Auditing Theory Practice Exam

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• Why might an auditor assess control risk at the maximum level?
• Under what circumstance can a practitioner change an assurance engagement?
• What type of risks should be assessed when determining acceptable audit risk?
• Which situation is of least concern to an auditor assessing risks of material misstatement?
• Which of the following is NOT considered an assurance service?
• Which of the following is an example of a self-review threat?
• Which of the following can eliminate threats to independence according to ethical standards?
• What is a significant concern for an auditor when assessing the accounts receivable process?
• How may cash receipts be handled to minimize misstatements?
• What does the auditor assess when determining materiality?
• What is the primary purpose of ethical standards in auditing according to the CPA profession?
• In an assertion-based engagement, who performs the evaluation of the subject matter?
• What type of threat is posed when a professional accountant is pressured to alter their work conclusions?
• Which of the following would NOT be classified as an analytical procedure?
• What type of threat arises from a financial interest in the client by the auditor?
• Which elements are part of a CPA firm's quality control policies?
• Which of the following is not a general authorization?
• What is the outcome of not implementing sufficient controls over inventory?
• What does Part A of the Code establish for professional accountants?
• Which of the following does NOT create a self-interest threat for a professional accountant?
• Which of the following actions may result in a self-review threat for a firm?
• Which of the following statements about consulting services is false?
• Which control provides reasonable assurance that all sales transactions are recorded?
• Recruiting senior management for an assurance client can create various threats, except which one?
• What is a primary purpose of an operational audit?
• Which test of controls can help ensure that goods shipped are properly billed?
• Which action can help in maintaining independence when dealing with potential conflicts?
• How frequently can media-covered events be held to celebrate a professional accountant's anniversaries without violating advertising rules?
• What may a professional accountant in public practice communicate about their employment opportunities?
• According to the Code of Ethics, what is the term for communication aimed at promoting the services of professional accountants?
• What is required for members of audit teams, firms, and network firms in relation to their audit clients?
• If the auditor's expert's work is inconsistent with other audit evidence, what should the auditor do?
• Which type of threat is particularly concerning when a firm is involved in both auditing and consulting for the same client?
• What must auditors do when conducting their work to ensure reliability?
• What factor could most likely indicate the existence of related parties?
• What does assurance engagement risk refer to?
• What type of threat to independence is created by family relationships between assurance team members and influential clients?
• What is the primary characteristic of a limited assurance engagement?
• Which of the following statements about publicity is incorrect?
• Why is it essential for purchase orders to be prenumbered?
• Who holds ultimate responsibility for the quality of each audit engagement?
• Which safeguard can be applied to reduce threats to independence when a close family member of a member of the assurance team has significant influence over the engagement?
• What defines the level of assurance in a reasonable assurance engagement?
• An objective of a performance audit is to assess whether entities are functioning?
• Which organization has the primary duty to enforce the provisions of RA 9298?
• Which of the following is not a primary objective of effective internal control?
• What is the INCORRECT statement regarding the internal and external auditor relationship?
• Which financial document would an auditor most likely rely on when determining preliminary judgment about materiality?
• Which of the following actions typically does not create a threat to independence?
• What is the correct statement on disclosing confidential client information by a CPA?
• Intimidation threats can occur in which of the following scenarios?
• What is the function of the quality assurance review conducted by the Board of Accountancy?
• What does obtaining reasonable assurance about an entity's financial statements imply?
• If a large portion of a firm's fees comes from a single assurance client, what threat does that create?
• When must the death or disability of a CPA be reported to the BOA?
• In the context of professional ethics, which principle ensures the auditor remains fair and impartial?
• If an auditor is testing control on a client's cash disbursements procedures with no audit trail, what method will they most likely use?
• Should the company implement controls if the cost exceeds projected savings from reduced inventory loss?
• What aspects should an auditor consider when numerous property and equipment transactions occur during the year?
• What is the fundamental requirement when conducting an assurance engagement?
• Which scenario represents a violation of the Implementing Rules and Regulations of RA 9298?
• PSRE 2400 applies to what type of engagements?
• What is the main role of internal auditing?
• In a compilation engagement, what is the accountant required to do?
• Which of the following does NOT exemplify intimidation threats?
• What kind of interests might require the auditor to disassociate from the client?
