True or False

1.An engagement quality control review is required for all completed audit engagement.

2.Promotion of a culture of quality is related to the element of monitoring.

3.Quality controls are policies and procedures adopted by a firm to provide a reasonable assurance that the audits done by the firm is being carried out in accordance with the objective and general principles governing an audit of financial statements.

4.The primary purpose of establishing quality control policies and procedures for deciding whether to accept or reject a new client is to minimize the likelihood of a firm associating with clients whose management lacks integrity.

5.The audit work performed by assistants should be reviewed to determine whether it was adequately formed and to evaluate whether the results are consistent with the conclusions to be presented in the auditor's report.

6.The Philippine Standards on Quality Control (PSCQs) are to be applied to all services that fall under the AASC's engagement standards.

7.In reviewing the audit work performed, the engagement partner need not review all audit documentation, but may do so.

8.An engagement quality control review ordinarily involves discussion with the engagement partner, a review of the financial statements or other subject matter information and the report, and, in particular, consideration of whether the report is appropriate.

9.The firm should obtain written confirmation of compliance with its policies and procedures on independence from all firm personnel required to be independent by relevant ethical requirements at least annually.

10.The review conducted by the quality control reviewer reduces the responsibilities of the engagement partner.

11. The main purpose of implementing quality control policies and procedures is

a. To have a favorable peer review.

b. To comply with regulatory agency.

c. To standardize the policies and procedures of the audit firm.

d. To provide reasonable assurance that audit will be conducted in accordance with PSA.

12. The firm's system of quality control should include policies and procedures that address each of the following, except

a. Control environment.

b. Human resources.

c. Relevant ethical requirements.

d. Monitoring.

13. In pursuing a firm's quality control objectives, a firm should adopt policies and procedures to enable it to identify and evaluate circumstances and relationships that create threats to independence, and to take appropriate action to eliminate those threats or reduce them to an acceptable level by applying safeguards, or, if considered appropriate, to withdraw from the engagement. Which quality control element would this be most likely to satisfy

a. Ethical requirements

b. Human resources

c. Monitoring

d. Leadership responsibilities for quality within the firm

14. PSQC 1 applies to both assurance and non-assurance services.

PSA 220 applies to both audit and review of financial statements.

a. True, true

b. True, false

c. False, true

d. False, false

15. The auditor is most likely to discover omitted audit procedures during

a. Preparation of the management letter.

b. Follow-up procedures performed in compliance with generally accepted auditing standards.

c. The conference held with the client prior to issuing the audit report.

d. A post engagement review performed as part of the firm's quality control inspection program.

16. A requirement that working papers be reviewed by the supervision, and any deficiencies be discussed with the preparer is an example of a quality control procedure in the area of

a. Acceptance and continuance of client relationships and specific engagements.

b. Human resources.

c. Relevant ethical requirements.

d. Engagement performance.

17. The objective of quality control mandates that a public accounting firm should establish policies and procedures for professional development which provide reasonable assurance that all entry-level personnel

a. Prepare working papers which are standardized in form and content.

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

c. Will advance within the organization.

d. Develop specialties in specific areas of public accounting.

18. In pursuing a firm's quality control objectives, a firm should adopt policies and procedures to enable it to identify and evaluate circumstances and relationships that create threats or reduce them to an acceptable level by applying safeguards, or, if considered appropriate, to withdraw from the engagement. Which quality control element would be most likely to satisfy?

a. Monitoring.

b. Ethical requirements

c. Human resources

d. Acceptance and continuance of client relationships.

19. Maintaining or providing access to adequate reference libraries and other authoritative sources is a procedure that is most likely performed to comply with the policy on

a.Assignment.

C. Maonitoring

b. Consultation.

d. Supervision.

20. The work performed by the assistants should be reviewed by personnel of at least equal competence to consider all of the following, except:

a. The objectives of the audit have been achieved.

b. The work was adequately performed and documented.

c. The conclusions expressed are consistent with the results of the work performed.

d. The engagement personnel maintained independence in the performance of the examination.