Inquiries directed towards those charged with governance may most likely

1. Set the following phases in proper order:
i. Pre-Engagement iii. Evidence-Gathering v. Post-Audit Responsibilities
ii. Internal controls iv. Planning vi. Reporting
a. i, ii, iii,iv, v, iv b. i, iv, ii, iii, vi, v c. i, iv,iii, ii, v, vi d. i, iv, ii, iii, v, vi

2. Evaluate the following statements
I. During audit planning, the auditor determines important areas of the audit to which attention (audit effort) must be devoted.
II. One of the purposes of audit planning is to ensure that audit work is performed efficiency and expeditiously.
III. During the audit planning, the auditor determines whether an unqualified opinion may be expressed
a. True, True, True c. True, False, False
b. True, True, False d. False, False, False

34. In exercising judgment as to which risks are significant risks, the auditor shall consider at least the following:
I. Whether the risk is a risk of fraud
II. Whether the risk is related to recent significant economic, accounting or other developments and, therefore, requires specific attention;
III. The complexity of transactions;
IV. Whether the risk involves significant transactions with related parties
V. The degree of subjectivity in the measurement of financial information related to the risk, especially those measurements involving a wide range of measurement uncertainty
VI. Whether the risk involves significant transactions that are outside the normal course of business for the entity, or that otherwise appear to be unusual.
a. I, II, III, and IV only
b. I, II, III, IV, and V only
c. I, II, and III only
d. I, II, III, IV, V, and VI

Sets with similar terms

Mindanao State University

College of Business Administration and Accountancy

DEPARTMENT OF ACCOUNTANCY

Marawi City

AUDITING THEORY

Accounting 151

MULTIPLE CHOICE. Read carefully the questions below andchoose the best statement among the choices.

Shade the letter corresponding to your answer on the sheet provided along with this questionnaire. Erasures are

strictly not allowed.

1.The ordinary examination of financial statements is not primarily designed to disclose

defalcations and other irregularities although their discovery may result. Normal audit

procedures are more likely to detect a fraud arising from

a.Collusion on the part of several employees.

b.Failure to record cash receipts for services rendered.

c.Forgeries on company checks.

d.Theft of inventories.

2.A principal purpose of a letter of representation from management is to

a.Serve as an introduction to company personnel and an authorization to examine the records.

b.Discharge the auditor from legal liability for his examination.

c.Confirm in writing management's approval of limitations on the scope of the audit.

d.Remind management of its primary responsibility for financial statements.

3.Which of the following statements is true?

a.It is usually easier for the auditor to uncover irregularities than errors.

b.It is usually easier for the auditor to uncover errors than irregularities.

c.It is usually equally difficult for the auditor to uncover errors or irregularities.

d.Usually, none of the given statements is true.

4.Generally, the decision to notify parties outside the client's organization regarding a

noncompliance with laws and regulations

a.Independent auditor.

b.Management.

c.Outside legal counsel.

d.Internal auditors.

5.An audit made in accordance with Philippine Standards on Auditing generally should

a.Be expected to provide assurance that noncompliance with laws and regulations will be

detected if the internal control is effective.

b.Be relied upon to disclose indirect-effect noncompliance with laws and regulations.

c.Encompass a plan to search actively for noncompliance with laws and regulations which relate

to operating aspects.

d.Not be relied upon to provide assurance that all noncompliance with laws and regulations will

be detected.

6.An auditor who believes that a material irregularity may exist should initially

a.Discuss the matter with those believed to be involved in the perpetration of material

irregularity.

b. Discuss the matter with a higher level of management.

c.Withdraw from the engagement.

d.Consult legal counsel.

7.When management refuses to disclose in the financial statements noncompliance to laws and

regulations which are identified by the independent auditor, the CPA may be charged with

unethical conduct for

a.Withdrawing from the engagement.

b.Issuing a disclaimer of opinion.

c.Failure to uncover the noncompliance to laws and regulations during the prior audits.

d.Reporting these activities to the audit committee.

8.A procedure in which a quality control partner periodically tests the application of quality

control procedures is most directly related to which quality control element?

a.Engagement performance

b.Independence, integrity, and objectivity

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What are the responsibilities of those charged with governance?

Is the process designed and affected by those charged with governance?

Can management and those charged with governance be same?

What are the 7 audit assertions?