Chapter 2 [Salosagcol] Flashcards
Which of the following best describes what is meant by generally accepted auditing standards?
a. Audit objectives generally determined on audit engagements
b. Acts to be performed by the auditor
c. Measures of the quality of the auditor’s performance
d. Procedures to be used to gather evidence to support financial statements
c
In the auditing environment, failure to meet auditing standards is often
a. An accepted practice
b. A suggestion of negligence
c. Conclusive evidence of negligence
d. Tantamount to criminal behavior
c
Audit standards require the auditor to
a. Perform procedures that are designed to detect all instances of fraud
b. Provide reasonable assurance that the financial statements are not materially misstated
c. Issue an unmodified opinion only when the auditor is satisfied that not instances of fraud have occurred
d. Design the audit program to meet financial statement users’ expectations concerning fraud
b
Which of the following underlies the application of generally accepted auditing standards, particularly the standards of field work and reporting?
a. Element of internal control
b. Element of materiality and risk
c. Element of reasonable assurance
d. Element of corroborating evidence
b
Requirements for training, independence, and due professional care are included in which group of the generally accepted auditing standards?
a. Fieldwork
b. General
c. Reporting
d. Quality control
b
The general standards of the generally accepted auditing standards include a requirement that
a. The fieldwork to be adequately planned
b. The auditor’s report to state whether the financial statements are presented in conformity with PFRS
c. Due professional care is exercised by the auditor
d. The auditor to obtain sufficient, competent evidential matter
c
Which of the following reflects a concept from the general standards of GAAS?
a. The confirmation of accounts receivable
b. Completing an internal control questionnaire
c. The initial planning of the audit with the audit partner, manager, senior, staff, and client personnel
d. The assignment of audit personnel to an engagement where they have no financial interest
d
What is the general character of the three generally accepted auditing standards classified as general standards?
a. Criteria for competence, independence, and professional care of individuals performing the audit
b. Criteria for evidence gathering
c. Criteria for the content of the auditor’s report on financial statements and related footnotes disclosures
d. The requirements for the planning of the audit and supervision of assistants, if any
a
Which of the following does not pertain to the standards of fieldwork?
a. Adequate planning and supervision
b. Obtaining sufficient competent evidential matter
c. Proper study and evaluation of internal control as a basis for reliance thereon
d. Technical training and proficiency
d
While performing audit services for their clients, professional accountants have a duty to provide a level of care which is
a. Reasonable
b. Greater than average
c. Superior
d. Guaranteed to be free from error
a
The standard of due audit care requires the auditor to
a. Make perfect judgment decisions in all cases
b. Ensure that the financial statements are free from error
c. Possess skills clearly above the average for the profession
d. Apply judgment in a conscientious manner, carefully weighing the relevant factors before reaching a decision
d
Which of the following is most likely to be unique to the audit work of CPAs as compared to work by practitioners of other professions?
a. Due professional care
b. Competence
c. Independence
d. Complex body of knowledge
c
The third general standard states that due care is to be exercised in the performance of an audit. This standard is ordinarily interpreted to require
a. Thorough review of the existing safeguards over access to assets and records
b. Limited review of the indications of employee fraud and illegal acts
c. Objective review of the adequacy of the technical training and proficiency of firm personnel
d. Critical review of the judgment exercised at every level of supervision
d
What is the general character of the three generally accepted auditing standards classified as standards of field work?
a. The competence of persons performing the audit
b. Criteria for the content of the auditor’s report on financial statements and related footnote disclosures
c. The criteria of audit planning and evidence-gathering
d. The need to maintain an independence in mental attitude in all matters relating to the audit
c
The third standard of field work states that sufficient competent evidential matter may in part by obtained through the following methods except
a. Inspection
b. Confirmation
c. Observation
d. Reconciliation
d
The generally accepted standards of reporting encompass all of the following except
a. Consideration of internal control
b. Consistent application of accounting principles
c. Informative disclosures
d. Conformity of financial statements with GAAP
a
The third generally accepted standard of reporting in auditing refers to
a. Whether financial statements are presented in conformity with GAAP
b. Whether accounting principles have been consistently observed
c. Adequacy of disclosures
d. An expression of opinion on the financial statements taken as a whole
c
The objective of the consistency standard is to provide assurance that
a. There are no variations in the format and presentation of financial statements
b. Substantially different transactions and events are not accounted for on an identical basis
c. The auditor is consulted before material changes are made in the application of accounting principles
d. The comparability of financial statements between periods in not materially affected by changes in accounting principles without disclosure
d
The fourth generally accepted auditing standard of reporting requires an auditor to render a report whenever an auditor’s name is associated with financial statements. The overall purpose of the fourth standard of reporting is to require that reports:
a. State that the examination of financial statements has been conducted in accordance with generally accepted auditing standards
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 financial statements under examination
d. Express whether the accounting principles used in preparing the financial statements have been applied consistently in the period under examination
b
The fourth reporting standard requires the auditor’s report to contain an expression of opinion regarding the financial statements taken as a whole, or an assertion to the effect that an opinion cannot be expressed. The objective of the fourth standard is to prevent
a. An auditor from reporting on one basic financial statement and not on the others
b. An auditor from expressing different opinions on each of the basic financial statements
c. Management from reducing its final responsibility for the basic financial statements
d. Misinterpretations regarding the degree of responsibility the auditor is assuming
d
The auditor is not liable to his client for
a. Negligence
b. Fraud
c. Dishonesty
d. Errors in the application of judgement
d
The Philippine Standards on Auditing (PSAs) issued by the Auditing and Assurance Standards Council
a. Are interpretations of the generally accepted auditing standards
b. Are the criteria used in evaluating the fair presentation of the financial statements
c. Are interpretations of the generally accepted accounting principles
d. Are optional guidelines which an auditor may choose to follow or not follow when conducting and audit
a
According to Philippine Standards on Auditing, because there are no inherent limitations in an audit that affect the auditor’s ability to detect material misstatements, the auditor is:
a. A guarantor but not an insurer of the statements
b. An insurer but not a guarantor of the statements
c. Neither a guarantor nor an insurer of financial statements
d. Both a guarantor and an insurer of the financial statements
c
An auditor does not have to comply with a specific requirement of the PSA if the auditor believes that:
a. The amount is insignificant
b. The requirement of the PSA is impractical to perform
c. The requirement of the PSA is impossible to perform
d. Any of the given three choices is correct
d
The Philippines Standards on Auditing can be described as
a. Providing very specific guidance about the specific activities an auditor must perform on each engagement
b. Similar to the Philippine Financial Reporting Standards (PFRS)
c. Defining the minimum standards of performance for an auditor
d. Providing assurance that an auditor will not issue an inappropriate audit opinion
c
Which of the following best describes the function of Auditing and Assurance Standards Council (AASC)?
a. To establish and promulgate generally accepted accounting principles in the Philippines
b. To investigate violations of the Accountancy Law
c. To promulgate accounting standards, practices and procedures that shall be generally accepted by the accounting profession in the Philippines
d. To determine the minimum requirements for admission in the accounting profession
c
