THEORY ON AUDITING AND ATTESTATION SERVICES PDF

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IAA-TAAS 22- How many separate parties are involved in an assurance engagement? 3 Which of the following professional has primary responsibility for the performance of an audit? The partner in charge of the engagement. PSRE 2400 (Engagements to Review Financial Statements), as amended by the AASC...

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IAA-TAAS 22-01  How many separate parties are involved in an assurance engagement? 3  Which of the following professional has primary responsibility for the performance of an audit? The partner in charge of the engagement.  PSRE 2400 (Engagements to Review Financial Statements), as amended by the AASC in February 2008, applies to Reviews of any historical financial information by a practitioner other than the entity’s auditor.  Which of the following services, if any, may a practitioner who is not independent provide? Compilations but not reviews.  Inquiries and analytical procedures ordinarily form the basis for which type engagement? Review  Criteria that are embodied in laws or regulations, or issued by authorized or recognized bodies of experts that follow a transparent due process are called Established criteria  The internal auditing department’s responsibility for deterring fraud is to Examine and evaluate the system of internal control.  Which of the following statements is true concerning evidence in an assurance engagement? Sufficiently is the measure of the quantity of evidence  Which of the following is the objective of a reasonable assurance engagement? A reduction in assurance engagement risk to an acceptably low level in the circumstances of the engagement as a basis for a positive form of expression of the practitioner’s conclusion.  An engagement to perform agreed-upon procedures may involve the auditor in performing certain procedures concerning I. Individual items of financial data. II. A single financial statement. III. A complete set of financial statements. I, II, and III  Which of the following is the most appropriate action to be taken by a CPA who has been asked to perform a consulting services engagement concerning the analysis of a potential merger if he/she has little experience with the industry involved? Accept the engagement but he/she should conduct research or consult with others to obtain sufficient competence.  What assurance is provided by the auditor in an agreed-upon procedures engagement? No assurance  Internal auditors should review the means of physically safeguarding assets from losses arising from Exposure to the elements.  In some assurance engagement, the evaluation or measurement of the subject matter is performed by the responsible party, and the subject matter information is in the form of an assertion by the responsible party that is made available to intended users. These engagements are called Assertion-based engagements  Which of the following engagements is covered by the Framework for Assurance Engagements? Independent Financial statement audit.

 Which of the following terms best describes the audit of taxpayer’s return by a BIR auditor? compliance audit.  The auditor is required to maintain professional skepticism throughout the audit. Which of the following statements concerning professional skepticism is false? A belief that management and those charged with governance are honest and have integrity relieves the auditor of the need to maintain professional skepticism.  A practitioner is associated with financial information when I. The practitioner attaches a report to that financial information. II. The practitioner consents to the use of his/her name in a professional connection. Either I or II  Governmental auditing often extends beyond examinations leading to the expression of opinion on the fairness of financial presentation and includes audits of efficiency, economy, effectiveness, and also Compliance.  These statements are issued by the AASC to provide interpretive guidance and practical assistance to auditors in the implementation of PSAs and to promote good practice. PAPSs  The Philippine Framework for Assurance Engagements Defines an describes the elements and objectives of an assurance engagement, and identifies engagements to which PSAs, PSREs, and PSAEs apply.  An assurance engagement should have which of the following elements? Subject matter ; Criteria Yes ; Yes  What is the proper organizational role of internal auditing? To serve as an independent, objective assurance and consulting activity that adds value to operations.  An audit to determine whether an entity’s is following specific procedures or rules set down by some higher authority is classified as a/an Compliance audit  Suitable criteria are required for reasonably consistent evaluation or measurement of the subject matter of an assurance engagement. Which of the following statements concerning the characteristics of suitable criteria is correct? Neutral criteria contribute to conclusions that are free from bias.  The overall objectives of the auditor in conducting an audit of financial statements are I. To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether caused by fraud or error. II. To report on the financial statements. III. To obtain conclusive rather than persuasive evidence. IV. To detect all misstatements, whether due fraud to error. I and II only  The review of a company’s financial statement by a CPA firm Is substantially less in scope of procedures than an audit  Operational auditing is primarily oriented toward Future improvements to accomplish the goals of management.  Which of the following standards are to be applied, as appropriate, in the audit of historical financial information? PSAs

 Internal auditors review the adequacy of the company’s internal control system primarily to Determine whether the internal control system provides reasonable assurance that the company’s objectives and goals are met efficiently and economically.  In an assurance engagement, the outcome of the evaluation or measurement of a subject matter against criteria is called Subject matter information  A practitioner should accept an assurance engagement only if The practitioner’s conclusion is to be contained in a written report.  What level of assurance is provided by the auditor in an audit engagement? High, but not absolute  The Philippine Standards on Assurance Engagements (PSAEs) are to be applied in Assurance engagements dealing with subject matters other than historical financial information.  When performing a compilation engagement, the accountant is required to Obtain a general knowledge of the business and operations of the entity.  Which of the following statement concerning consulting services is false? Consulting services ordinarily involve external reporting.  Independence in not a requirement for which of the following engagements? Compilation Yes

Review No

Agreed-upon Procedures Yes

 ________________ is the risk that the practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated. Assurance engagement risk  The subject matter of an assurance engagement may include Financial Information Yes

Internal Controls Yes

Compliance with Regulation Yes

 An objective of a performance audit is to determine whether an entity’s Specific operating units are functioning economically and efficiently.  Reducing assurance engagement risk to zero is very rarely attainable or cost beneficial as a result of the following factors, except The practitioner may not have required assurance knowledge and skills to gather and evaluate evidence.  The Philippine Standards on Quality Control (PSQCs) are to. Be applied to All services that fall under the AASC’s engagement standards.  The auditor is required to comply with all PSAs relevant to the audit of an entity’s financial statements. A PSA is relevant to the audit when I. The PSA is in effect II. The circumstances addressed by the PSA exist. Both I and II

 Assurance services differ from consulting services in that they I. Focus on providing advice. II. I onlyInvolve monitoring of one party by another II only  Operational audits generally have been conducted by internal and COA auditors, but may be performed by certified public accountants. A primary purpose of an operational audit is to provide A measure of management performance in meeting organizational goals.  A summary of findings rather than assurance is most likely to be included in a/an Agreedupon procedures report  What level of assurance is provided by the practitioner in a review engagement? Moderate  After accepting an assurance engagement, a practitioner is not allowed to change the engagement to a non-assurance engagement, or from a reasonable assurance engagement to a limited assurance engagement, except when there is reasonable justification for the change. Which of the following ordinarily will justify a request for a change in the engagement? I. A change in circumstances that affects the intended user’s requirements. II. A misunderstanding concerning the nature of the engagement. Both I and II  Which of the following bets describes the reason why independent auditors report on financial statements? Different interest may exist between the company preparing the statements and the persons using the statements.  Which of the following statements best describes assurance services? Independent professional services that are intended to enhance the credibility of information to meet the needs of an intended user....