1.Monitoring, as an element of quality control policies of a firm, requires:

a.Providing reasonable assurance that the firm's other quality control policies and procedures are effectively operating.

b.Designates individuals as specialists to serve as authoritative sources and define their authority in consultative situations.

c.Ensuring that personnel are sufficiently directed, supervised and their work being reviewed adequately

d.Identify the right personnel to be assigned in an audit engagement.

2.Which of the following is not permitted by law to practice accountancy as prescribed by Quality Control Policies for an audit firm?

a.Independence

b.Confidentiality

c.Integrity

d.Prudence

3.The government agency tasked by law of implementing and enforcing the regulatory policies of the national government with respect to the regulation and licensing of the various professions and occupations under its jurisdiction is

a.PRC

b.BOA

c.COA

d.SEC

4.The amount of audit fees depends largely on the

a.Size and capitation of the company under audit

b.Amount of profit for the year

c.Availability of cash

d.Volume of audit work and degree of competence and responsibilities involved

5.Which of the following relates to delegation objective of quality control?

a.The firms createW a group that provides technical training to audit staff.

b.There is to be a sufficient direction, supervision, and review of work at all levels to provide reasonable assurance that the work performed meets appropriate standards of quality

c.Assignment of work to the more qualified personnel

d.Whenever necessary, consultation within or outside the firm is to occur with those who have appropriate expertise

6.What is the overriding reason why the auditor considers the professional competence of assistants whom the work will be delegated?

a.All the audit assistants assigned to an engagement must be independent in appearance

b.To have reasonable assurance that such work will be performed with due care by the audit assistant.

c.To lessen the working paper preparation

d.To eliminate audit risk

7.Which of the following is (are) quality control policies on an audit firm level?

ConsultationAssignmentDirection

a.YesNoYes

b.NoNoYes

c.YesNoYes

d.YesYesNo

8.Which of the following relate to skills and competence as an objective of quality control policies?

a.Advancement

b.Professional development

c.Hiring

d.All of these

9.Which of the following objectives are generally a component of a firm's quality control?

I.Professional requirements

II.Skills and competence

III.Assignment

IV.Inspection

V.Consultation

VI.Due professional care

VII.Monitoring

VIII.Delegation

a.A, B, C, D, E, F

b.A, B C, E, G, H

c.A, B, C, F, E, G

d.B, C, G, F, H

10.Monitoring, as an element of quality control policies of a firm, requires:

a.Providing reasonable assurance that the firm's other quality control policies and procedures are effectively operating

b.Designates individuals as specialists to serve as authoritative sources and define their authority in consultative situations.

c.Ensuring that personnel are sufficiently directed, supervised and their work being reviewed adequately

d.Identify the right personnel to be assigned in an audit engagement.

11.Which of the following quality control procedures is a monitoring activity?

a.Evaluates the firm's independence and its ability to serve the prospective client

b.Reviews and tests compliance with the firm's general quality control policies and procedures

c.Designates individuals as specialists to serve as authoritative sources and define their authority in consultative situations

d.Monitors continuing professional education programs and maintain appropriate records, both on a firm and an individual audit engagement basis.

12.It involves informing assistants of their responsibilities and the objectives of the procedures they have to perform:

a.Supervision

b.Monitoring

c.Directing

d.Consultation

13.Which of the following is an element of "directing and audit assistant" objective?

a.Identifying in advance the staffing requirements of a particular audit engagement

b.Informing assistants of their responsibilities and the objectives of the procedures they are to perform

c.Resolving any differences in professional judgment between audit personnel

d.Resolution of differences in audit findings

14.Which of the following is not an element of professional requirements as prescribed by quality control policies for an audit firm?

a.Independence

b.Confidentiality

c.Integrity

d.Prudence

15.Generally Accepted Auditing Standards (GAAS) and Philippine Standards on Auditing (PSA) should be looked upon by practitioners as:

a.Ideals to work towards, but which are not achievable

b.Maximum standards which denote excellent work

c.Minimum standards of performance which must be achieved on each audit engagement

d.Benchmark to be used on all audits, reviews, and compilations.

16.In pursuing its quality control objectives with respect to assigning personnel to engagements, a public accounting firm may use policies and procedures such as

a.Routing employees from assignment to assignment on a random basis to aid in the staff training effort

b.Requiring timely identification of the staffing requirements of specific engagements s that enough qualified personnel can be made available

c.Allowing staff to select the assignments of their choice to promote better client relationships

d.Assigning a number of employees to each engagement in excess of the number required so as not to overburden the staff and interfere with the quality of the audit work performed.

