_________________1. It deals with whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. Such an opinion is common to all audits of financial statements.

_________________2. It likely cause the possibility of inaccurate financial statements.

_________________3. A review of company's computerized accounting system, assessment of its efficiency or reliability and recommendations for improving the system would constitute this type of audit.

_________________4. This is achieved by the expression of an opinion by the auditor on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework.

_________________5. As a result of legal, physical and economic factors preventing users of external financial statements from examining personally the information provided by a company's directors, an independent party is needed to assess the reliability of the information of their behalf.

6.Users of a company's financial statements demand independent audits because

a.Users demand assurance that fraud does not exist.

b.Management may not be objective in reporting.

c.Users expect auditors to correct management errors.

d.Management relies on the auditor to improve internal control.

7.S1 Information risk refers to the risk that the auditor may express an unqualified opinion on the financial statements when in fact the financial statements are materially misstated

S2 The biases and motives of the information provider may be a cause of information risk

S3 The assumption underlying an audit of financial statements is that they will be used by different groups for similar purposes

a.False, false, true

b.False, true, false

c.False, true, true

d.True, false, false

8.The Philippine Standards on Auditing issued by ASPC

a.Are applicable only when an independent audit involving an expression of an opinion on financial statements is carried out

b.Are the only authoritative source of auditing standards for members of the accountancy profession in the Philippines

c.Are general guideline to help auditors

d.Require that in no circumstances would an auditor may judge it necessary to depart from a PSA even though such a departure may result to more effective achievement of the objective of an audit

9.Which of the following statements does not describe a condition that creates a demand for auditing?

a.Conflict between an information preparer and a user can result in biased information

b.Information can have a substantial economic consequences for a decision maker

c.Expertise is often required for information preparation and verification

d.Users can directly assess the quality of information

10.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.

11.The primary goal of the CPA in performing the attest function is to

a.Investigate the incidence of fraud

b.Examine all the individual transactions for his to issue an opinion about the fairness of presentation of an entity's financial statements

c.Determine whether the client's assertions that are embodied in the financial statements are fairly presented

d.Prevent an issuance of improperly prepared financial statements

12.The concept of reasonable assurance as expressed by the auditor on his report means

a.The auditor just considers material misstatements when he prepares his audit report.

b.It indicates that the auditor is not an insurer or guarantor of the correctness of the financial statements.

c.The cost of doing the audit should not exceed the professional fee charged.

d.The auditor has to observe reasonable care when he performs the audit and prepares his audit report.

13.S1 A typical objective of an operational audit is for the auditor to determine whether the financial statements fairly present the entity's financial position, results of operations and cash flows

S2 In performing compliance audits, a CPA issues a report on the degree of compliance with the criteria used for the engagement (for example, laws, rules or regulations which have been set by the auditor)

S3 Independent auditors are expected by management to be experts who actively participate in management decision-making.

a.False, false, truec. False, true, false

b.True, false, false

d. False, false, false

14.I. Information asymmetry seldom occurs.

II. Conflicts of interest often occur between absentee owners and managers.

a.Both statements are true.

b.Both statements are false.

c.First statement is true; second statement is false.

d.First statement is false, second statement is true.

10.Compliance auditing often extends beyond audits leading to the expression of opinion on the fairness of financial presentation and includes audits of efficiency, economy, effectiveness, as well as

a.Accuracy.

b.Evaluation.

c.Adherence to specific rules or procedures.

d.Internal control