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Unibersidad de Manila College of Accountancy & Economics Auditing Theory

Dr. LRC dela Cruz

1.  The Code of Professional Ethics for CPAs promulgated by the Board applies to a.  All CPAs in public practice  b.  All CPAs in government c.  All CPAs in public practice and employed in private business d.  All CPAs in public practice employed in private business and industry, in the government and in education. 2.  The underlying reason for a code of ethics is a.  That it provides a safeguards against unscrupulous people  b.  That it is required by legislation

 

c.   To licensing agencies a basisservice for measuring the performance of the practitioners d. Theprovide need forthe public confidence in with the quality of the profession 3.  The CPA profession deemed deemed it necessa necessary ry to establish a code of ethics and a m mechanism echanism for its enforcement because a.  The establishment of flexible ethical standards provides self-protection for CPAs  b.  An ethical conduct that stresses the CPAs responsibility to clients and colleagues is a prerequisite to success c.  A requirement of law provides that CPAs establishes a code of ethics d.  Acceptance of responsibility to the public is a distinguishing mark of a profession. 4.  Which of the following is not one of the characteristic of a profession? a.  A responsibility to protect exclusively the interest of a client or employer.  b.  Mastery of a particular intellectual skill acquired by training and education c.  Adherence by its members to a common code of conduct d.  Acceptance of a duty to society as a whole 5.  The principle of professional competence and due care imposes certain obligations on professional accountants, which of the following is not one of those obligations required by this principle a.  To obtain professional knowledge and experience to enable them to fulfil their responsibilities

 

 b. diligently accordance with applicable technical and professional standards c.  To To act become awareinand understand relevant technical, professional and business developments d.  To be fair, intellectually honest and free of conflict of interest 6.  The essence of due care principle is that the auditor should not be guilty of a.   Negligence b. Fraud c. Bias d. Errors in judgment 7.  Competence as a CPAs includes all of the following except, a.  Consulting others if additional technical information is needed  b.  Having the technical qualifications to perform an engagement c.  Warranting the infallibility of the work performed d.  Possessing the ability to supervise and evaluate the quality of staff work 8.  The phase of professional competence that requires a professional accountant to adopt a program designed to endure quality control in the performance of professional services consistent with technical and professional standards is a.  Review of professional competence c. Application of professional competence  b.  Attainment of professional competence d. Maintenance of professional competence 9.

 

Professional competence shouldofinclude: –  Attainment  Attainment professional competence Statement 1  –  Statement 2  –  –  Maintenance  Maintenance of professional competence a.  Both statements are true c. Only Statement 1 is true  b.  Both statements are false d. Only Statement 2 is true

10.  An auditor who accepts an audit engagement and does not possess the industry experience/ expertise of the business entity should a.  First inform management that an unqualified opinion cannot be issued  b.  Engage financial experts familiar with the nature of the business entity c.  Refer a substantial portion of the audit to another CPA who will act as a principal auditor d.  Obtain knowledge of matters that relate to the nature of the entity’s business  business  11.  The principle of confidentiality imposes an obligation on professional accountant to refrain from a.  Responding to an inquiry or investigation conducted by the Board  b.  Disclosing confidential information to another party even if the client authorises the disclosure c.  Disclosing information to defend themselves in case of litigation d.  Using confidential information acquired as a result of professional and business relationship to their personal advantage or advantage of third parties

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12.  The principle of confidentiality applies to a.  All professional accountant  b.  Professional accountant in public practice

c. Professional accountant in government d. Professional accountant in commerce and industry

13.  Which of the following is considered a violation of rules on confidentiality a.  The CPA divulges information disclosed to him by a prospective client  b.  The CPA discloses information to another CPA in compliance with a quality review conducted by the Quality Review Committee c.  The CPA discloses information to protect his own interest in the course of legal proceedings d.  The CPA discloses information to a successor auditor after obtaining the client permission 14.  The Code of Ethics for professional accountant states that a CPA shall not disclose any confidential information obtained in the course of a professional engagement except with the consent of his client. In which of the following situations given  below would a CPA be in violation of the principle of confidentiality confid entiality disclosing confidential information a.   b. c.  d. 