17.A successor auditing most likely would make specific inquiries of the predecessor auditing regarding

a.Specialized accounting principles of the client's industry

b.The competency of the client's internal audit staff

c.The uncertainty inherent in applying sampling procedures

d.Disagreements with management as to auditing procedures

18.Analytical procedures used in planning an audit should focus on

a.Reducing the scope of tests of controls and substantive tests

b.Providing assurance that potential material misstatements will be identified

c.Enhancing the auditor's understanding of the client's business

d.Assessing the adequacy of the available evidential matter

19.Which of the following is an effective audit planning and control procedures that helps prevent misunderstandings and inefficient use of audit personnel?

a.Make copies, for inclusion in the working papers, of those client supporting documents examined by the auditor

b.Provide the client with copies of the audit programs to be used during the audit

c.Arrange a preliminary conference with the client to discuss audit objectives, fees, timing, and other information.

d.Arrange to have the auditor prepare Wand post any necessary adjusting or reclassification entries prior to final closing

20.Analytical procedures, which means the analysis of significant ratios and trends including the resulting investigation of fluctuations and relationships that are inconsistent with other relevant information or which deviate from predicted amounts, are not required to be applied

a.At the planning stage of the audit

b.As substantive procedures

c.Overall review stage of the audit

d.None of the above

21.Which of the following statements is correct concerning analytical procedures?

a.Analytical procedures usually involve comparisons of ratios developed from recorded amounts to assertions developed by management.

b.Analytical procedures used in planning an audit generally use data aggregated at a high level

c.Analytical procedures can replace tests of controls in gathering evidence to support the assessed level of control risk

d.Analytical procedures are more efficient, but not more effective, than tests of details and transactions.

22.The following factors affect the nature, timing and extent of an audit firm's quality control policies and procedures, except

abcd

Size and nature of practiceYesYesNoNo

Geographic dispersionYesYesYesNo

OrganizationYesNoYesNo

Appropriate cost/benefit considerationsYesYesNoNo

23.Within the context of quality control, the primary purpose of continuing professional education and training activities, is to enable a CPA firm to provide personnel within the firm with:

a.Technical training that assures proficiency as an auditor

b.Professional education that is required in order to perform with due professional care

c.Knowledge required to fulfill assigned responsibilities and to progress within the firm

d.Knowledge required in order to perform a peer review

24.To exercise due professional care, the auditor should examine all available corroborating evidences supporting management's assertions.

The proper attitude of an auditor who is performing an examination in accordance with GAAS should be professional responsiveness.

GAAS means rules acknowledged by the accounting profession because of their universal application.

a.b.c.d.

First statementTrueFalseTrueTrue

Second statementFalseFalseTrueFalse

Third statementFalseFalseTrueTrue

25.Prior to the acceptance of an audit engagement with a client who has terminated the services to the predecessor auditor, the CPA should

a.Contact the predecessor auditor without advising the prospective client and request a complete report of the circumstance leading to the termination with the understanding that all information disclosed will be kept confidential

b.Accept the engagement without contacting the predecessor auditor since the CPA can include audit procedures to verify the reason given by the client for the termination

c.Not communicate with the predecessor auditor because this would in effect be asking the auditor to violate the confidential relationship between auditor and client

d.Advise the client of the intention to contact the predecessor auditor and request permission for the contact

26.Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's

a.Opinion of any subsequent events occurring since the predecessor's audit report was issued

b.Understanding as to the reasons for the change of auditors

c.Awareness of the consistency in the application of GAAP between periods

d.Evaluation of all matters of continuing accounting significance

27.Which of the following best describes what is meant by Generally Accepted Auditing Standards?

a.Pronouncements issued by the Auditing Standards and Practice Council

b.Procedures to be used to gather evidence to support financial statements

c.Rules acknowledges by the accounting profession because of their universal compliance

d.Measures of the quality of the auditor's performance.

28.When an independent auditor is approached to perform an audit for the first time, he or she should make inquiries of the predecessor auditor. Inquiries are necessary because the predecessor may be able to provide the successor with information that will assist the successor in determining whether

a.The predecessor's work should be used

b.The company rotates auditors

c.In the predecessor's opinion, control risk is low

d.The engagement should be accepted

29.Which of the following procedures would an auditor most likely perform in planning a financial statement audit?

a.Inquiring of the client's legal counsel concerning pending litigation

b.Comparing the financial statements to anticipated results

c.Examining computer generated exception reports to verify the effectiveness of internal controls

d.Searching for unauthorized transactions that may aid in detecting unrecorded liabilities.

30.Which of the following should an auditor obtain from the predecessor auditor prior to accepting an audit engagement?

a.Analysis of balance sheet accounts

b.Analysis of income statement accounts

c.All matters of continuing accounting significance

d.Facts that might bear on the integrity of management

31.An auditor need not abide by an auditing standard if the auditor believes that

a.The amount is immaterial

b.The requirement of the standard is impractical to perform

c.The requirement of the standard is impossible to perform

d.Any of the three above is correct

32.A CPA should comply with applicable generally accepted auditing standards on every engagement

a.Without exception

b.Except in examinations that result in a qualified report

c.Except in engagements where the CPA is associated with unaudited financial statements

d.Except in examinations of interim financial statements

33.The firm is to be staffed by personnel who have attained and maintained the technical standards and professional competence required to enable them to fulfill their responsibilities with due care is the objective of what quality control policy?

a.Professional requirements

b.Assignment

c.Skills and competence

d.Delegation

34.In connection with the element of professional development, a CPA firm's system of quality control should ordinarily provide that all personnel

a.Have the knowledge required to enable them to fulfill responsibilities assigned

b.Possess judgment, motivation, and adequate experience.

c.Seek assistance from persons having appropriate levels of knowledge, judgment, and authority.

d.Demonstrate compliance with peer review directives