1.

Before applying principal substantive tests to the details of accounts at an interim date prior to the balance sheet date, an
auditor should\
a. Assess control risk as below the maximum for the assertions embodied in the accounts selected for interim testing.
b. Determine that the accounts selected for interim testing are not material to the financial statements taken as a whole.
c. Consider whether the amounts of the year-end balances selected for interim testing are reasonably predictable.
d. Obtain written representations from management that all financial records and related data will be made available.

2.

Which statement is correct regarding the sufficiency and appropriateness of audit evidence?
a. Sufficiency is the measure of the quality of audit evidence.
b. Appropriateness is the measure of the quantity of audit evidence; that is, its relevance and its reliability in providing
support for, or detecting misstatements in, the classes of transactions, account balances, and disclosures and related
assertions.
c. The quantity of audit evidence needed is affected by the risk of misstatement (the greater the risk, the more audit
evidence is likely to be required) and also by the quality of such audit evidence (the higher the quality, the less may be
required).
d. Merely obtaining more audit evidence may compensate for its poor quality.

3.

Which of the following statements concerning evidential matter is true?

a. Competent evidence supporting managements assertions should be convincing rather than merely persuasive.
b. Effective internal control contributes little to the reliability of the evidence created within the entity.
c. The cost of obtaining evidence is not an important consideration to an auditor in deciding what evidence should be
obtained.
d. A clients accounting data cannot be considered sufficient audit evidence to support the financial statements.

4.

Which of the following is not likely a quality control procedure on consultation?

a. Identifies areas and specialized situations where consultation is required and encourage personnel to consult with or in
use authoritative sources on other complex matters.
b. Designates individuals as specialists to serve as authoritative sources and define their authority in consultative
situations.
c. Assigns an appropriate person or persons to be responsible for assigning personnel to audits.
d. Specifies the extent of documentation to be provided for the result of consultation in those areas and specialized
situations where consultation is required

5.

Which of the following statements is incorrect?

a. The auditors report must state whether the financial statements were prepared with GAAP.
b. The auditors report must state whether GAAP was consistently followed from the prior period to the current period.
c. The auditors report must imply whether the client has provided adequate disclosure on the financial statements and in
the accompanying notes.
d. The auditors report must express an opinion on the financial statements taken as a whole, or explain why there is no
opinion provided.

6.

Which of the following statements about preliminary assessment of control risks is correct?
a. After obtaining an understanding of the accounting and internal control systems, the auditor should make a preliminary
assessment of control risks, at the assertion level, for all accounts or transaction classes.
b. The preliminary assessment of control risk can be done only after completing tests of controls.
c. The preliminary assessment of control risk for a financial assertion is normally low, unless the auditor is able to identify
weaknesses that may indicate ineffectiveness of accounting and internal control system.
d. The auditor ordinarily assesses control risk at high level for some or all assertions when it is not cost efficient to do
tests of controls.

7.

A secondary purpose of the auditor's consideration of internal control is to provide

a. A basis for assessing control risk.
b. An assurance that the records and documents have been maintained in accordance with existing company policies and
procedures.
c. A basis for constructive suggestions about improvements in internal control structure.
d. A basis for the determination of the resultant extent of the tests to which auditing procedures are to be restricted.

8.

Which of the following is least likely considered by the auditor in determining the significance of service organization
activities to the client and the relevance to the audit?
a. Terms of contract and relationship between the client and the service organization.
b. The material financial statement assertions that are affected by the use of the service organization.

c.
d.
9.

Client's internal controls that are applied to the transactions processed by the service organization.
The control policies and procedures of the client of requiring that all payments for goods and services be supported by
receiving reports.

When inventory is material to the financial statements, the auditor should obtain sufficient appropriate audit evidence
regarding its existence and condition by attendance at physical inventory counting unless impracticable. Where attendance
is impracticable, due to factors such as the nature and location of the inventory, the auditor should
a. Take or observe some physical counts on an alternative date and, when necessary, perform tests of intervening
transactions.
b. Consider whether alternative procedures provide sufficient appropriate audit evidence of existence and condition to
conclude that the auditor need not make reference to a scope limitation
c. Issue qualified or disclaimer of opinion.
d. Issue qualified or adverse opinion

10. Which statement is incorrect regarding segment information?

a. Segment information is information in the financial statements regarding distinguishable components or industry and
geographical aspects of an entity.
b. When segment information is material to the financial statements, the auditor should obtain sufficient appropriate audit
evidence regarding its disclosure in accordance with generally accepted accounting principles in the Philippines.
c. The auditor considers segment information in relation to the financial statements taken as a whole, and is ordinarily
required to apply auditing procedures that would be necessary to express an opinion on the segment information
standing alone
d. Audit procedures regarding segment information ordinarily consist of analytical procedures and other audit tests
appropriate in the circumstances.