PRE1-AAP QUIZ 1

Are claims made by business owners and managers that the information included in company financial statements — such as a balance sheet, income statement, and statement of cash flows — is accurate.

• Accuracy

• Occurence

• Assertions

• Audit documentation

I. Communication of audit findings is the ultimate objective of any audit.

II. For the audit to be useful, the results must be communicated to interested users on a timely basis.

• Both statements are true

• Both statements are false

• Only statement I is true

• Only statement II is true

It is a study of a specific unit of an organization for the purpose of measuring its performance. The main objective is to assess entity’s performance, identify areas for improvements and make recommendations to improve performance.

• Internal Audit

• Government Auditors

• Compliance Audit

• Operational Audit

Provide minimum guidance for the auditor that helps determine the extent of audit steps and procedures that should be applied to fulfill the audit objective.

• Auditing Standards

• Auditing Strategy

• Auditing Policies

• Audit Planning

Elements of Quality Control

I. Independence, Integrity, and Objectivity

 II. Personnel Management

 III. Acceptance and Continuance of Clients and Engagements

• Only statements I and II are true

• Only statements I and III are true

• All statements are true

• All statements are false

Involves intentional misstatements or omissions of amounts or disclosures in the financial statements to deceive financial statement users.

• Fraudulent Financial Reporting

• Error of Original Entry

• Compensating Error

• Employee Fraud

It acknowledges its responsibility for the implementation and operations of accounting and internal control systems that are designed to prevent and detect fraud and error.

• Noncompliance

• Completion Phase

• Testing Phase

• Planning Phase

This may include Embezzling receipts, Stealing entity’s assets such as cash, marketable securities, and inventory, Lapping of accounts receivable.

 

• Management Fraud

• Misappropriation of Assets

• Fraudulent Financial Reporting

• Material Misstatements

Testing Phase

I. During the course of audit, the auditor may encounter circumstances that may

indicate the possibility of fraud or error.

II. After identifying material misstatement in the financial statements, the auditor should whether such a misstatement resulted from a fraud or an error.

• Both statements are false

• Only statement I is true

• Only statement II is true

• Both statements are true

Defines auditing by stating the objective of a financial statement audit, that is, to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework.

 

• PSA 210

• PSA 200

• PSA 220

• PSA 215