Chapter 1

Question 1

report provided: factual findings of procedures

Answer 1

agreed-upon procedures

Question 2

greater the risk, the _ quantity of evidence required

Answer 2

greater

Question 3

criteria are made available to intended users in ff. ways

Answer 3

1. publicly
2. inclusions in clear manner in presentation of SMI
3. inclusions in a clear manner in assurance report
4. general understanding

Question 4

an AE wherein the evidence supports a moderate level of assurance that the information subject to review is free of material misstatement.

Answer 4

review

Question 5

assurance engagements from the perspective of what forms assurance engagement can take then we get

Answer 5

attestation or assertion-based engagements
and direct reporting engagements.

Question 6

is the information that results from applying the criteria to the subject matter.

Answer 6

The outcome of the evaluation or measurement of a subject matter,

Question 7

the risk that the practitioner will not detect material misstatements that exists.

Answer 7

detection risk

Question 8

The practitioner provides a written report containing a conclusion that conveys the
assurance obtained about the subject matter information.

Answer 8

written assurance report

Question 9

positive form

Answer 9

in our opinion, internal control is effective, in all material respects, based on XYZ criteria

Question 10

measure of quality of evidence (reliability and relevance)

Answer 10

appropriateness

Question 11

affected by the effectiveness of the procedures conducted by the auditor to gather evidence.

Answer 11

detection risk

Question 12

audit within company. independent, objective assurance and consulting activity designed to add value and improve an organization’s operations

Answer 12

internal audit

Question 13

in limited assurance engagement, the practitioner expresses the conclusion in

Answer 13

negative form

Question 14

ELEMENTS OF AN ASSURANCE ENGAGEMENT:

Answer 14

A. Three party relationship involving:

1. A practitioner
2. A responsible party, and
3. Intended users

B. Appropriate subject matter

C. Suitable criteria

D. Sufficient appropriate evidence

E. Written assurance report (in the form appropriate to a reasonable AE or limited AE)

Question 15

negative form

Answer 15

based on our works described in this report, nothing has come to our attention that causes us to believe that internal control is not effective, in all material respects, based on XYZ criteria.

Question 16

There are two types of assurance engagement a practitioner is permitted to perform:

Answer 16

A reasonable assurance engagement and

A limited assurance engagement.

Question 17

report provided: negative assurance on assertions

Answer 17

review

Question 18

an auditor is engaged to carry out those procedures of an audit nature to which the auditor and entity and any appropriate third parties have agreed

Answer 18

agreed upon procedures

Question 19

types of assertions

Answer 19

1. internal control assertions
2. financial statements assertions

Question 20

Aims to reduce the AE risk to a level that is acceptable
in the circumstances of the engagement. That risk is greater than for a reasonable AE as a
basis for expressing a negative form of conclusion.

Answer 20

Limited assurance engagement

Question 21

absolute assurance is not attainable because:

Answer 21

1. need for judgement
2. use of testing (time-consuming and costly)
3. inherent limitations of any accounting and internal control systems
4. most evidence available to auditor is persuasive rather than conclusive in nature

Question 22

report provided: identification of information compiled

Answer 22

compilation

Question 23

the degree or level of assurance we get
two types

Answer 23

reasonable assurance engagements and limited assurance engagements.

Question 24

government audit includes

Answer 24

1. financial and compliance audit
2. economy and efficiency audit
3. program results

Question 25

____ presents a framework for auditing and related services

Answer 25

PSA 120 (Philippine Standard on Auditing)

Question 26

provide accounting services to small clients with limited accounting staff

Answer 26

accounting and data processing or information technology system services

Question 27

Person who provides the assurance to the intended users about a subject matter that is the responsibility of another party.

Answer 27

practitioner

Question 28

the susceptibility or tendency of a subject matter information to a material misstatement, assuming there are no related controls

Answer 28

inherent risk

Question 29

are two types of assurance engagements based on who is performing the evaluation:

Answer 29

1. Assertion-based engagements (or attestation engagements) 2. Direct reporting engagements

Question 30

non-assurance engagements examples

Answer 30

1. agreed upon procedures 2. compilation of financial and other information 3. tax services 4. management consulting/advisory services 5. accounting and data processing or information technology system services

Question 31

the evaluation or measurement of the subject matter is performed by the responsible party, and the subject matter information is in the form of an assertion by the responsible party that is made available to the intended users. Ex. Independent financial statements audit.

Answer 31

Assertion-based engagements (or attestation engagements)

Question 32

phrases used to express the auditor's opinion

Answer 32

1. give a true and fair view 2. present fairly in all material aspects

Question 33

employs the practitioner's technical skills, education, observations, experiences, and knowledge of the analytical approach and procedures used

Answer 33

management consulting/advisory services

Question 34

Refers to the auditor’s satisfaction as to the reliability of an assertion made by one party for the use of another party.

