1 – AUDITING

1 – ANSWER:
A SYSTEMATIC PROCESS OF OBJECTIVELY
OBTAINING AND EVALUATING EVIDENCE
REGARDING ASSERTIONS ABOUT ECONOMIC
ACTIONS OR EVENTS TO ASCERTAIN THE
DEGREE OF CORRESPONDENCE BETWEEN
THESE ASSERTIONS AND ESTABLISHED
CRITERIA AND COMMUNICATING THE RESULTS
TO INTERESTED USERS
2 – ASSURANCE VS. NON-ASSURANCE
ENGAGEMENTS
 2 – ANSWER:
THE OBJECTIVE OF ASSURANCE
ENGAGEMENTS IS TO EXPRESS AN OPINION
THAT ENHANCES THE DEGREE OF
CONFIDENCE THAT INTENDED USERS CAN
HAVE. NON-ASSURANCE ENGAGEMENTS ARE
THOSE SERVICES PERFORMED BY CPAs WHICH
DO NOT INVOLVE THE EXPRESSION OF AN
OPINION
3 – ASSERTION-BASED VS. DIRECT REPORTING
ENGAGEMENT
 3 – ANSWER:
ASSERTION-BASED – CLIENT PREPARES THE FS
AND AUDITOR EXPRESSES AN OPINION
REGARDING THE FS
DIRECT REPORTING – THE CLIENT DOES NOT
PREPARE THE FS, THE AUDITOR DOES IT OR
OBTAINS A REPRESENTATION FROM A THIRD
PARTY WHO DOES IT, AND EXPRESSES AN
OPINIO REGARDING THE FS
4 – REASONABLE VS. LIMITED ASSURANCE
ENGAGEMENT
 4 – ANSWER:
REASONABLE ASSURANCE – INDEPENDENT
FINANCIAL STATEMENT AUDIT
LIMITED ASSURANCE – REVIEW OF NON-
FINANCIAL PERFORMANCE, HUMAN
RESOURCES, INTERNAL CONTROL
5 – THREE TYPES OF AUDIT
 5 – ANSWER:
EXTERNAL AUDIT, OPERATIONAL AUDIT,
COMPLIANCE AUDIT
6 – THREE TYPES OF AUDITORS
 6 – ANSWER:
INTERNAL AUDITOR, EXTERNAL AUDITOR,
GOVERNMENT AUDITOR
7 – FIVE ELEMENTS OF AN ASSURANCE
ENGAGEMENT
 7 – ANSWER:
THREE PARTY RELATIONSHIP, APPROPRIATE
SUBJECT MATTER, SUITABLE CRITERIA,
SUFFICIENT APPROPRIATE EVIDENCE,
WRITTEN ASSURANCE REPORT/OPINION
8 – FIVE FORMS OF APPROPRIATE SUBJECT
MATTER
 8 – ANSWER:
FINANCIAL PERFORMANCE/CONDITIONS (FS),
NON-FINANCIAL PERFORMANCE/CONDITIONS
(EFFICIENCY AND EFFECTIVITY), PHYSICAL
CHARACTERISTICS (CAPACITY OF FACILITY),
SYSTEMS & PROCESSES (INTERNAL CONTROL
& IT SYSTEM), BEHAVIOR (CORPORATE
GOVERNANCE, HUMAN RESOURCE
PRACTICES)
9 – FIVE CHARACTERISTICS OF SUITABLE
CRITERIA
 9 – ANSWER:
RELEVANCE, COMPLETENESS, RELIABILITY,
NEUTRALITY, UNDERSTANDABILITY (RRCUN)
10 – FIVE GENERALIZATIONS REGARDING THE
RELIABILITY OF EVIDENCE
 10 – ANSWER:
EVIDENCE IS MORE RELIABLE WHEN:
1) OBTAINED FROM INDEPENDENT SOURCES;
2) RELATED CONTROLS ARE EFFECTIVE (IF
GENERATED INTERNALLY);
3) DIRECTLY OBTAINED BY PRACTIONER THAN BY
INFERENCE (OBSERVATION VS INQUIRY)
4) IN DOCUMENTARY FORM THAN ORAL
5) ORIGINAL DOCUMENTS THAN PHOTOCOPIES OR
FASCIMILES
 11 – FACTORS THAT LIMIT THE AUDITOR
FROM PROVIDING ABSOLUTE ASSURANCE
 11 – ANSWER:
SAMPLING RISKS, HUMAN WEAKNESSES
/NON-SAMPLING RISKS, RELIANCE ON
MANAGEMENT’S REPRESENTATION,
INHERENT LIMITATIONS OF THE CLIENTS
ACCOUNTING AND INTERNAL CONTROL
PROCESS, NATURE OF EVIDENCE
 12 – FOUR SOURCES OF NEED FOR
INDEPENDENT FINANCIAL STATEMENT AUDIT
 12 – ANSWER:
CONFLICT OF INTEREST BETWEEN
MANAGEMENT AND USERS OF FINANCIAL
STATEMENTS, EXPERTISE, REMOTENESS,
FINANCIAL CONSEQUENCES
13 – TEN GENERALLY ACCEPTED AUDITING
STANDARDS
 13 – ANSWER:
TECHNICAL TRAINING AND PROFICIENCY,
INDEPENDENCE, PROFESSIONAL CARE,
PLANNING, INTERNAL CONTROL
CONSIDERATION, EVIDENTIAL MATTER,
GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES, INCONSISTENCY, DISCLOSURE,
OPINION
14 – SIX ELEMENTS OF A SYSTEM OF QUALITY
CONTROL
 14 – ANSWER:
LEADERSHIP RESPONSIBILITIES FOR QUALITY
ON AUDITS, RELEVANT ETHICAL
REQUIREMENTS, ACCEPTANCE AND
CONTINUANCE OF CLIENT RELATIONSHIPS,
HUMAN RESOURCES AND ASSIGNMENT,
ENGAGEMENT PERFORMANCE, MONITORING
15 – RESPONSIBILITIES OF THE ENGAGEMENT
PARTNER DURING THE ENGAGEMENT
PERFORMANCE
 15 – ANSWER:
DIRECTION, SUPERVISION,REVIEW, MANAGE
CONSULTATION
18 – RISK-BASED
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