. Recruitment
b. Performance evaluation, compensation and promotion
c. Capabilities and competence
d. Career development
e. Assignment of engagement team

23
Q

Which of the following underlies the application of generally accepted auditing standards, particularly of fieldwork and reporting?

a. Element of internal control
b. Elements of materiality and risk
c. Element of reasonable assurance
d. Element of corroborating evidence

A

b. Elements of materiality and risk

24
Q

The reporting standard requires the auditor’s report to contain an expression of opinion regarding the FS taken as a whole or an assertion that an opinion cannot be expressed. The objective of the 4th standard is to prevent

a. An auditor from reporting on one basic FS and not on the others
b. An auditor from expressing different opinions on each of the basic FS
c. Management from reducing its responsibility
d. Misinterpretation regarding the degree of responsibility the auditor is assuming.

A

b. An auditor from expressing different opinions on each of the basic FS

25
Q

When may an auditor need not abide with PSA requirements?

A

When the amount is insignificant, or when the requirement is impractical or impossible to perform

26
Q

Which of the following pronouncements issued by AASC is designed to resolve issues relating to PSAs?

a. Philippine Auditing Practice Statements
b. Interpretations
c. Statements of Auditing in the Philippines
d. Generally Accepted Auditing Standards

A

b. Interpretations

27
Q

T or F
The nature and extent of a CPA firm’s quality control policies and procedures depend on its size, nature of the firm’s practice, and cost-benefit considerations.

A

True.

28
Q

PRC through BoA has required all CPA firms and individual CPAs in public practice to obtain a certificate of accreditation to practice and such certificate is valid for 4 years.

A

False, 3 years

29
Q

Explain Engagement Performance as a quality control.

A

A firm should establish policies and procedures designed to provide it with reasonable assurance that:

a. engagements are performed in accordance with professional standards
b. audit report is appropriate in the circumstances
c. Engagement partner is responsible for the direction, supervision, review, and overall performance of the audit engagement.

  1. Direction - assistants should be informed of their responsibilities
  2. Supervision - monitoring progress of the audit
  3. Review - Work performed by assistants should be reviewed
  4. Consultation - personnel must be encouraged to seek assistance from authoritative sources within or outside the firm. Engagement partner should:
    a. Be responsible for the engagement team
    b. Be satisfied that members of the engagement team have undertaken appropriate consultation
    c. Conclusion resulting from consultations are documented and agreed with the party consulted
    d. Determine that conclusions from consultations have been implemented
30
Q

The primary factor that should be considered in determining the extent of supervision needed by an assistant is the assistant’s

a. willingness to exercise due care
b. Competence
c. Professional education
d. Independence

A

d. Independence

31
Q

Which of the following is responsible for establishing auditing standards that will become generally accepted in the Philippines?

a. SEC
b. FRSC
c. CoA
d. AASC

A

d. AASC - Auditing and Assurance Standards Council

AUDITING THEORY (17 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions