AUDITING THEORY 1

When auditing FS, the primary concern is with?

• Determining whether recorded information properly reflects the economic events that occurred during the accounting period.

• Determining fraud has occurred

• Determining if taxable income has been calculated correctly

• Analyzing the financial information to be sure that it complies with government requirements.

The subject matter of any audit consist of:

• Assertions about economic actions and events

• Economic data

• Financial statement

• Operating data

In FS audits, the audit process should be conducted in accordance with

• Audit Program

• Philippine Standards on Auditing

• Philippine Accounting Standards

• Philippine Financial Reporting Standards

Which of the following types of audit uses laws and regulations as its criteria?

• Operational audit

• Financial statement audit

• Compliance audit

• Performance audit

The auditor communicates the results of his or her work through the medium of the

• Engagement letter

• Audit report

• Management letter

• Financial statements

The responsibility for the preparation of the FS and accompanying notes belongs to

• Auditor

• Management

• Both Auditor and Management

• The management for the FS, the auditor for the notes

Which  is not one of the limitations of an audit?

• The use of testing

• Nature of evidence that the auditor obtains

• Human error

• Limitations imposed by the client

Which of the following does not describe a condition that creates a demand for auditing?

• Conflict between an information prepares and user can result in biased information

• Information can have substantial  economic consequences for decision-maker

• Expertise is often required for information preparation and verification

• Users can directly assess the quality of information

Which of the following is not one of the general principles governing the audit of FS?

• The auditor should plan and perform the audit with an attitude of professional skepticism

• The auditor should conduct the audit with PSA

• The auditor should obtain sufficient evidence only, primarily through inquiry and analytical procedures

• The auditor should comply with the Philippine Code of Professional standards

Which of the following does not describe an element of theoretical framework of auditing?

• The data to be audited can be verified

• Short-term conflicts may exist between managers and auditor

• Auditors act on behalf of the management

• An audit benefits the public