In order an investigation PRCresponsibilities through the Board In to properlyconducted discharge by thethe CPAs in accordance with his professional standards To another accountant interested in purchasing the CPAs practice In compliance with a subpoena issued by a court

15.  A CPA shall not disclose confidential information obtained during an audit engagement in which one of the following situations a.  To a successor auditor auditor without the cclient lient permission c. In defens defensee of himself when sued by the client  b.  When the security of the state requires d. With the consent of the client 16.  Andy, a non-CPA has a law practice. Andres, a CPA has agreed to pay Andy 20% of the fee for services rendered by Andres to Andy’s client. Who, if anyone, is in violation of the code of ethic s? a.  Andres b. Andy c. Both Andres and Andy d. Neither Andres and Andy 17.  A professional accountant name can be associated with information that a.  Contains information without any real knowledge of whether they are true or false  b.  Contains a misleading statement c.  Uses estimates d.

 

Intentionally omits or obscures information

18.  In which of the following circumstances would a CPA be bound by ethics to refrain from disclosing any confidential information obtained during the course of a professional engagement a.  Confi Confidential dential client information is made available with the client’s permission    b.  The CPA is issued a summon enforceable by a court order which orders the CPA to present confidential information c.  An inquiry by the PRC and the CPA needs the disclosure to defend himself d.  A major stockholder of a client company seeks accounting information from the CPA after the management declined to disclose the requested information 19.  When a professional accountant performs services in a country other than home country and differences on specific matters exists between ethical requirements of the two countries, the professional accountant should apply a.  The less strict ethical requirements  b.  The ethical requirements of his or her home country c.  The stricter of the two ethical requirements d.  The ethical requirements of the country in which services are being performed 20.  Identify the incorrect statement. “A professional accountant rendering tax services is entitled to put forward the best posit ion in favour of a professional client or an employer, provide d….    a.  The accountantprovided…. assumes responsibility for the content of the tax return  b.  It does not impair the accountant integrity and objectivity c.  It is consistent with the law d.  It is rendered with professional competence

21.  A CPA, while performing an audit, strives to achieve independence in appearance in order to a.  Comply with the gen generally erally accepted standards of fieldwork c. Become Become indepe independent ndent in mind  b.  Reduce risk and liability d. Maintain public confidence in the profession 22.  Independence in auditing means a.   Not having a loan to or from an assurance client  b.   Not having any financial or economic relationship with the client c.  Taking an unbiased viewpoint d.  Being an advocate of the assurance client 23.  One of the major differences between auditors and other professionals is that most professionals a.  Do not need confidence of the public

 

 b. Do notnot have to pass rigorous to be administered in the profession c.   Need be concerned aboutexamination independence d.  Are not expected to act in the best interest of the public

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24.  The concept of materiality would be least important to an auditor in determining a.  The effect of an auditor’s direct financial interest in a client    b.  Transactions that should be reviewed c.  The extent of audit work planned for particular account d.  The need for disclosing a particular transaction or event 25.  Which of the following most accurately states how objectivity has been defined by the Code of Ethics a.  Avoiding facts and circumstances that could reduce the public confidence in the professional accountant report  b.  Being honest and straightforward in all professional and business relationship c.  A combination of impartiality, intellectual honesty and a freedom from conflict of interest d.  A state of mind that permits the provision of an opinion without being affected by influences that compromise  professional judgment 26.  Independence is required whenever a professional accountant performs a.  Professional services services

b. Assurance services

c. Non-assurance services

d. Tax consultancy

27.  Ultimately, the decision as to whether the CPA is independence or not, will be made by the a.  Audit Committee b. Auditor c. Public d. Client 28.  It refers to the avoidance of facts and circumstances that are so significant that a reasonable and informed third party, having knowledge of all relevant re levant information, including safeguards applied would reasonably conclude a firm’s or a member of the assurance team’s integrity, objectivity or professional scepticism had been compromised  compromised   a.  Inherent independence c. Independence in appearance  b.  Independence in fact d. Independence of mind 29.  The primary factor that distinguishes a direct from an indirect financial interest is the a.  Relationship between investor and inv investee estee c. Risk aassociated ssociated with su such ch investment  b.  Materiality of the amount involved d. Control over investment decision 30.  The network firms are required to be independent of the client a.  For non-assurance engagement