• Which control activity assures that all billed sales are accurately posted to the accounts receivable ledger?
• Why do internal auditors review the adequacy of a company's internal control system?
• What term is used for materiality levels specific to particular transactions or balances?
• Which element of a firm's quality control system focuses on detecting and addressing issues during audits?
• Which of the following relationships can create self-interest and intimidation threats?
• Which two objectives must be achieved by an auditor during an audit of financial statements?
• A potential independence threat may be posed by:
• What is likely when an auditor decides to perform tests of controls?
• What is the primary concern with accepting a lower fee for assurance services?
• What statement about professional identification cards is correct?
• Who has the primary responsibility for the performance of an audit?
• When inherent risk is high, what is required concerning audit risk?
• According to PSA 330, how often should an auditor test unchanged controls?
• The nature, timing, and extent of quality control policies depend on what factors?
• Which auditing procedure is most effective for identifying related party transactions?
• In which scenario would the auditor gather additional evidence?
• What do we call fees that are based on the outcome of a transaction or service performed?
• Which CPE credit unit statement is incorrect?
• Which circumstance may lead to an advocacy threat for a professional accountant?
• What is the term for the auditor's willingness to accept the possibility of material misstatement in financial statements?
• Which of the following are considered elements of the control environment?
• According to PSQC 1, what process evaluates the firm's system of quality control?
• What is considered a significant influence that can affect auditors' objectivity?
• For which type of engagements is independence not a requirement?
• When is a practitioner considered to be associated with financial information?
• What is the third level of materiality that auditors must determine?
• How can an auditor best ensure that financial records are free from error?
• What role does the Professional Regulatory Board of Accountancy have in quality audits?
• What threat may arise when fees from an assurance client represent a large part of an individual's revenue?
• Which of the following best describes the intimidation threat?
• When assessing control risk, which of the following is a common procedure for auditors?
• What should the auditor consider when developing the overall audit strategy?
• Which statement is true regarding the Certificate of Registration for successful examinees?
• Which statement about materiality is TRUE?
• Who appoints the members of the Professional Regulatory Board of Accountancy in the Philippines?
• Which statement regarding the use of a CPA's name in practice is incorrect?
• Within how many days must the Board of Accountancy submit ratings after the CPA examination?
• What is a critical factor determining the significance of a self-interest threat?
• A practitioner should accept an assurance engagement only when?
• In terms of audit ethics, a 'material indirect financial interest' can create what potential threat?
• How many CPE credit units must be earned yearly by registered accounting professionals?
• What type of threat to independence is presented when litigation is likely between the assurance firm or a member and the assurance client?
• What action should a CPA take who has little experience regarding a consulting engagement on a potential merger?
• What is the acceptable norm for loans made by audit clients to the audit firm?
• Which of the following is NOT a safeguard against threats to independence?
• What defines the elements and objectives of an assurance engagement?
• What is the total number of fundamental principles of professional ethics established by the Code of Ethics?
• When understanding a client’s internal control, which issues should an auditor consider?
• Which of the following is essential to the integrity of the audit process?
• What is required from the Accredited National Professional Organization of CPAs when submitting nominations to the Board of Accountancy?
• What is the primary responsibility of internal auditors regarding fraud?
• What potential independence threat is associated with litigation support services estimating outcomes affecting financial statement disclosures?
• When a firm performs valuation services for an audit client, which independence threat may arise?
• Which control is typically not performed in the accounts payable department?
• What does internal auditing primarily aim to safeguard against?
• If an auditor served as a director of a client two years prior to the audit, what should they consider about taking on the audit engagement?
• If a family member of an audit team member is in a position to influence the audit client, what must happen?
• What is one of the main objectives of the internal control system?
• What is one of the overall objectives of an auditor in conducting an audit of financial statements?
• Which techniques can an auditor use in testing the effectiveness of controls?
• What is one of the limitations of reasonable assurance in auditing?
• Which situation would classify as an "error" in financial statements?
• What document is issued to those who pass the CPA licensure examination?
• What does a self-review threat refer to in auditing?
• What role does inquiry play in the audit process?
• What term best describes the audit of a taxpayer's return?
• What aspect of auditing ensures that the auditor maintains an unbiased view?
• Which of the following is NOT a type of assurance engagement?
• Under which circumstance could a familiarity threat be created?
