TRUE / FALSE

1. A CPA firm offers management advisory services to clients to Furnish professional

advice and assistance which will enable the client to improve operations.
2. A code of professional conduct is not one of the most important distinguishing
characteristics of a profession.
3. A CPA certificate is evidence of basic competence in the discipline of accounting at the
time the certificate is granted.
4. To merit public trust and confidence, the professional person must convince the public
that he will place public service ahead of personal reward.
5. Internal Auditing is not normally a service rendered by public accountants.

True
False
True
True
True

6. 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 Board of Accountancy.

False

7. Securities and Exchange Commission is the government agency that is represented both
to the Auditing Standards and Practices Council and the Auditing and Assurance
Standards Council.

True

8. Statements on financial accounting standards constituting GAAP are issued by the

Accounting Standards Council.

True

9. The amount of audit fees doesnt largely depend on the volume of audit work and degree
of competence and responsibilities involved.

False

10. In determining audit fees, an auditor may take into account the size and amount of
capital of client.

False

11. In the audit of historical financial statements, the GAAP (Generally Accepted
Accounting Principles) is the most common accounting basis.

True

12. An audit of historical financial statements most commonly includes the Income
Statement, Statement of Cash Flows and the Statement of Net Working Capital.

False

13. The primary purpose of an independent financial statement audit is to assure

management that the financial statements are unbiased and free from material error.

False

14. Independent auditing can best be described as a professional activity that measures and
communicates financial accounting data.

False

15. Internal auditing often extends beyond examinations leading to the expression of an
opinion on the fairness of financial presentation and includes audits of efficiency,
effectiveness, and internal control.

False

16. In auditing financial accounting data, the primary concern is with determining if
fraud has occurred.

True

17. The criteria by which an auditor evaluates the information under audit may vary with
the information being audited.

True

18. Results of compliance audits are typically reported to someone within the
organizational unit being audited rather than to a broad spectrum of outside users.

False

19. Statements on Auditing Standards relate to the filing requirements and enforcement
activities of the SEC.
20. An independent audit is important to readers of financial statements because it
measures and communicates the financial data included in financial statements.

False

21. The factor which distinguishes an error from fraud and other irregularity is whether it is
caused by the auditor or the client.

False

22. . Inherent risk is the probability that material misstatements have occurred in
transactions entering the accounting system used to develop financial statements.
23. An audit is an independent examination of only the financial information of an entity.

True
False

24. Maintenance of accounts is the function of Accounting, auditing has nothing to do with
it.

True

25. The cut-off point marks the dividing line between a transaction to be recorded in one
accounting period and that of the next period.

True

26. Post-audit is the examination of proposed disbursements before payment (voucher

audit) or of sales transactions before delivery

False

27. Independent audit is described as providing reasonable assurance that published audited
financial reports are free from material misstatement and are in accordance with
legislation and relevant accounting standards.

True

28. Auditor does not need communication skills, as he is concerned only with financial
information.
29. Internal auditing is an assurance and consulting activity that provides management with
information regarding efficient and effective operations; compliance with laws,
regulations, policies, and procedures; and other organizational performance issues
designed to reduce risk and add value to the organization.
False

False

30. It is not the duty of

auditor to check the

accuracy of the books of account by checking the proper posting and balances of the
books of accounts.
31. In performing an assurance engagement, a professional accountant typically expresses
a conclusion about an assertion.

True

32. When the professional accountant has obtained sufficient appropriate evidence to
conclude that the subject matter confirms in all material respects with identified
suitable criteria, he/she can provide limited level of assurance.

False

33. Non-assurance engagements include compliance audit.

False

34. Business risk is not a component of engagement risk.

True

35. Evidence from external sources is less reliable than that generated internally.

True

36. Assurance over website controls and electronic commerce assurance services are
examples of Assurance Services on Information Technology.

True

37. In assurance engagement risk, control risk is the susceptibility of the subject matter
information to a material misstatement, assuming that there are no related controls.

False

38. Agreed-upon procedures are an assurance engagement that provides a high level of
assurance that the financial statements are free of material misstatement.

False

39. Compilation is an assurance engagement.

40. Assurance engagement is simply an engagement conducted by a practitioner at the end
of which he expresses his opinion on the measurement of subject matter against
criteria.

False

False

True