 

 b. For assurance assurance engagements engagement provided auditthat client c.  For providedtotoan client are not audit client when the assurance report is expressly restricted for use of identified users d.  For assurance engagements provided to clients that are not audit clients, when the auditor is not expressly restricted for use by identified users. 31.  Which of the following statements is not correct about independence requirements a.  For assurance engagements provided to non-audit clients, where the distribution of the assurance reports is limited only to specified users, the firm should be independent of the client  b.  For assurance engagements provided to audit client, the members of the assurance team, the firm and network firms are required to be independent of the client c.  For assurance engagements provided to non-audit clients, where the distribution of the assurance report is limited only to specified users, the members of the assurance team are required to be independent of the client d.  For assurance engagements provided to non-audit clients, the members of the assurance team and the firm are required to be independent of the client. 32.  The member of the assurance team and the firm should be independent of the assurance client during the period of the assurance engagement. For this purpose, the period of the engagement

 

a.    b. c.  d. 

Starts when when the the assurance engagement letter is prepared and assurance ends whenservices the assurance report is issued Starts team begins to perform and ends when the fieldwork is completed Starts when the engagement letter is prepared and ends when the fieldwork is completed Starts when the assurance team begins to perform assurance services and ends when the assurance report is issued

33.  Which of the following professional services does not require independence a.  Assertion based engagements c. Tax consultancy services  b.  Direct reporting engagements d. Examination of financial forecast 34.  This occur when because of a close relationship, a professional accountant becomes too sympathetic to the interest of others a.  Self-interest threat b. Self-review threat c. Advocacy threat d. Familiarity threat 35.  This occur as a result of the financial or other interests of a professional accountant or of an immediate or close family member a.  Self-interest treat b. Self-review threat c. Advocacy threat d. Familiarity threat 36.  This treat occurs when a member of the assurance team may be deterred from acting objectively and exercising professional scepticism by threats, actual or perceived, from the directors, officers or employees of an assurance client

 

a.

Intimidation threat

b. Familiarity threat

c. Advocacy threat

d. Self-interest threat

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37.  According to the Philippine Code of Ethics, compliance with fundamentals principles is potentially affected by self-interest, self-review, advocacy, familiarity and intimidation threats. Which of the following best described advocacy threat? a.  This occurs when a firm or a member of the assurance team, promotes or may be perceived to promote, an assurance clients position or opinion to the point that objectivity may, or maybe perceived to be, compromised  b.  This occurs when a firm or member of the assurance team could benefit from financial interest in an assurance client c.  This occur when a member for an assurance team was previously a director or officer of the assurance client d.  This occur when any product or judgment of a previous engagement needs to be re-evaluated in reaching conclusions on the assurance engagement 38.  Which of the following circumstances would least likely create self-interest threat a.  Having a close personal relationship between a member of the assurance team and the assurance client, its directors, officers or employees  b.  Contingent fees relating to assurance engagements c.  A loan or guarantee to or from an assurance client or any of its directors or officers d.  A direct financial interest or material indirect financial interest in an assurance client 39.  Which of the following would most likely create a self-review threat a.  A former partner joins the assurance client  b.  Financial interest in a client c.  Litigation involving professional accountant and a client d.  A former officer of a client is now a member of the assurance team 40.  Which of the following would least likely create self-interest threat a.  Pressure to reduce inappropriately the extent of work performed in order to reduce fees  b.  Undue dependence on total fees from an assurance client c.  Having a close business relationship with an assurance client d.  Concern about the possibility of losing the engagement 41.  Which of the following is an example of an intimidation threat that may affect the independence of the professional accountant a.  A member of the assurance team having an immediate family member or close family member who is a director or officer of the assurance client  b.

