ACTG 11 – ASSURANCE PRINCIPLES

BS Accountancy, SY 2019-2020
3RD Year, 2ND Semester
QUIZ #1

Student Name: ________________________________________________________________________

Date: ___________________________________________________________________________________
Instructions: Encircle the letter of the correct answer. Please avoid erasures.

1. BROADLY defined, the subject matter of ANY audit consists of

a. Financial statements
b. Economic data
c. Assertions (x)
d. Operating data

2. These are the standards or benchmarks used to evaluate or measure the subject matter of an assurance
engagement
a. Criteria (x)
b. Engagement process
c. Assertions
d. Generally accepted auditing standards

3. The criteria for evaluating quantitative information vary. For example, in the case of an independent audit
of financial statements by CPA firms, the criteria are usually the
a. PFRS or PFRS for SMEs (x)
b. Philippine Standards on Auditing
c. National Internal Revenue Code
d. Regulations of the Securities and Exchange Commission

4. Which of the following is not an element of assurance engagements

a. Subject matter
b. Engagement process (x)
c. Evidence
d. Suitable criteria

5. An audit of financial statements is conducted to determine if the

a. Organization is operating efficiently and effectively
b. Auditee is following specific procedures or rules set down by some higher authority
c. Overall financial statements are stated in accordance with the applicable financial reporting
framework (x)
d. Client’s internal control is functioning as intended

6. In financial statement audits, the audit process should be conducted in accordance with
a. The audit program
b. Philippine Standards on Auditing (x)
c. Philippine Accounting Standards
d. Philippine Financial Reporting Standards
7. The person or class of persons for whom the professional accountant prepares the report for a specific use
or purpose
a. Professional accountant
b. Responsible party
c. Intended users (x)
d. None of the above

8. Which of the following types of audit uses laws and regulations as its criteria
a. Operational audit
b. Financial statement audit
c. Compliance audit (x)
d. Performance audit

9. In performing an assurance engagement, a professional accountant typically

a. Supplies litigation support services
b. Assesses control risk at a low level
c. Expresses a conclusion about an assertion (x)
d. Provides management consulting advice

10. The auditor communicates the results of his or her work through the medium of the
a. Engagement letter
b. Audit report (x)
c. Management letter
d. Financial statements

11. Which of the following forms may the subject matter of an assurance engagement take
a. Historical financial information
b. Systems and processes
c. Behavior
d. All of them (x)

12. Which of the following types of auditing is performed most commonly by CPAs on a contractual basis?
a. Internal auditing
b. Income tax auditing
c. Government auditing
d. External auditing (x)

13. Which of the following has the primary responsibility for the fairness of the representations made in the
financial statements
a. Client’s management (x)
b. Audit committee
c. Independent auditor
d. Board of Accountancy

14. By providing high level of assurance on audit reports on financial statements, the auditor
a. Guarantees the fair presentation of the financial statements
b. Confirms the accuracy of the financial statements
c. Enhances the credibility of the financial statements (x)
d. Assures the readers that fraudulent activities of employees have been detected

15. The reason an independent auditor gathers evidence is to

a. Form an opinion on the financial statements (x)
b. Detect fraud
c. Evaluate management
d. Evaluate internal controls
16. An attitude that includes a questioning mind and a critical assessment of audit evidence is referred to as
a. Due professional care
b. Professional skepticism (x)
c. Reasonable assurance
d. Supervision

17. Which of the following is more difficult to evaluate objectively

a. Efficiency and effectiveness of operations (x)
b. Compliance with government regulations
c. Presentation of financial statements in accordance with GAAP
d. All the three above are equally difficult

18. Which of the following characteristics is not considered necessary in determining whether the criteria is
suitable
a. Relevance
b. Neutrality
c. Reliability
d. Sufficiency (x)

19. The auditor’s satisfaction as to the reliability of an assertion being made by one party is called
a. Assurance (x)
b. Audit risk
c. Precision
d. Materiality

20. When a CPA has obtained sufficient appropriate evidence to conclude that the subject matter conforms, in
all material respects, with identified suitable criteria, he/she can provide a(n)
a. Limited assurance
b. Absolute assurance
c. Reasonable assurance (x)
d. No assurance