Answer 34

ASSURANCE

Question 35

Aims to reduce the AE risk to an acceptably low level in the circumstances of the engagement, as a basis for expressing a positive form of conclusion.

Answer 35

Reasonable assurance engagement

Question 36

audits of parts or components or other based on other criteria or basis

Answer 36

special audits

Question 37

the higher the quality, the _ quantity required

Answer 37

less

Question 38

To provide such assurance, the auditor assesses the ______- as a result of procedures conducted, and expresses a conclusion.

Answer 38

evidence collected

Question 39

Is the risk that the practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated.

Answer 39

4.Assurance Engagement (AE) Risk

Question 40

report provided: positive assurance on assertions

Answer 40

audit

Question 41

the outcome of the measurement or evaluation.

Answer 41

Subject Matter Information

Question 42

the risk that a material misstatement that could occur will not be prevented, or detected and corrected, on a timely basis by related internal controls.

Answer 42

Control Risk

Question 43

it has broader scope than external audit. scope includes

Answer 43

1. efficiency and effectiveness of operations 2. reliability of financial reporting 3. safegaurding of assets 4. compliance with laws and regulations

Question 44

means an engagement, in which a practitioner expresses a conclusion, designed to enhance the degree of confidence of the intended users, other than the responsible party, about the outcome of the evaluation or measurement of a subject matter, against criteria.

Answer 44

Assurance Engagement

Question 45

measure of quantity of evidence

Answer 45

sufficieny

Question 46

evidence is more reliable if:

Answer 46

1. obtained from independent sources outside the entity 2. when controls are inplace for internally generated evidence 3. obtained directly by the practitioner, rather than through inquiry 4. when it exists in documentary form in paper, electronic or other media 5. original documents, rather than photocopies

Question 47

assurance engagements examples

Answer 47

1. audits 2. reviews 3. other assurance services

Question 48

an appropriate subject matter is:

Answer 48

1. identifiable and capable of consistent evaluation or measurement against identified criteria. 2. can be subjected to procedures for gathering sufficient appropriate evidence to support a reasonable (high, not absolute) assurance or limited (moderate) assurance conclusion

Question 49

audit of government receipts and disbursements

Answer 49

government audit

Question 50

objective: to assist all members of management in the effective discharge of their responsibilities by furnishin them with analyses, appraisals, recommendations, and pertinent comments concerning activities reviewed.

Answer 50

internal audit

Question 51

CPA renders 2 kinds of tax services

Answer 51

1. tax compliance 2. tax planning

Question 52

one party who makes an assertion about a subject matter

Answer 52

Responsible party

Question 53

Is considered in the context of quantitative and qualitative factors:

Answer 53

materiality

Question 54

Representations by management, explicit or otherwise, that are embodied in the financial statements or processes.

Answer 54

ASSERTION

Question 55

Criteria are the benchmarks used to evaluate or measure the subject matter.

Answer 55

1. relevance 2. completeness 3. reliability 4. understandability 5. neutrality

Question 56

another party who will use or rely on the assurance provided by the practitioner about the reliability of the subject matter.

Answer 56

Intended users

Question 57

the practitioner either directly performs the evaluation or measurement of the subject matter, or obtains a representation from the responsible party that has performed the evaluation or measurement that is not available to the intended users. The subject matter information is provided to the intended users in the assurance report.

Answer 57

Direct reporting engagements

Question 58

Recognize that circumstances may exist that causes the subject matter to be materially misstated.

Answer 58

professional skepticism

Question 59

internal audit includes

Answer 59

1. operational audit 2. management audit 3. financial audit

Question 60

Two Main Categories of Services

Answer 60

1. assurance engagement 2. non-assurance engagement

Question 61

– is measurable. It is the one being measured or evaluated.

Answer 61

subject matter

Question 62

an assurance engagement to provide high level of assurance that the FS are free from material mistatement

Answer 62

Independent Financial Statement Audit (external audit)

Question 63

ingredients needed for sufficient appropriate evidence

Answer 63

1. professional skepticism 2. sufficieny and appropriateness 3. materiality 4. assurance engagement risk

Question 64

in reasonable assurance engagement, the practitioner expresses the conclusion in

Answer 64

positive form

Question 65

Components of AE risk:

Answer 65

1. inherent risk 2. control risk 3. detection risk

Question 66

combined level of inherent and control risk are low

Answer 66

higher detection risk

Question 67

accountant is engaged to use accounting expertise as opposed to auditing experties to collect, classify and summarize financial information.

Answer 67

Compilation fo Financial and other information