 

Preparation original data used to generate financial statements or preparation of other records that are the subject matter of theofassurance engagement c.  Dealing in, or being a promoter of, share or other securities in an audit client d.  Threat of replacement over a disagreement with the application of an accounting principle

42.  Which of the following circumstances would least likely create familiarity threat a.  A former director or officer of the assurance client joins the assurance team  b.  A member of the assurance team having an immediate family member or close family member who is a director or officer of the assurance team c.  A former partner of the firm being a director, officer of the assurance client or an employee in a position to exert direct and significant influence over the subject matter of the assurance engagement d.  A member of the assurance team having an immediate family member of close family member who as an employee of the assurance client is in a position to exert direct and significant influence over the subject matter of the assurance engagement 43.  When threat to independence that are other than those clearly insignificant are identified, the t he professional accountant should a.  Apply appropriate safeguards to eliminate threats to independence or to reduce them to an acceptable level  b.  Assigned more experienced staff to the assurance engagement

 

c. thethe assurance heightened of professional scepticism d.  Continue Downgrade nature ofengagement engagementbut to with one that does notlevel require independence 44.  Safeguards fall into two broad categories. Safeguards created by the profession, legislation or regulation does not include a.  Documented policies regarding identification of threat to compliance with fundamental principles  b.  Corporate governance regulations c.  Educational, training and experience requirements for entry into the profession d.  Continuing professional development requirements 45.  The rotation of senior accounting personnel can be regarded as a safeguard a.  Created within business community c. In the work environment  b.  Created by the profession d. Within the client’s system and procedures  procedures   46.  Which of the following is not one of the safeguards in the work environment a.  Continuing professional education requirements  b.  Using different partners and teams with separate reporting lines for the provision of non-assurance services to an assurance client c.  Rotation of senior personnel d.

 

Documented internal policies and procedures requiring compliance with the fundamental principles

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47.  Which of the following statements about CPAs financial interest in a client is incorrect? a.  Material indirect financial interest impairs the CPAs independence  b.  Immaterial indirect financial interest impairs the CPAs independence c.  Material direct financial interest impairs CPAs independence d.  Immaterial direct financial interest impairs the CPAs independence 48.  If a member of the assurance team or their immediate family member, has a direct financial interest, or a material indirect financial interest, in the assurance client, the self-interest self -interest threat created would be so significant. Consequently, tthe he professional accountant should apply appropriate safeguards in order to eliminate threat or reduce it to an acceptable level. Which of the following safeguards would not be appropriate a.  Limit the participation of the member of the assurance team  b.  Dispose of the direct financial interest prior to the individual becoming a member of the assurance team c.  Dispose of the indirect financial interest in total prior to the individual becoming member of the assurance team d.  Dispose of a sufficient amount of the indirect financial interest so that the remaining interest is no longer material  prior to the individual becoming a member of the assurance team. tea m. 49.  Close family members do not include a.  Parents b. Siblings

c. Non-dependent child

d. spouse

50.  Which of the following activities would least likely impair the professional accountant independence a.  Reporting, in a management role to those charged with governance  b.  Serving as an officer or director of an audit client c.  Being an honorary member of an audit client d.  Determining which recommendation of the firm should be implemented 51.  The Philippine Code of Ethics requires that lead engagements partners of listed entities be rotated at least once every a.  2 years b. 3 years c. 5 years d. 7 years 52.  Which of the following would would least likely be considered considered violation of the independence independence rules a.  Providing bookkeeping services to an audit client that is listed  b.  Receiving a gift from an assurance client c.  Providing legal services to an assurance client in a legal dispute d.

