Let’s Analyze

Multiple Choice Questions:

1. Which of the following is not one of the major categories of practitioner’s services?
a. Compilation engagement.
b. Assurance engagements on subject matters other than historical
financial information.
c. Related service framework.

d. Compilation engagement.

2. An example of an assurance engagement is

a. Labor data for union contact negotiation.
b. Audit of financial statements of a medium size company.

c. Regulator’s questionnaire on business ethics and conduct.

d. Insurance claims data.
3. Which of the following is not one of the five elements exhibited by
assurance engagements?
a. The subject matter.
b. Suitable criteria.
c. Sufficient appropriate evidence
d. A multi-party relationships.
4. What does an auditor do?
a. Provide a guarantee on the ongoing viability of a company.
b. Provide an independent opinion on the financial report.

c. Help management to produce the financial report.

d. Ensure that the financial report contains no fraud or error.

5. Which of the following is an accurate statement regarding assurance services?

a. Assurance services improve the quality of information for decision makers.

b. Assurance services must be performed by a CPA.

c. An attestation service is not a type of assurance service.
d. Assurance services can only be performed on financial data.
6. Subject matter and subject matter information of an assurance engagement
can take all of the following, except:

a. Physical characteristics.
b. Non-financing performance or conditions.
c. Litigation planning.

d. Financial performance or conditions.

7. Assurance services differ from consulting services in that they
Involved Monitoring of

Focus on Outcomes One Party by Another

a. Yes Yes

b. Yes No
c. No Yes
d. No No
8. What is the type of assurance engagement that has as its subject matter a
non- historical financial information?
a. Special purpose engagement.

b. Agreed-upon procedures.
c. Review of financial statements.

d. Prospective financial information.

9. The following statements relate to assurance engagements. Choose the
incorrect statements.
1. The objective of an assurance engagement is for a professional
accountant to evaluate or measure a subject matter that is the responsibility or
another party against identified suitable criteria, and to express a conclusion that
provides the intended user with a level of assurance about the subject matter.

2. Assurance engagements performed by professional accountants

are intended to enhance the credibility of information about a subject matter.
3. Assurance engagements involve two parties: a professional accountant
and an intended user.
4. The subject matter of an assurance engagement is limited to historical
or prospective financial information.
5. The intended user in an assurance engagement is the person or class of
persons for whom the professional accountant prepares the report for a specific use
or purpose.
a. 2, 3, 4 and 5
b. 2, 4 and 5
c. 3 and 4

d. 1, 2, 3, and 4

10. How does the related services framework differ from the assurance framework?
a. Related services claim compliance with PSAs.

b. Related services engagements do not result in an opinion.

c. Related services enhance the degree of confidence intended users can have.
d. Related services claim compliance with PSAEs.
11. Which of the following is not true about the subject matter of an
assurance engagement?
a. It is the topic about which the assurance is conducted.
b. It could be information such as financial statements, statistical information
and non-financial performance indicators.
c. It could be the Philippine Financial Reporting Standards.

d. It could be systems and processes or behavior.

12. A responsible party does each of the following,
except: a. Selects the audit procedures.

b. Determines the subject matter.

c. Selects criteria.
d. Engages the practitioner.
13. The characteristics for assessing whether criteria are suitable are all
the following, except
a. Reliability.
b. International acceptance.

c. Understandability
d. Neutrality
14. Sufficiency of evidence is

a. Evidence which is adequate.

b. The measure of the quality of evidence.
c. The measure of the quantity of evidence.
d. Evidence which is material.
15. In a limited assurance engagement, the practitioner
a. Has obtained sufficient appropriate evidence to reduce
assurance engagement risk to an acceptably low level.
b. Expresses the conclusion in a positive form.
c. Expresses the conclusion in the negative form.
d. Conveys reasonable assurance.
16. Professional judgment is the application of relevant training, knowledge and
experience, within the context provided by , in making informed
decisions about the courses of action that are appropriate in the circumstances
of the audit engagement.
a. Philippine Financial Reporting Standards.
b. Philippine Standards on Auditing.

c. The Code of Professional Ethics of an Accountants.

d. Auditing, accounting and ethical standards.

17. The Philippine Framework for Assurance Engagements
a. Establishes standards and provides procedural requirements for the
performance of assurance engagements.
b. Contains basic principles, essential procedures, and related guidance for
the performance of assurance engagements.
c. Provides a frame of reference for CPAs in public practice when performing audits,
reviews, and compilations of historical financial information.
d. Defines and describes the elements and objectives of an assurance
engagement, and identifies engagements to which PSAs, PSREs, and
PSAEs apply.

18. The auditor is required to prepare audit documentation sufficient to enable an

experienced auditor, having no previous connection with the audit, to understand
the
in reaching conclusions on significant matters arising during the audit.

a. Confirmation letters.
b. Significant professional judgments made.
c. The total evidence gathered.

d. The interviews conducted with employees and management.

19. Absolute assurance is generally not attainable as a result of various factors,
such as
a. The use of sampling in performing tests of controls and substantive tests.
b. Internal control systems are subject to the risk of collusion and
management override. No system is fool-proof.
c. There are some assertions for which the only evidence comes from
management representations, such as the completeness of minutes of meetings of
the board of directors.
d. All of these.

20. An assurance report

a. Provides reasonable assurance to the responsible party.
b. Has a format that is uniquely different from PSA audit opinions.

c. Is prepared by the responsible party.

d. Provides a written report containing a conclusion that conveys
the assurance obtained about the subject matter information.