1. If a CPA recklessly departs from the criterions of due attention when carry oning an audit. she or he will be apt to unknown 3rd parties based on a. rigorous liabilityc. carelessness
b. gross negligenced. breach of contract

2. Under the common jurisprudence. which of the undermentioned statements most accurately reflects the liability of a CPA who fraudulently gives an sentiment on an audit of a client’s fiscal statements? c. The CPA is apt merely to 3rd parties in privity of contract with the CPA. d. The CPA is apt merely to cognize users of the fiscal statements. e. The CPA likely is apt to any individual who suffered a loss as a consequence of the fraud. f. The CPA likely is apt to the client even if the client was cognizant of the fraud and did non trust on the sentiment.

3. An illustration of breach of contract would be
g. a bank’s claim that an hearer had a responsibility to bring out material mistakes in fiscal statements that had been relied on in doing a loan h. an auditor’s refusal to return client’s general leger book until client paid last year’s audit fees i. a CPA firm’s failure to present a revenue enhancement return on the agreed-upon day of the month because the house had a backlog of other work which was more moneymaking j. an auditor’s failure to finish the audit by the agreed-upon day of the month because client’s fiscal records had been confiscated by the BIR

4. Performing the preliminary battle activities helps to guarantee that the hearer plans an audit battle. which is non? k. The hearer maintains the necessary independency and ability to execute the battle. l. There are no issues with direction unity that may impact the auditor’s willingness to go on the battle. m. The hearer evaluates conformity with ethical demands as required by PSA 220 ( Redrafted ) n. There is no misconstruing with the client as to the footings of the battle.

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5. Which of the followers is the most likely first step an hearer would execute at the beginning of an initial audit battle? o. Fix a
unsmooth bill of exchange of the fiscal statements and of the auditor’s study. p. Study and measure the system of internal administrative control. Q. Tour the client’s installations and reexamine the general records. r. Consult with and reexamine the work of the predecessor hearer prior to discoursing the battle with the client direction.

6. The usage of an engagement missive is the best method of documenting I. The needed communicating of important lacks in internal control construction II. Significantly lower materiality degrees than those used in the anterior audit III. The description of any letters or studies that the hearer expects to publish IV. Presentment of any alterations in the original agreements of the audit a. I and IIc. II and III

b. I and IVd. III and IV

7. The undermentioned statements relate to the auditor’s duty for the sensing of mistakes and fraud. Identify the right statements. I. Due to the built-in restrictions of the audit. there is a possibility that stuff misstatements in the fiscal statements may non be detected II. The subsequent find of material misstatement of the fiscal information ensuing from fraud or mistake does non. in itself. bespeak that the hearer failed to follow the basic rules and indispensable processs of an audit a. I onlyc. II merely

B. Both statements are trued. Both statements are false

8. The term “error” refers to unwilled deceit of fiscal information. Examples of mistakes are when I. Assetss have been misappropriated
II. Minutess without substance have been recorded
III. Records and paperss have been manipulated and falsified IV. The effects of the minutess have been omitted from the records a. All of the above statements are true
B. Lone statements I and III are true
c. All of the above statements are false
d. Merely the statements II and IV are true

9. What information should an incoming hearer obtain during the enquiry of the predecessor hearer prior to the credence of the audit? I. Facts that bear on the unity of direction
II. Whether statistical or non-statistical sampling was used to garner grounds III. Disagreement with direction refering scrutinizing processs IV. The consequence of the client’s internal audit map on the range of the independent auditor’s scrutiny a. I and IIc. I and IV

b. I and IIId. III and IV

10. Which of the followers is the right order of stairss in the audit procedure? A. Perform trials of control
B. Develop an overall scheme for the expected behavior and range of the audit C. Obtain client’s written representation
D. Prepare engagement missive
E. Perform substantial trials
a. D. A. B. E. Cc. D. B. C. A. E
b. D. B. A. E. Cd. D. B. E. A. C


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