• How is the sufficiency of evidence best defined in an assurance engagement?
• Which action could potentially lead to an intimidation threat related to independence?
• Which of the following is NOT a component of the internal control framework?
• According to the Code, which factor should NOT be taken into account when determining professional fees?
• Which of the following statements regarding legal services to audit clients is incorrect?
• What is the incorrect statement about the ownership of working papers?
• What characteristic of suitable criteria ensures conclusions are free from bias?
• What is considered a key factor in the effectiveness of internal control?
• According to RA 9298, what is true about audit working papers?
• Which of the following actions is NOT a safeguard for maintaining professional independence?
• What happens if a CPA fails to comply with CPE requirements?
• What should a CPA do if they have a direct financial interest in an audit client?
• Which of the following is NOT an objective of the auditor?
• Which method is least effective for verifying all sales invoices if an auditor is conducting a fraud risk assessment?
• What is the relationship between materiality and audit risk?
• For audits of listed entities, the engagement partner must complete what before issuing the auditor's report?
• What is the required time frame for a partner to report the dissolution of a CPA partnership?
• What is a primary goal of performing tests of controls?
• Which aspect is NOT included in the engagement partner's responsibility during an audit engagement?
• What circumstance does NOT create an advocacy threat for a professional accountant?
• Which statement best describes assurance services?
• What is true about assessing control risk during an audit?
• What type of assurance engagement involves the practitioner expressing a positive form of conclusion?
• Which statement about the term of office for the Board of Accountancy is false?
• The outcome of evaluating or measuring a subject matter against criteria in assurance engagements is referred to as what?
• When should a professional accountant disclose a potential conflict of interest?
• To mitigate threats of independence, which safeguard would be prioritized?
• What is an example of a self-review threat?
• In terms of fraud prevention, what is an essential aspect of internal controls?
• Which statement about evidence in an assurance engagement is true?
• What could typically be considered a misstatement due to error?
• Which of the following services may a practitioner who is not considered independent provide?
• Which statement regarding taxation service provision to audit clients is false?
• Governmental auditing extends beyond financial presentations and includes audits of?
• What is the main distinguishing factor between fraud and error?
• What is required for consistent evaluation within assurance engagements?
• What is essential for the engagement partner in terms of audit engagement management?
• If a firm offers an assurance engagement at a significantly lower fee, what must they demonstrate to ensure there’s no self-interest threat?
• What is an example of engagement-specific safeguards in the work environment?
• Reducing assurance engagement risk to zero is rarely attainable due to which of the following factors?
• How long can a partner continue to practice under the partnership name after becoming a sole proprietor?
• An auditor must obtain knowledge of what system to understand accounting estimates?
• What independence threat arises if fees from an assurance client remain unpaid for a long duration?
• Which of the following reflects an auditor's responsibility regarding risk assessment?
• Analytical procedures in planning an audit should primarily focus on what?
• Which statement best explains the importance of ethical standards in the CPA profession?
• Which of the following best describes neutral criteria in assurance engagements?
• Which term refers to communication intended to provide factual information about a professional accountant without promoting them?
• A PSA is considered relevant to an audit when?
• How is a vacancy in the Board of Accountancy filled?
• What penalty may be faced by someone violating the provisions of the Accountancy Act?
• Why is it important for an auditor to understand the information system?
• Why do independent auditors report on financial statements?
• What is the primary purpose of establishing quality control policies when accepting new clients?
• What happens when a member of the audit team has an indirect financial interest?
• What element of quality control concerns the competency and ethics of personnel?
• Which type of engagement primarily involves inquiries and analytical procedures?
• Which of the following is true regarding the professional accountant's responsibilities towards clients?
• What is a key element needed to maintain independence in auditing?
• What safeguard is NOT recommended to mitigate the threat from actual or threatened litigation?
• Which organization must submit nominations for members of the Board of Accountancy?
• Which of the following statements about professional skepticism is false?
• What type of financial interest is defined when control over an investment vehicle exists?
• What type of testing would be most appropriate for an auditor assessing control risk at a low level?
• What statement about controls relevant to a financial statement audit is true?
• Which type of audit focuses on compliance with laws and regulations?
• What threat to independence arises when a member of the assurance team is aware that they may join the assurance client in the future?
• Familiarity threat arises when: