TESTjBANKjAU
DITINGjTHEORY
Overview
1. Providingjquantitativejinformationjthatjmanagementjandjothersjcanjusejtojmakejdecisionsjisjthejfunctionjof
A. Accounting
B. Auditing
C. Finance
D. Managementjofjinformationjsystems
2. Thejseriesjofjtasksjandjrecordsjofjanjentityjbyjwhichjtransactionsjarejprocessedjasjajmeansjofjmaintainingjfinancialjrecord
s
A. Accountingjsystem
B. Computerjinformationjsystem
C. Controljenvironment
D. Internaljcontroljsystem
3. Thejexpertisejthatjdistinguishesjauditorsjfromjaccountantsjisjinjthe
A. Abilityjtojinterpretjaccountingjstandards
B. Accumulationjandjinterpretationjofjevidence
C. Abilityjtojinterpretjgenerallyjacceptedjaccountingjprinciples
D. Requirementjtojpossessjeducationjbeyondjthejbachelor’sjdegree
4. Comprisesjofficersjandjothersjwhojalsojperformjseniorjmanagerialjfunctions
A. Auditjcommittee C.jGovernance
B. Boardjofjdirectors D.jManagement
5. Anjauditjconductedjtojdeterminejwhetherjanjentityjisjfollowingjspecificjproceduresjorjrulesjsetjdownjbyjsomejhigherjauth
ority
A. Compliancejaudit C.jFinancialjaudit
B. Detailedjaudit D.jOperationaljaudit
6. Aj reviewj ofj anyj partj ofj anj organization’sj andj methodsj forj thej purposej ofj evaluatingj efficiencyj andj effectivenessj is
classifiedjasja(n)
A. Auditjofjfinancialjstatements
B. Compliancejaudit
C. Operationaljaudit
D. Productionjaudit
7. Operationaljauditingjisjprimarilyjorientedjtoward
A. Pastjprotectionjprovidedjbyjexistingjinternaljcontrol
B. Futurejimprovementsjtojaccomplishjthejgoalsjofjmanagement
C. Thejaccuracyjofjdatajreflectedjinjmanagement’sjfinancialjrecords
D. Thejverificationjthatjajcompany’sjfinancialjstatementsjarejfairlyjpresented
8. Ajtypicaljobjectivejofjanjoperationaljauditjis
A. Makejrecommendationsjforjimprovingjperformance
B. Evaluatejthejfeasibilityjofjattainingjthejentity’sjoperationaljobjectives
C. Reportjonjthejentity’sjrelativejsuccessjinjattainingjprofitjmaximization
D. Determinejwhetherjthejfinancialjstatementsjfairlyjpresentjthejentity’sjoperations
9. Underjthejlaw,jthejchiefjexecutivejofficerjofjthejCommissionjonjAuditjisjthe
A. Chairman C.jCommissioner
B. CommissionjSecretary D.jExecutivejDirector
10. OnejofjthejgovernmentjauditingjstandardsjwhichjisjnotjobservedjbyjindependentjCPAsjinjthejprivatejsectorjis:
A. Anjevaluationjshalljbejmadejofjthejsystemjofjinternaljcontrol
B. Ajreviewjshalljbejmadejofjcompliancejwithjlegaljandjstatutoryjrequirements
1
, C. Thejauditjisjtojbejadequatelyjplannedjandjassistantsjarejtojbejproperlyjsupervised
D. Sufficientj competentj evidentialj matterj shallj bej obtainedj throughj inspection,j observation,j inquiries,j andj confi
rmations
11. Whichjofjthejfollowingjisjmorejdifficultjtojevaluatejobjectively?
A. Compliancejwithjgovernmentjregulations
B. Efficiencyjandjeffectivenessjofjoperations
C. Presentationjofjfinancialjstatementsjinjaccordancejwithjgenerallyjacceptedjaccountingjprinciples
D. Alljthreejofjthejabovejarejequallyjdifficult
ProfessionaljPracticejofjAccounting
12. ThejCorejCompetenciesjofjCPAsjinclude:
A. Assurancejandjinformationjintegrity
B. Objectivity
C. Pursuitjofjlife-longjlearningjandjexcellence
D. Strategicjandjcriticaljthinkingjskills
13.
refersjtojthejapplicationjofjrelevant,jtraining,jknowledgejandjexperience,jwithinjthejcontextjprovidedjbyjauditi
ng,jaccountingjandjethicaljstandardsjinjmakingjinformedjdecisionsjaboutjthejcoursejofjactionjthatjarejappropriatejinjthejcirc
umstancesjofjthejauditjengagement.
A. Compliance C.jProfessionaljjudgment
B. Professionaljcompetence D.jReasonablejassurance
14. Whilejperformingjservicesjforjtheirjclients,jprofessionalsjhavejajdutyjtojprovidejajleveljofjcarejwhichjis
A. Freejfromjjudgmentjerrors C.jReasonable
B. Greaterjthanjaverage D.jSuperior
15. “Absencejofjreasonablejcarejthatjcanjbejexpectedjofjajpersonjinjajsetjofjcircumstances”jisjthejdefinitionjof
A. Constructivejfraud C.jGrossjnegligence
B. Fraud D.jOrdinaryjnegligence
QualityjControljStandards
16. Thejpoliciesjandjproceduresjadoptedjbyjajfirmjtojprovidejreasonablejassurancejthatjalljauditsjdonejbyjthejfirmj arejbeingjc
arriedjoutjinjaccordancejwithjthejObjectivejandjGeneraljPrinciplesjGoverningjanjAuditjofjFinancialjStatements.
A. Generaljcontrols C.jPeerjreview
B. Internaljcontrols D.jQualityjcontrols
17. Thejmainjpurposejofjimplementingjqualityjcontroljpoliciesjandjproceduresjis:
A. Tojhavejajfavorablejpeerjreview
B. Tojcomplyjwithjregulatoryjagency
C. Tojstandardizejthejpoliciesjandjproceduresjofjthejauditjfirms
D. TojprovidejreasonablejassurancejthatjauditjwilljbejconductedjinjaccordancejwithjPSA
18. Ajfirmjshouldjestablishjandjmaintainjajsystemjofjqualityjcontroljtojprovidejitjwithjreasonablejassurancejthat:
I. Thejfirmjandjitsjpersonneljcomplyjwithjprofessionaljstandardsjandjapplicablejlegaljandjregulatoryjrequirements
II. Reportsjissuedjbyjthejfirmjorjengagementjpartnersjarejappropriatejinjthejcircumstances
A. Ijonly C.jBothjIjandjII
B. IIjonly D.jNeitherjIjnorjII
19. Thejfirmjshalljestablishjpoliciesjandjproceduresjdesignedjtojprovidejitjwithjreasonablejassurancejthatjengagementsjarejper
formedjinjaccordancejwithjprofessionaljstandardsjandjregulatoryjandjlegaljrequirements,jandjthatjthejfirmjorjthejengage
mentjpartnerjissuejreportjthatjarejappropriatejinjthejcircumstance.jSuchjpoliciesjandjproceduresjshalljinclude:
A. Reviewjresponsibilities
B. Supervisionjresponsibilities
C. Mattersjrelevantjtojpromotingjconsistencyjinjthejqualityjofjengagementjperformance
2
,D. Alljofjthejchoices
3
, 20. Thejobjectivesjofjthejqualityjcontroljpoliciesjtojbejadoptedjbyjthejauditjfirmjwilljordinarilyjincorporate:
A B C D
Skillsjandjcompetence Yes Yes Yes No
Monitoring Yes No Yes Yes
Professionaljrequirements Yes Yes No Yes
21. ThejnaturejandjextentjofjajCPAjfirm’sjqualityjcontroljpoliciesjandjproceduresjdependjon
A B C D
ThejCPAjfirm’s Yes Yes No Yes
ThejnaturejofjCPAjfirm’sjpractice Yes Yes Yes No
Cost-benefitjconsiderations Yes No Yes Yes
22. Qualityjcontroljpoliciesjandjproceduresjshouldjbejimplementedjat
A B C D
Leveljofjthejauditjfirm Yes Yes No No
Individualjaudits Yes No Yes No
23. Anjauditjfirmjshouldjimplementjqualityjcontroljpoliciesjandjproceduresjdesignedjtojensurejthatjalljauditsjarejconductedjinja
ccordancejwithjPSAsjorjrelevantjnationaljstandardsjorjpractices.jThesejpoliciesjandjproceduresjshouldjbejimplemented
A. Onjindividualjauditsjonly
B. Atjthejauditjformjleveljonly
C. Eitherjatjthejauditjfirmjleveljorjonjindividualjaudits
D. Bothjatjthejauditjfirmjleveljandjonjindividualjaudits
24. Whichjofjthejfollowingjisjnotjoncejofjthejmajorjconcernsjofjthejauditorjwhenjestablishingjqualityjcontroljpoliciesjandjproc
edures?
A. Billingjarrangement C.jEthicaljrequirements
B. Engagementjperformance D.jIndependence
25. Whichjofjthejfollowingjqualityjcontroljobjectivesjwouldjbejleastjimportancejtojthejauditor?
A. Determinationjofjauditjfee C.jProfessionaljadvancement
B. Hiringjpersonnel D.jReviewjandjsupervision
26. Thejfirm’sjsystemjofjqualityjcontroljshouldjincludejpoliciesjandjproceduresjthatjaddressjeachjofjthejfollowingjelements,
except
A. Controljenvironment
B. Humanjresources
C. Relevantjethicaljrequirements
D. Relevantjethicaljrequirements
27. Injpursuingjajfirm’sjqualityjcontroljobjectives,jajfirmjshouldjadoptjpoliciesjandjproceduresjtojenablejitjtojidentifyjandjeval
uatejcircumstancesjandjrelationshipsjthatjcreatejthreatsjorjreducejthemjtojanjacceptablejleveljbyjapplyingjsafeguards,jor
,jifjconsideredjappropriate,jtojwithdrawjfromjthejengagement.jWhichjqualityjcontroljelementjwouldjbejmostjlikelyjtojsati
sfy?
A. Monitoring
B. Humanjresources
C. Ethicaljrequirements
D. Leadershipjresponsibilitiesjforjqualityjwithinjthejfirm
28. AjfirmjofjCPAsjmayjusejpoliciesjandjproceduresjsuchjasjnotifyingjprofessionaljpersonneljasjtojthejnamesjofjauditjclientsjhavi
ngjpubliclyjheldjsecuritiesjandjconfirmingjperiodicallyjwithjsuchjpersonneljthatjprohibitedjrelationsjdojnotjexist.jThisjisjdo
nejtojachievejeffectivejqualityjcontroljinjwhichjofjthejfollowingjareas?
A. Humanjresources
B. Ethicaljrequirements
C. Acceptancejandjcontinuancejofjclients
D. Leadershipjresponsibilitiesjforjqualityjwithinjthejfirm
4
DITINGjTHEORY
Overview
1. Providingjquantitativejinformationjthatjmanagementjandjothersjcanjusejtojmakejdecisionsjisjthejfunctionjof
A. Accounting
B. Auditing
C. Finance
D. Managementjofjinformationjsystems
2. Thejseriesjofjtasksjandjrecordsjofjanjentityjbyjwhichjtransactionsjarejprocessedjasjajmeansjofjmaintainingjfinancialjrecord
s
A. Accountingjsystem
B. Computerjinformationjsystem
C. Controljenvironment
D. Internaljcontroljsystem
3. Thejexpertisejthatjdistinguishesjauditorsjfromjaccountantsjisjinjthe
A. Abilityjtojinterpretjaccountingjstandards
B. Accumulationjandjinterpretationjofjevidence
C. Abilityjtojinterpretjgenerallyjacceptedjaccountingjprinciples
D. Requirementjtojpossessjeducationjbeyondjthejbachelor’sjdegree
4. Comprisesjofficersjandjothersjwhojalsojperformjseniorjmanagerialjfunctions
A. Auditjcommittee C.jGovernance
B. Boardjofjdirectors D.jManagement
5. Anjauditjconductedjtojdeterminejwhetherjanjentityjisjfollowingjspecificjproceduresjorjrulesjsetjdownjbyjsomejhigherjauth
ority
A. Compliancejaudit C.jFinancialjaudit
B. Detailedjaudit D.jOperationaljaudit
6. Aj reviewj ofj anyj partj ofj anj organization’sj andj methodsj forj thej purposej ofj evaluatingj efficiencyj andj effectivenessj is
classifiedjasja(n)
A. Auditjofjfinancialjstatements
B. Compliancejaudit
C. Operationaljaudit
D. Productionjaudit
7. Operationaljauditingjisjprimarilyjorientedjtoward
A. Pastjprotectionjprovidedjbyjexistingjinternaljcontrol
B. Futurejimprovementsjtojaccomplishjthejgoalsjofjmanagement
C. Thejaccuracyjofjdatajreflectedjinjmanagement’sjfinancialjrecords
D. Thejverificationjthatjajcompany’sjfinancialjstatementsjarejfairlyjpresented
8. Ajtypicaljobjectivejofjanjoperationaljauditjis
A. Makejrecommendationsjforjimprovingjperformance
B. Evaluatejthejfeasibilityjofjattainingjthejentity’sjoperationaljobjectives
C. Reportjonjthejentity’sjrelativejsuccessjinjattainingjprofitjmaximization
D. Determinejwhetherjthejfinancialjstatementsjfairlyjpresentjthejentity’sjoperations
9. Underjthejlaw,jthejchiefjexecutivejofficerjofjthejCommissionjonjAuditjisjthe
A. Chairman C.jCommissioner
B. CommissionjSecretary D.jExecutivejDirector
10. OnejofjthejgovernmentjauditingjstandardsjwhichjisjnotjobservedjbyjindependentjCPAsjinjthejprivatejsectorjis:
A. Anjevaluationjshalljbejmadejofjthejsystemjofjinternaljcontrol
B. Ajreviewjshalljbejmadejofjcompliancejwithjlegaljandjstatutoryjrequirements
1
, C. Thejauditjisjtojbejadequatelyjplannedjandjassistantsjarejtojbejproperlyjsupervised
D. Sufficientj competentj evidentialj matterj shallj bej obtainedj throughj inspection,j observation,j inquiries,j andj confi
rmations
11. Whichjofjthejfollowingjisjmorejdifficultjtojevaluatejobjectively?
A. Compliancejwithjgovernmentjregulations
B. Efficiencyjandjeffectivenessjofjoperations
C. Presentationjofjfinancialjstatementsjinjaccordancejwithjgenerallyjacceptedjaccountingjprinciples
D. Alljthreejofjthejabovejarejequallyjdifficult
ProfessionaljPracticejofjAccounting
12. ThejCorejCompetenciesjofjCPAsjinclude:
A. Assurancejandjinformationjintegrity
B. Objectivity
C. Pursuitjofjlife-longjlearningjandjexcellence
D. Strategicjandjcriticaljthinkingjskills
13.
refersjtojthejapplicationjofjrelevant,jtraining,jknowledgejandjexperience,jwithinjthejcontextjprovidedjbyjauditi
ng,jaccountingjandjethicaljstandardsjinjmakingjinformedjdecisionsjaboutjthejcoursejofjactionjthatjarejappropriatejinjthejcirc
umstancesjofjthejauditjengagement.
A. Compliance C.jProfessionaljjudgment
B. Professionaljcompetence D.jReasonablejassurance
14. Whilejperformingjservicesjforjtheirjclients,jprofessionalsjhavejajdutyjtojprovidejajleveljofjcarejwhichjis
A. Freejfromjjudgmentjerrors C.jReasonable
B. Greaterjthanjaverage D.jSuperior
15. “Absencejofjreasonablejcarejthatjcanjbejexpectedjofjajpersonjinjajsetjofjcircumstances”jisjthejdefinitionjof
A. Constructivejfraud C.jGrossjnegligence
B. Fraud D.jOrdinaryjnegligence
QualityjControljStandards
16. Thejpoliciesjandjproceduresjadoptedjbyjajfirmjtojprovidejreasonablejassurancejthatjalljauditsjdonejbyjthejfirmj arejbeingjc
arriedjoutjinjaccordancejwithjthejObjectivejandjGeneraljPrinciplesjGoverningjanjAuditjofjFinancialjStatements.
