YS INSTITUTE OF ACCOUNTS, BUSINESS AND FINANCE Ld ACCOUNTANCY & INTERNAL AUDITING DEPARTMENT / 7 SECOND SEMESTER AY2015-2016 93 ‘AUDITING REVIEW (THE MIDTERM CAMINATION < ‘Before accepting an engagement to audit a new client, an auditor is IRIS Snquiries of the predecessor auditor after obtaining | Of the prospective client.” 3. Sbéain the prospective client’s signature to the engagenent letter ~ @. Prepare e mono gating forth the staffing requirenonte and desuesting the peelininery sudit plan.» >. Dischss the management representation letter with the prospective Client's audit committee. y e_consent > 2, Which of the following is( not) mandatory when performing an audit in “accordance with Philippine ee ‘on Auditing (PSAs)? A. proper supervision of assistants - ic (arc -B. efficient performance of audit procedures jnheren) uk? C. understanding the client's system of internal controls / D. adequate planning of work to be performed / 3.-K listing of (al}) the things which th sufficient, appropriate evidence is the: A. Audit procedure. * LE, Audit progran, -dcicils Audit plan. ~ G2\eal D. Audit risk model. « : _aesign of camels 2 ge they = © weve a x implications and consider the eo\ moaidp [aai} dence, o'r one = (B) Withdraw from the engagesent. tzoiFiex/ too_dey! iinasreect] tng [Gon8z5i Fisk’) tooigy) and the righ of Jincorrect 9 en ER eR ream vn TE ar apy 5, eificienay.. "airs wygp.gze~ Cc. Both «and B: ces ety &.) Audit effectiveness: — D. Neither « and b. 20, meee of the fotlowing conditions must_ba passant CE ?e, taditor st 2 So Meeearae. res Gaara oe Tob)be present to insue such # report? cOnaCerst ed otUbw Prerert © SANT "Yonoone vacavenant,starenant of Rid seatanante "balance sheets 2roMfioae sare ancisaea sm the Seereect ts B. The three general standards have peen followed in all respects on an © D. Hee eerie a aanner that enable his/her to conclude that the three standards of field work have been met. 21, ze “Jenst_severe, type of qeport for disclosing departures fre * “wwaqualified veport}ie the: : . Kdverse opinion Disclaimer of opinion. (C:) Quaistied opinion. D: Report on unaudited financial statements |. Gelaé;" GPA, determines that there is eubstantial doubt as to whether ASC (Gelai n. She believes that the regarding the group ble to an audit ble to an audit * compilationfACCO DON Ee eye PARTME! INSTITUTE OF ACCOUNTS. B NG DEPARTMENT . INTERNAL AUDITING _ YY ACCOUNTANCY & INTERNAL AUOTICG i, ‘SECOND SEMES' pb, qualified opinson: “ . oe. = = ting an impor! daa compan “Fog the 26. An auditor aay expre Os pees tania audit Procedure, Tiaseation. © ot B. The auditor's report refers to the work G, An accounting principle GAAP is used: @) Te auditor tae sis an] ineorrect way Wy 27, Wasch of the following phe Lified opinion? “Except for.” V (B) ssubject to." V 20, the following —atavenante relate to [GPA examination ‘statement is INCORRECT? a ‘A. To pass the @Xamination, candidates should obtain genes sore deta and above, with no rating in any subject less, than) B. Candidates who obtain a rating of 75% and above 4 _least fot senjacte snail receive a conditional credit For the subjects paseod: ~ ©. Conditioned candidates shall take an examination in ths Subject within two years) from the preceding examination. “ (D.) Candidates who fait in fi splete CPA examinations shall no longer be allowed to take the examinations a fifth time.~< c. Bither a or by ‘D> Neither a nor b: 1 weighted Gein; CPA, dated ner audit _pepost (on 2 client’s 2010 financial Statements) aa of Beil] except for Note G, as to which the , date is March 3, 2011, in thie case, Gelai is taking responsibility for: ‘Deal are Cae ae acer vente coaucring through March 3, 201% fo. Mov 2» wwe cy AY RBSSSNE Svence cccurring through February 10, 2011 only. * ay reeeetene events occurring through February 10, 2011, (except £08]. |< 5 seoption? Ao Taek of visible output 1 dignet | Lack of viesble transaction trail 2. Inch of visible eransaction Sotivar files / wet 9 22 Me (S: Tage of acogee to date tariecice that may raeurt from 27 processing: vaigstal ‘cess are violated wien: : Koen seperate IT department Te se up within 90 organization. 2% \ B. Computer department personnel focus oP Sonveraion of processing Of information. > ane 3 fo: im personnel originate changes in aasteE 7 woul Wadyan oe? D. In-house. computer technicians partici} ee cn computer software (guisieicniascteiont. < peeceeest SESS argT ta so nis arc 48. Mary_Philomen CPA, is printing & _bQ-page long-fore Mary Bn one the 201) audit of Majorca Mansions, ZnS qreeSkecter screen displays this error message: yem_audit report 37 Agter 30 pages, Attention! Attention of paper. Please insert more paper into tray and pres the Start button. ‘his is an example of: A. Parity check B. Valid-code test a. cc. Hash total Echo check wemises of Family House, & 49.-Grace Del Rosario, CPA; is entering’ the to jefore Grace is required Senne roa sensi Factiity, |Batpee Se icenl ten! ST, is requir Setet fer identification card and input an C-dight Pa jooda, This is an exanple of: Peace and procedural control © Access control 3 organizational contro2~ S00 So Hardware control revise or exclude ones as the needINSTITUTE OF ACCOUNTS, BUS ACCOUNTANCY & INTERNAL A\ ‘SECOND SEMESTER AY20! and expiration date SEPLENtD Stpepublic of the PRiLSPPine? mentioned 2" cc. Date of speuance 5. Bignature of the Pr ss. ghee years of maaningfsl exparience 3° public-psactice * The IRR constitutes of: the IRR convents as wudit assistant in any of the Big wditing fi=me Bethe Yoountey oo emer eT audit aneiavant and one year ae audit in-charge of 8 cngegenont. —_ ee SeRTeaT ce audit ansiatant and tro yours ar sit sn-cnarge croegenant : OTTO, wn aigning partner of audit engagements < inthe sc, sos ice wi be the[ Tome amdeteen she bling bad on rae of personae vol engagement, and P380,00." mia method of billing fees illustrates: A. Por diem basis. Cc. Flat fee basis. BL Retainer basis 5) Maxima feo basse sro telioeing GpAe bold Masters’ Degrees ‘and. Dognorad POseee,, 2 cea Sn se es Baceitied Internal Auditors, and all of then 97 the Certified Fraud Examiner (CFE) exams KIT are senior Be Biers of PICPA. Wnich of the following tith Violation of the ethical requirenente. on publicity? ‘Shegelyn $. James, member: FICPA" oo Bo SRESITET Gar Rosario, 8A, CIA, CFE) MBA, pho < 1°) BY cteslie J. Francisco, BSA, CPA, CIA, MBA, Ph.D” $: UeSteanne 8. Sison, Senior Audit Associate” )=~ _wiioh of the following statements i@ correct? Mich of Mtument of the auditor’ e report that dsatinansahes: ‘Stheze 1s the auditor’s sagnature soed to the Board of Direstors, the ied.” jive paragraphs, compared to At from reports the old ation and presentation of establishment and implesentation t likely found_in the auditor's financial statements of Gelat st as at December 31, 2011. ~ implementing and maintaining ‘and fair presentation of serial misstatement. < /i7 sent fairly, in all Gelai Company as of ce and ite cash end Macariola, CPAs. chal sta 7 ich of the followingRw INSTITUTE OF AC COO ee DITING DEPA ACCOUNTANCY & INTERNAL AUDITING DEPARTMENT oe Met aYa0ts06 sanaaenent co contire receivabten owas not able to perform s& qa _ that the ‘resulting scope janitation financiai atatanentay orace Will: : nancial statements, Grice Wile q qualified opinion or = d4gehniner © opsnion. ws tare tere —— Spintcn. in cron the cagupenant, ¢ precticumla; subarea, ee Sey, seston Seve, Cie oor triton an the stomatal statment: 2 are Wild express 2 discisthon of» qualified opinion oF sd¥siasP ee Eee car atataments.» Scvei 9 D. Express an adverse opinion on * ‘nancial statements do 62. An auditor's report includes a statesent that "the £: vont fairly the financial position in sé Pailipein oi Pr eertor's report was probably issved lect the (exc comente that were (8°: other than PFRS- Goa teepaxediosianacaprehansivelbasisiforiassosstsn Pervasively misstated. 2 Misleading. x a. Materially sisstated. 63. Aljon, CPA, has audited Bona Seniconductors, tne. DOIN the course Alion, Giey “Aijoa sclisted the earvices of Mhixley: tee ee! “Aba result of Shirley's services, 3c! ‘tion to the modification, Teport. While drafting the explana’ TEE ecorance io sheexpartsa_reguired: SSE ‘aia not In these circumstances, ALjon: king such & permission to use her name. ee al otalaicttw|( peraiesion oc! Sizzlay) Poss reference. _s, may refer to Shirley without perm ion, but shirley’ \, be concealed. ~ a ona ouk skagasziaitvsinerionminatsstiiyiskilnnst’yoer taser regarding the uation. < Sa eror ek EXPER ms 198 /tEgal AACE eA ea Sash on Hand and in Bank C01 ee Dic‘Statements of Financial ' SS" ‘As of December 31 Assets 2011 2010 ‘Cash and cash equivalents (note 5) 290,895 114,299 Loans and receivables, net {note 6) 598,714 461,215 when_Ruben_sigh? by the client, : nding considering the reporting framework used D1 t, he a8 y 12 sugthion on’ the 2011 financial statements figures of the 2010 financial statenents. figurernion on the 2010 financial statements, plus corresponding figures of the 2011 financial statements. : sagurfeion on the 2011 financial statements on{y. 3m epinion on the 2011 financial statements, ‘and another ‘the 2010 financial statements ~ plus correspo! opinion for ne primary source of information to be ceported Wesol tioh, chains, ‘high of the following ar 13Ke1Y) “and assessments is management. urce? (x) Client's lawyer Court, records c. Client’s management D. Independent auditor would an auditor bpainarily perform! 68.Which of owing procedurt ge ar ‘of. t events? reo days before and after the RT Review the cut-off bank statements for year-end (BD Inquire of | the client’s legal counsel _-conserning1itigations and pending cases. zeportable conditions previously communicated to the ns to determine the propriety of sures. * released its financial statements oii, Pokemon, Inc., @ customer, history of financial material loss on an be disclosed or ot be adjusted. x anatory paragraph in the per 31, 2011 Oe alSeer TA KResume that D management did not amend the ‘Timon will choose atwaun Tesuing = (5): a. ‘Unqualified opinion and qualified opinion. (®.) Qualified opinion and adverse opinion a < Qualified opinion and disclaimer of opinion |. Adverse opinion and disclaimer of opinion 72, sorely after the audit report has already been_xeleased to Marie Compacts Elvis, CPA, discovered the eefibaequent event requiring ads) etipeepite asking Marie Company NOT eport thereon, MARIE to rele financial statements and the audit TssvED wiisted to this, what is the best course of action ‘on part of Elvis? a Re tics Grosaseled coport, [os 0 corigentes, Logethen wii © Soom seettgy addressed to the board of directors and shareholders of ‘he entity. ~ B. Tasue a modified report, as = corrigendum, apology. = (G) Ask for legal advice, and take action to auditor's report. seeE “ucaieied report, with a qualified or adverse opinion, to Pe Printed in a newspaper of general circulation, no less than 15 days vehor the issuance of the unamended financial statements and the original audit report.> but without a written prevent reliance on the 73, PGreuant to an attitude of fessional skepticism, ah auditor is seeking support fox management te oe ations regarding Tit ‘ons regarding Iitigation. ‘The auditor’ s PEinsry meane of obtaining corroboration of management's information is ‘A. Confirmation of claims and jenents fron an officer 0 presiding over the litigation. ent’ s lawyer. pts from the other parties to the lawyer upon review of the rating information regarding he auditor is unable to perform rating information. In this are umilatch eh a period of time, going concern there is doubt aINSTITUTE OF ACCOUNTS, BUSINESS a ARTMENT _ coaarnaatee moran A) Management, auditor, respectively ‘po muditor, management, respectively. C. Management, management, respectively. D. -Miditor, auditor, respectavely. 30 which of the following statements 1s ancorrest?) oe {P's The level of the muditor’s satisfaction as to the iz n of ys Tnsertion being wade by one party for use by another party 1s known 92 ‘aewurance. 4 oe Kasurance services are independent professional services that improve the quality of inforsation for decision-makers, such aa management and external users. / c. All five element nentionedin the Frasevork for Assurance Engagements ‘must be met before an engagement is classified as an assurance engagement. D. ‘The person or class of persons for whom the professional accountant aren or lane of peceans fak_shon_she-nestessiemel _aaars. 