 

Providing tax consultancy services to an assurance client

53.  In determining estimates of fees, an auditor may take into account each of the following, except a.  Attainment of specific findings  b.  Value of the service to the client c.  Degree of responsibility assumed by undertaking the engagement d.  Skills required to perform the service 54.  The CPA should not undertake an engagement if his fee is to be based upon a.  A percentage of audited net income c. Per diem rates plus expenses  b.  The complexity of the service rendered d. The findings of a tax authority 55.  Which of the following will least likely impair independence a.  A partner or an employee of the firm receives a token gift from an assurance client  b.  An immediate family member of a member of the assurance team is a director, an officer or an employee of the assurance client in a position to exert direct and significant influence over the subject matter of the assurance engagement c.  A partner or employee of the firm serves as an officer or as a director on the board of an assurance client d.

 

A member of the participates the assurance that he or she is toassurance , or may team join the assuranceinclient sometimeengagement in the futurewhile knowing, or having reason to believe

56.  In which of the following situations would a public accounting firm have violated the Code of Ethics in determining fees a.  A fee based on the degree of responsibility that the service entails  b.  A fee which is based upon the nature of the engagement rather than upon the actual time spent on the engagement c.  A fee that will be established as a result of a bankruptcy proceedings d.  A fee based on whether or not the audit report leads to the approval of client application for bank loan 57.  The approach to a potential client for the purpose of offering professional services is called a.  Indecent proposal b. Solicitation c. Encroachment d. Advertising 58.  Professional accountants press and other media releases undertaken to commemorate anniversaries in public practice by informing the public of their achievements or contribution towards nation building are a.   Not permitted in the Philippines  b.  Considered to be a violation of the rules in advertising c.  Forms of solicitation d.   Not considered violation of advertising rules provided such undertaking is done only once every 5 years

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59.  A successor auditor is required to communicate with the previous auditor. The primary concern in this communication is a.  To save successor auditor time and money in gathering data  b.  Information which will help the successor auditor determine whether the client management has integrity c.  To learn about client by examining predecessor working paper d.  To enable successor auditor to perform a more efficient audit 60.  Which of the following statements about the composition of the BOA is incorrect a.  The Board shall elect a chairman from among its members to serve for a term of one year  b.  The four sectors in the practice of accountancy shall as much as possible be equitably represented in the Board c.  The Board shall be composed of a chairman and six members d.  The members of the Board shall be appointed by the President of the Philippines from a list of three recommendees for each position and ranked by the Commission, from a list of five nominees for each position submitted by Accredited Professional Organization 61.  The following statements relate to the term of office of the chairman and the members of BOA Statement 1 –   –   No No person who has served two successive complete terms shall be eligible for reappointment until the t he lapse of one year Statement 2  –  –  Appointment  Appointment to fill up an unexpired term is not to be considered a complete term Statement 3  –  –  A  A person may serve in BOA for eight consecutive years Statement 4  –  –   No No person shall serve in the Board for more than 12 years a.  All statements are true c. Two statements are true  b.  Three statements are true d. All statements are false 62.  Which of the following is not a valid ground for suspension or removal of members of the Board a.  Being charged of crimes involving moral turpitude c. Neglect of duty or incompetence  b.  Violation of RA 9298 d. Rigging the CPA licensure examination results 63.  The standard setting body created by the PRC to promulgate accounting standards that will be generally accepted in the Philippines a.  Financial Reporting Standard Council c. Accounting Standard Council  b.  Auditing Standard and Practices Council d. Auditing and Assurance Standards Council

 

