Exercise PSA 120

What is the primary purpose of the Philippine Standards on Auditing (PSAs)?

• To provide guidelines for financial reporting

• To describe the framework for auditing financial statements

• To establish tax regulations

• To outline accounting standards

Which of the following is NOT a type of service distinguished in the Framework?

• Review

• Audit

• Compilation

• Consultancy

What level of assurance does an audit provide?

• High, but not absolute assurance

• Absolute assurance

• No assurance

• Moderate assurance

In a review engagement, what type of assurance is provided?

• No assurance

• High assurance

• Positive assurance

• Negative assurance

What is the role of the Auditing Standards and Practices Council?

• To prepare financial statements

• To conduct financial audits

• To issue Philippine Standards on Auditing

• To issue tax regulations

What must an auditor do if they depart from a PSA?

• Seek legal advice

• Notify the public

• Justify the departure

• Ignore the departure

What is the objective of an audit of financial statements?

• To compile financial information

• To provide tax advice

• To express an opinion on the financial statements

• To prepare financial statements

Which of the following is true about agreed-upon procedures?

• They are the same as audits

• No assurance is expressed

• They provide high assurance

• They provide moderate assurance

What is the main difference between an audit and a review?

• The duration of the engagement

• The qualifications of the auditor

• The type of financial statements reviewed

• The level of assurance provided

What does the term 'auditor' refer to in the context of PSAs?

• Only those who conduct audits

• Only those who provide consultancy

• Both auditors and those performing related services

• Only accountants