Assurance engagement other services of practitioners PDF

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BS Accountancy Mindanao State University Assurance Engagement other services of practitioner CPA reviewer practice theories questions with answers...

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AUDITING THEORY

AT.3001-Assurance Engagements & Other Services of a Practitioner

R.C.P. SOLIMAN/K.J. UY MAY 2021

References: a. b.

Philippine Framework for Assurance Engagements PSA 120, Framework of Philippine Standards on Auditing

DISCUSSION QUESTIONS Ethical Principles and Quality Control Standards Introduction 1. Philippine Standards on Assurance Engagements defines and describes the elements and objectives of an assurance engagement. Philippine Framework for Assurance Engagements contain basic principles, essential procedures, and related guidance, consistent with the concepts in the Framework, for the performance of assurance engagements. a. Only Statement 1 is correct. b. Only Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect. Services of a CPA in Public Practice

5. CPAs in public practice who perform assurance engagements are governed by the following, except a. Philippine Framework for Assurance Engagements b. Code of Ethics for Professional Accountants in the Philippines c. Philippine Standards on Related Services d. Philippine Standards on Quality Control Definition and Objective of an Assurance Engagement 6.

Assurance services are best described as a. Independent professional services that improve the quality of information, or its context, for decision makers. b. The assembly of financial statements based on assumptions of a reasonable party. c.

2. Which of the following is not an assurance service? a. Audit of financial statements. b. Review of interim financial information. c. WebTrust engagement. d. Preparation of financial statements. 3. Which of the following professional services would be considered an assurance engagement? a. An engagement to install web-based accounting system for a client. b. Preparation of tax returns and attachments based on information provided by the client. c. Performance of agreed-upon procedures related to application of the client with the SEC to increase its authorized shares. d. An engagement to report on compliance of a client with a debt covenant. Demand for Assurance Services

Services designed to express an opinion on historical financial statements based on the results of an audit. d. Services designed for the improvement of operations, resulting in better outcomes. 7. Which of the following best describes the objective of an assurance engagement? a. To assist the company in improving the effectiveness and efficiency of its operations. b. To benchmark the company’s information with companies that are considered leaders in their industry. c. To assist the company in compiling information needed for the preparation of its financial statements. d. To enhance the credibility of information being provided by one party to another in such a way that the other party receiving the information will be able to use it in making informed decisions.

4. Which of the following statements does not describe a Scope of the Framework condition that creates a demand for auditing? a. Conflict between the information preparer and the 8. The following engagements may meet the definition of assurance engagement but are not covered by the user can result in biased information. Framework: b. Information can have substantial economic consequences for a decision maker. I. Engagements to testify in legal proceedings regarding accounting, auditing, taxation, or c. Expertise is often required for information other matters. preparation and verification. II. Engagements that include professional d. Users can directly assess the quality of information. opinions, views or wording from which a user

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AT.3001

EXCEL PROFESSIONAL SERVICES, INC. may derive some assurance, but those 12. Which of the following items can be a subject matter of an assurance engagement? opinions, views or wordings are incidental only to overall engagement, a written report is a. Historical or prospective financial information. expressly restricted in use by specified users, b. Performance of a basketball team. there is a written understanding with the users c. Enrollment system of a university. that the engagement is not intended to be an d. All of the above. assurance engagement, and the engagement is not represented as an assurance 13. When is a subject matter considered appropriate? engagement in the report. a. Identifiable, and capable of consistent evaluation or III. An assurance engagement which is part of a measurement against the identified criteria. larger consulting engagement. b. The information about it can be subjected to a. I, II, and III procedures and for gathering of sufficient b. III only appropriate evidence to support a conclusion. c. I and II only c. Either a or b. d. Neither I, II, nor III d. Both a and b. Reports on Non-Assurance Engagements

14. In an assurance engagement, the outcome of the evaluation or measurement of a subject matter against 9. A practitioner performed a non-assurance engagement criteria is called with a client. Which of the following statements are a. Subject matter allowed to be included in the report of the practitioner? b. Subject matter information a. A statement saying that the practitioner complied c. Assertion with the Framework for Assurance Engagements. d. Evidence b. Use of words such as “assurance,” “audit” or “review.” Criteria c. A conclusion designed to enhance the degree of confidence of intended users about the outcome of 15. When performing an assurance engagement, CPAs use the evaluation or measurement of a subject matter standards or benchmarks to evaluate or measure the against criteria. subject matter of an assurance engagement. These are d. None of the above. referred to in the framework as a. Evidence Engagement Acceptance

b. Subject Matter c. Criteria d. Conclusion

10. A proposed assurance engagement can only be accepted when I. The CPA’s preliminary knowledge about the 16. Which of the following statements refer to the ‘Relevance’ characteristic of suitable criteria for engagement circumstances indicates that relevant assurance engagements? ethical requirements will be satisfied. a. Relevant factors that could affect the conclusions in II. The subject matter of the engagement is the context of the engagements are not omitted. appropriate, the criteria to be used are suitable b. Allows reasonably consistent evaluation or and are available to intended users, the measurement of the subject matter including when practitioner has access to sufficient appropriate used in similar circumstances by similarly qualified evidence to support the conclusion, and the conclusion is to be contained in a written report. practitioners. III. There is a rational purpose for the engagement. a. c. Contributes to conclusions that are free from bias. I, II, or III. d. Contributes to conclusions that assist decisionb. I and II only. making by the intended users. c. II and III only. d. I, II, and III. 17. Criteria that are embodied in laws, regulations, or issued by authorized or recognized bodies of experts Elements of an Assurance Engagement that follow a transparent due process are called a. Established criteria Three Party Relationship b. Specifically developed criteria c. Either a or b 11. Which of the following statements is incorrect regarding d. Neither a nor b the three-party relationship element of assurance engagement? 18. Criteria may be made available to intended users to a. The intended user is generally the addressee of the allow them to understand how the subject matter has been evaluated or measured. professional accountant’s report. b. The responsible party and the intended user will Criteria may also be available only to specific intended often be from separate organizations. users, for example the terms of a contract, or criteria c. The responsible party may also be one of the issued by an industry association that are available only intended users. to those in the industry. d. The practitioner is expected to perform audit a. Only Statement 1 is correct services only. b. Only Statement 2 is correct c. Both statements are correct Subject Matter d. Both statements are incorrect

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