Pre-Engagement Procedures Flashcards
Which of the following has the highest level of authority within the hierarchy set by GAAP?
a. FASB Pronouncements
b. Pronouncements of bodies composed of expert accountants, exposed for public coment
c. Authoritative body pronouncements
d. Company pronouncements
c.
One of the elements of quality control is:
a. Due professional care
b. Engagement performance
c. Supervision
d. All of the choices
b.
A quality control partner periodically tests the application of quality control procedures. Which quality control element is this?
a. Monitoring
b. Human resources
c. Field work
d. Due professional care
a.
The following are reasons why the practitioner in an audit engagement evaluates integrity of client:
- To avoid ASSOCIATION with clients whose management lacks INTEGRITY
- Litigations involving CPAs are due to LACK OF INTEGRITY of client
- Lack of management integrity = high audit risk
Training, independence, and due professional care requirements are under which group of GAAS?
a. General
b. Reporting
c. Quality control
d. None of the choices
a.
CPAs are required by GAAS to:
a. Assume responsibility for any losses to the client from fraud which existed during audit but was not detected by auditors.
b. Follow accounting principles adopted by SEC
c. Accept as audit clients companies which have no competition between each other
d. Exercise due professional care int he performance of examination and preparation of the report
d.
Ellie, CPA, found that Konny Co. has committed incompliance with Philippine laws and regulations. If Ellie wishes to withdraw from the engagement, what would be her reason?
a. Illegal act has received widespread publicity
b. Ellie cannot estimate the effect of the illegal act on Konny’s financial statements
c. Konny’s manaagement fails to take appropriate actions
d. Choices b and c
c.
The first paragraph of the standard unqualified audit report is called:
a. Opinion
b. Scope
c. Opening
d. Introductory
d.
When a conflict on accounting principles exist between one supported by pronouncement of authoritative body and other widely recognized pronouncement bodies, which one prevails?
a. Authoritative body pronouncement
b. Widely-recognized pronouncement
c. Both
d. Neither
a.
The following are elements of quality control. Choose the exception.
a. Review
b. Monitoring
c. Ethical requirements
d. None of the choices are exceptions.
a.
Who issues international pronouncements providing auditing procedural and reporting guidance?
a. International Accounting Standards Board
b. International Accounting Standards Council
c. International Auditing and Assurance Standards Board
d. Generally Accepted Auditing Standards Council
c.
The general character of the 3 generally accepted auditing standards that are classified as general standards are:
Hint: T I P
Technical training and proficiency
Independence
Professional care
To which person in the audit client company whose FS are being examined can the auditor’s report be addressed to?
a. Elton, the President of J Corp.
b. John, the Chief Operating Officer of J Corp.
c. Board of Directors of J Corp.
d. Karlos, the Chief Financial Officer of J Corp.
c.
Generally accepted auditing standards means:
a. Measures of quality of auditor’s performance
b. Audit objectives determined on audit engagements
c. Acts to be performed by auditors
d. All of the choices
a.
Ellie, CPA, discovered an illegal act during her audit of Antonio Corp. What should Ellie do?
a. Increase amount of examinations to uncover all illegal acts
b. Notify the NBI
c. Report the act to the same level of authority who committed the illegal act
d. Report the act to high level personnel within the client’s organization and to the audit committee
d.
Remember: this is an assurance engagement. All information pertaining to client must be kept confidential, except when information can be divulged when required by court, such as submission of evidence, or when authorized by higher authorities. You are not a policeman/investigator, remember that.
