AT-5901_overview of auditing

AT-5901_overview of auditing - Page 1 of 8 CPA REVIEW...

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CPA REVIEW SCHOOL OF THE PHILIPPINES M a n i l a AUDITING THEORY Overview of Auditing Related PSAs : PSA 100, 120, 200 and 610 1. Certain fundamental beliefs called "postulates" underlie auditing theory. Which of the following is not a postulate of auditing? a. No long-term conflict exists between the auditor and the management of the enterprise under audit. b. Economic assertions can be verified. c. The auditor acts exclusively as an auditor. d. An audit has a benefit only to the owners. 2. In all cases, audit reports must a. Be signed by the individual who performed the audit procedures. b. Certify the accuracy of the quantitative information which was audited. c.Communicate the auditor’s finding to the general public. d. Inform readers of the degree of correspondence between the quantifiable information and the established criteria. 3. The auditor communicates the results of his or her work through the medium of the a. Engagement letter c. Management letter. b. Audit report d. Financial statements. 4. As used in auditing, which of the following statements best describes "assertions"? a. Assertions are the representations of management as to the reliability of the information system. b. Assertions are the auditor's findings to be communicated in the audit report. c. Assertions are the representations of management as to the fairness of the financial statements. d. Assertions are found only in the footnotes to the financial statements. 5. The expertise that distinguishes auditors from accountants is in the a. Ability to interpret generally accepted accounting principles. b. Requirement to possess education beyond the Bachelor’s degree. c.Accumulation and interpretation of evidence. d. Ability to interpret ASC Statements. 6. The framework for auditing and related services as addressed by PSA excludes a. Review c. Compilation b. Tax services d. Agreed upon procedure 7. It refers to the level of auditor’s satisfaction as to the reliability of an assertion being made by one party for use by another party. a. Confidence level c. Assurance level b. Reasonableness level d. Tolerable level 8. Indicate the level of assurance provided by audit and related services. a b c d Audit High High Negative Absolute Review Moderate None Moderate High Agreed-upon procedures None None None Limited Compilation None None None None 9. Which of the following is true of the report based on agreed-upon-procedures? a. The report is restricted to those parties who have agreed to the procedures to be performed. b. The CPA provides the recipients of the report limited assurance as to reasonableness of the assertion(s) presented in the financial information. c.The report states that the auditor has not recognized any basis that requires revision of financial statements. AT-5901
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AT-5901_overview of auditing - Page 1 of 8 CPA REVIEW...

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