7 Whe oparatsonas subst 2 Gesionad D> Kwasess the efficiency ‘effectiveness of managenent’s operating \—provedures / B. assess the presentation of management's financial statements in accordance with generally accepted accounting principles ¥ Fs 7 ©. deteraine whether management has complied with applicable laws and regulations 7 Ccrpliarve : D. determine whether the audit committee of the board of directors is effectively discharging its responsibility to oversee management’ s operations ~ $1 Members of the COA shall be appointed by the President of P the Philippines, 52 ach member of the COA shall serve for a tern of seven years, subject < ppointment: c. True, true (AZ False, false 128A requires communication between “the burden mntly, substantive tests ntly, substantive tests , substantive tests substantive tests Travolta’s audit , 2011© _ rrrrry REE reas 880 Rvidanoe Soa ad te peantaen an onal wien of ample of subjective oviser oT ament obtsined from tne oh Aent SOBeSet etieyiton = nee B. The physical count of securities S Tipaperatent counts seaassoew etseomen, OS REGIST Sino ate “Ebakewpty Sich Us sions a est aera eaten eer seals _nagegs — oh gk & liability secounte Be ? cegarding audits of audits of liability sccounte, ity accounts ~ regarding goounts c. 2. Se knowledgeable othe entity oF Sutaide the ent fete’ o study of plausible “this procedure cons ea ey Saar SORE Macey See ay ancoracaon, tron teat fF oamenns satormas sen Or neat anes. So no Sats Nhat were eye felationships among D. An independent execution Griginally performed as somes ie set below the maximum effective in controle to be an timely manner, expects one oF more correcting, B. The auditor venting, or detecting and preventing’ 4 in the financial statements. ; "oontrole risk assesgment is set at snecaiaximos Level) cet Mew the maximum Wo TC, © er ‘2 set below 1 controls risk as: Gorlewing are examples of tests of controls,focus on: Send “by inepecting’ ‘the individual debit and credit 90. ‘Obtaining evidence entries to the account. / B, Obtaining evic Obtaining evidence directly from an o D. Obtaining evidence in the most cos’ dence directly about an acco’ outside source. * effective manner. ~ tests of details of lances are usually may be audited through the use of 91, Ending balances ‘and analytical procedlres.~~ Beginning balances ‘ormance of internal control procedures for r/s audit adjustments to the books st year’s appropriations documents trial balanceFAR EASTERN Ul rr AR EASTEALC MANTA Vy eaWANCE on neCOUNTS, BUSINESS E INSTITUTE OF ACTA AUDITING DEPARTMEN ANC SEMESTER AY2015°201 nich aeke ve respondent a the item oa, n-tipe of conttrantion_seate a 2 @ Negative tyPe ‘A. Demand type B. Positive type Fraud tyP® i fe which the auditor 93. Whick of the following statements +4 incorrect? > Wo et selon wefaca to ohe entire set of gate “Oy wishes to draw conclusions /” o2 A Tandon sanzie, Te one sn which So characteristics of A, Fandon #eE narasteristics of the population. | % a3 Hebgling’ fore refers to the documentary svldeng> which physically SEPT Fthe sampling unite in a given population: ‘si and 82> a cea and a3 @) 82 and 83 + BL st, 82 and $3» the sanple i# 94. statistical aampling may be applied to the following: Gabetantive analytical procedures Sete gatin ian naman ree ae weaeaee oe SP ~ c, Risk assessment procedures ~ (B)) Noperoe the answers: rotor ee sang g1 Statistical sampling helps an ‘auditor to measure the of ‘the evidential matter obtained.» CRI Se De etlaeres mates eee ay the ro @uditor in determining ‘iciency of samplé he tultar on Searninis Ge ePle aetoe eo ane an seemed perio ae A. 81 and 82 82 and 83 DSi, 82 and 83 (26 Wich of the foltoving eitoations siSogteate MEIN RISK? ols during an audit, ‘the “less than h Level details during an audit, the ‘a supported the conclusion Tt was, ‘that the auditor’ ‘trol _is reasonable when, justify the assessed level. details during an audit, the ‘supported the conclusion terially misstated. It teed population daclabian) =e wally ghee , . sean —99: Which of the following statements FAR EASTERN UNIVERSITY 'N. REYES, SAMPALOC, MANILA INSTITUTE OF ACCOUNTS, BUSINESS AND FINANCE, ACCOUNTANCY & INTERNAL AUDITING DEPARTMENT ‘SECOND SEMESTER AY 2015-2016 B. The expected deviation rate D. The population size correct’ Rafe ac taseey eyecare by an“auditor. - Stratified sampling. involves dividing the population into two oF more sub-populations. / computed 83 ror "purposes of systematic sampling, the interval io PY dividing the population size by the sample size, / A. Bland 82> c. 52 end 8 Boat end 83 [Be Sty 82 ana 82 at desirable sethod for use s2 200. Common sampiing pine for tests of controls and for substantive tests are "h) Ketributes sampling plans and variable wampling plans, respectively : Sampling plans and stop-OF "9° sampling plans, ruspoctively. ‘utvaple sampling plans and attributes sampling plans, respectively. Seoprorego, sampling plane and ds scovery ‘sampling plans,