A. Generaljcontrols C.jPeerjreview
B. Internaljcontrols D.jQualityjcontrols
17. Thejmainjpurposejofjimplementingjqualityjcontroljpoliciesjandjproceduresjis:
A. Tojhavejajfavorablejpeerjreview
B. Tojcomplyjwithjregulatoryjagency
C. Tojstandardizejthejpoliciesjandjproceduresjofjthejauditjfirms
D. TojprovidejreasonablejassurancejthatjauditjwilljbejconductedjinjaccordancejwithjPSA
18. Ajfirmjshouldjestablishjandjmaintainjajsystemjofjqualityjcontroljtojprovidejitjwithjreasonablejassurancejthat:
I. Thejfirmjandjitsjpersonneljcomplyjwithjprofessionaljstandardsjandjapplicablejlegaljandjregulatoryjrequirements
II. Reportsjissuedjbyjthejfirmjorjengagementjpartnersjarejappropriatejinjthejcircumstances
A. Ijonly C.jBothjIjandjII
B. IIjonly D.jNeitherjIjnorjII
19. Thejfirmjshalljestablishjpoliciesjandjproceduresjdesignedjtojprovidejitjwithjreasonablejassurancejthatjengagementsjarejper
formedjinjaccordancejwithjprofessionaljstandardsjandjregulatoryjandjlegaljrequirements,jandjthatjthejfirmjorjthejengage
mentjpartnerjissuejreportjthatjarejappropriatejinjthejcircumstance.jSuchjpoliciesjandjproceduresjshalljinclude:
A. Reviewjresponsibilities
B. Supervisionjresponsibilities
C. Mattersjrelevantjtojpromotingjconsistencyjinjthejqualityjofjengagementjperformance
2
,D. Alljofjthejchoices
3
, 20. Thejobjectivesjofjthejqualityjcontroljpoliciesjtojbejadoptedjbyjthejauditjfirmjwilljordinarilyjincorporate:
A B C D
Skillsjandjcompetence Yes Yes Yes No
Monitoring Yes No Yes Yes
Professionaljrequirements Yes Yes No Yes
21. ThejnaturejandjextentjofjajCPAjfirm’sjqualityjcontroljpoliciesjandjproceduresjdependjon
A B C D
ThejCPAjfirm’s Yes Yes No Yes
ThejnaturejofjCPAjfirm’sjpractice Yes Yes Yes No
Cost-benefitjconsiderations Yes No Yes Yes
22. Qualityjcontroljpoliciesjandjproceduresjshouldjbejimplementedjat
A B C D
Leveljofjthejauditjfirm Yes Yes No No
Individualjaudits Yes No Yes No
23. Anjauditjfirmjshouldjimplementjqualityjcontroljpoliciesjandjproceduresjdesignedjtojensurejthatjalljauditsjarejconductedjinja
ccordancejwithjPSAsjorjrelevantjnationaljstandardsjorjpractices.jThesejpoliciesjandjproceduresjshouldjbejimplemented
A. Onjindividualjauditsjonly
B. Atjthejauditjformjleveljonly
C. Eitherjatjthejauditjfirmjleveljorjonjindividualjaudits
D. Bothjatjthejauditjfirmjleveljandjonjindividualjaudits
24. Whichjofjthejfollowingjisjnotjoncejofjthejmajorjconcernsjofjthejauditorjwhenjestablishingjqualityjcontroljpoliciesjandjproc
edures?
A. Billingjarrangement C.jEthicaljrequirements
B. Engagementjperformance D.jIndependence
25. Whichjofjthejfollowingjqualityjcontroljobjectivesjwouldjbejleastjimportancejtojthejauditor?
A. Determinationjofjauditjfee C.jProfessionaljadvancement
B. Hiringjpersonnel D.jReviewjandjsupervision
26. Thejfirm’sjsystemjofjqualityjcontroljshouldjincludejpoliciesjandjproceduresjthatjaddressjeachjofjthejfollowingjelements,
except
A. Controljenvironment
B. Humanjresources
C. Relevantjethicaljrequirements
D. Relevantjethicaljrequirements
27. Injpursuingjajfirm’sjqualityjcontroljobjectives,jajfirmjshouldjadoptjpoliciesjandjproceduresjtojenablejitjtojidentifyjandjeval
uatejcircumstancesjandjrelationshipsjthatjcreatejthreatsjorjreducejthemjtojanjacceptablejleveljbyjapplyingjsafeguards,jor
,jifjconsideredjappropriate,jtojwithdrawjfromjthejengagement.jWhichjqualityjcontroljelementjwouldjbejmostjlikelyjtojsati
sfy?
A. Monitoring
B. Humanjresources
C. Ethicaljrequirements
D. Leadershipjresponsibilitiesjforjqualityjwithinjthejfirm
28. AjfirmjofjCPAsjmayjusejpoliciesjandjproceduresjsuchjasjnotifyingjprofessionaljpersonneljasjtojthejnamesjofjauditjclientsjhavi
ngjpubliclyjheldjsecuritiesjandjconfirmingjperiodicallyjwithjsuchjpersonneljthatjprohibitedjrelationsjdojnotjexist.jThisjisjdo
nejtojachievejeffectivejqualityjcontroljinjwhichjofjthejfollowingjareas?
A. Humanjresources
B. Ethicaljrequirements
C. Acceptancejandjcontinuancejofjclients
D. Leadershipjresponsibilitiesjforjqualityjwithinjthejfirm
4