64. The Financial Reporting Standard Council shall be composed of a chairman and a.  14 members b. 17 members c. 8 members d. 15 members 65.  Which of the following best describes the function of Auditing and Assurance Standard Council a.  To undertake continuing research on both auditing and financial accounting in order to make them responsive to the needs of the public  b.  To monitor full compliance by auditors to PSA c.  To assists the BOA in conducting administrative proceedings on erring CPAs in public practice d.  To promulgate auditing standards, practices and procedures that shall be generally accepted by the accounting  profession in the Philippines 66.  The following statements relate to RA 9298, which is true? a.  After 3 years, subject to certain conditions, the Board may order the reinstatement of a CPA whose certificate of registration has been revoked  b.  The PRC has the authority to remove any member of the BOA for negligence, incompetence or any other just cause c.  Insanity is not a ground for proceedings against a CPA d.   No person shall be appointed as a member of the Board unless he has been iin n the practice of accountancy for at least 10 years among others 67.  Which of the following statements is correct a.  The refresher course should be completed within 2 years from the preceding examination  b.  Any candidate who fails in 2 complete examinations will no longer be allowed to take another set of examination c.  The examination in which the candidate was conditioned and the removal examination on the subject in which s/he failed shall be counted as two complete examinations d.  Any candidate who fails in 2 complete examinations shall be disqualified disqualified from taking another examination unless s/he submits evidence to the satisfaction of the Board that s/he enrolled in an completed at least 24 units of subjects given in the examination 68.  The Board shall submit to the PRC the ratings obtained by each candidate within how many days a.  10 b. 5 c. 2 d. 3 69.  Which of the following shall be issued to a candidate who passes the examination a.  Certificate of full compliance and PRC Id  b.  Certificate of registration and professional identification card c.  Certificate of accreditation to practice public accountancy and PRC id d.  Personal identification card and a certificate of accreditation to practice public accountancy

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70.  Any person who shall violate any of the provision of RA 9298 or any of its implementing rules and regulations, subject to the approval of the PRC, shall upon conviction, be punished by a.  A fine of not more than Php 50,000  b.  Lethal injection c.  A fine of not less than Php 50,000 or by imprisonment for a period of not exceeding 2 years or both d.  Imprisonment for a period of not exceeding 2 years 71.  All CPA who are considered in the practice pr actice of accountancy shall abide by the requirements, rules and regulatio regulations ns on continuing  professional education. For this purpose, it is required that all al l registered CPAs must complete a minimum of a.  120 credit units in 3 years c. 45 credit units in 3 years  b.  30 credit units in 3 years d. 15 credit units in 3 years 72.  Unless otherwise exempted, registered CPAs in the practice of accountancy who have not completed the CPE requirements shall a.  b.   c.  d. 

Submit a letter addressed to the Board indicating the reasons for not complying with the CPE requirements Be dropped from the roster of CPAs  Not be allowed to renew their professional licenses Present evidence to the satisfaction of the Board that they have the necessary knowledge, skills and experience to discharge their professional responsibility

73.  Who is not permitted by RA 9298 to practice public accountancy a.  General partnership c. Sole proprietorship  b.  Limited liability partnership d. Corporation, whose stockholders are all CPAs 74.  According to RA 9298, if a partner in a two-member partnership dies, the surviving partner may continue to practice as an individual under the existing firm title title which includes the deceased partner’s name name   a.  Until the partnership pay-out pay-out to the deceased partner’s estate is terminated  terminated    b.  For a period of time not to exceed 5 years c.  For a period of time not to exceed 2 years d.  Indefinitely 75.  Which of the following is not one of the functions of the Board a.  b.  c.  d. 

To adopt an official seal of the commission To supervise the registration, licensure and practice of accountancy in the Philippines To issue, suspend, revoke or reinstate the certificate of registration for the practice of the accountancy profession To prescribed and/or adopt a code of ethics for the practice of accountancy

76.  The procedure that is necessary necessary to achieve the objective of the audit sha shall ll be determined by the a.  Those charged with governance c. Auditor  b.  Client management d. Board of Accountancy 77.  Which of the following is not one of the limitation of audit a.  Scope limitation imposed by the entity  b.   Nature of evidence obtained

c. Inadequacy of records d. Confidentiality of information

78.  One of the conditions that give rise to demand for an external audit of financial statement is expertise. Which of the following describes the meaning of expertise? a.  As experts, auditors are expected to detect all material misstatements in the financial statement  b.  Auditors usually rely on the work of an expert as a basis for evaluating some assertions embodied on the financial statements

 

c.   The Usersreaders usuallyoflack necessary expertise to verify thethe reliability of information d. the the financial statements must possess necessary expertise to be able to understand the financial statements 79.  Which of the following does not properly describe audit limitation a.  Many assertions of financial statements cannot be audited  b.  Audit conclusions are made on the basis of examining a sample of evidence c.  Fatigue and human weakness can cause auditors to overlook pertinent evidence d.  The work undertaken by the auditor is permeated by judgment 80.  Which of the following does not properly describe an element of theoretical framework of auditing a.  Audit benefits the public  b.  Data to be audited can be verified c.  Auditor act on behalf of management d.  Short term conflict may exist between managers who prepare the data and auditors who examine data 81.  Which of the following is incorrect about responsibility for financial statements a.  Fair presentation of financial statements is an implicit part of auditors responsibility

 

 b. is responsible for fair presentation statement c.  Management Auditor is responsible for expressing an opinion of onfinancial the financial statement d.  Audit of financial statement does not reduce management responsibility

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82.  Which of the following statements about independent financial statement audit is incorrect a.  The risk that the auditor will fail to uncover material misstatement is eliminated when the auditor conducted the examination in accordance with the standards  b.  The phrase use to express the auditor’s opinion is “present fairly in all material respects”   c.  The term “scope of the audit” refers to audit procedures deemed necessary in the circumstances to achieve  objective of audit d.  The auditor’s opinion enhances the credibility of the financial statements  statements   83.  Which of the following is the best statements of the responsibility responsibility of the auditor with respect to audited financial statement a.  The auditor responsibility on fair presentation of financial statement is limited only up to the date of the report  b.  The auditor is responsible only to his qualified opinion but not for any other type of opinion c.  The auditor responsibility is confined to the expression of opinion on the audited financial statement d.  The responsibility over the financial statement rests with the management and the auditor assumes responsibility with respect to the notes to financial statement 84.  Which of the following statements does not described a condition that creates demand for audit a.  Users can directly assess the quality information  b.  Conflict between the preparer of information and the user that would result to an unbiased information c.  Expertise is often required for information preparation and verification d.  Information can have substantial economic consequences for a decision maker 85.  Which of the following best describes the reason why an independent auditor reports on financial statement a.  A poorly designed internal control system maybe in existence  b.  A management fraud may exist and it is more likely to be detected by independent auditors c.  Different interest may exists between the company preparing the financial statement and the person using it d.  A misstatement of account balance may exists and is generally corrected as the result of the independent audit work 86.  Which one of the following is not among the conditions that give rise to a demand by external user for independent audits of financial statement a.  Consequence for making decision  b.  Remoteness of user c.  Complexity of making economic decision d.  Potential conflict of interest between user and preparer of the financial statement 87.  Which of the following is not one of the general principle governing the audit of financial statement a.  The auditor should comply with the Code of Ethics  b.  The auditor should plan and perform the audit with an attitude of professional scepticism c.  The auditor should conduct the audit in accordance with the standards d.  The auditor should obtain sufficient appropriate evidence primarily through inquiry and analytical procedures to be able to draw reasonable conclusions 88.  The primary reason for an audit by an independent independent auditor is a.  To ensure that frauds will be discovered  b.  To guarantee that there are no misstatement in the financial statement c.  To satisfy regulatory bodies d.  To provide increased assurance to users as to the fairness of the financial statement 89.  Which of the following is not one of the limitations of an audit a.   Nature of evidence that the auditor obtains c. Human error  b.  Use of testing d. Client imposed limitation 90.  The independent audit is important to readers of financial statements because it a.  Determines the future stewardship of the management of the company whose financial statement was audited  b.  Reports on the accuracy of all information in the financial statement c.  Measures and communicates financial and business data involved in financial statement d.  Involves the objective examination of and reporting on management prepared statements 91.  Bugoy was hired to audit the financial statements of XXX Corporation. The function of his opinion on XXX Corporation financial statement a.  Serve as requirement requirement for regulatory bodies c. Lend Lend credibility to management representation  b.  Detect fraud and abuse in operations d. Improve financial decision of management 92.  Which of the following is limitation of audit a.  The risk that the auditor may not possess possess the training and proficiency required by the engagement  b.  The possibility that management may prevent the auditor from performing necessary audit procedures c.  The fact that most audit evidence is persuasive rather than conclusive in nature d.  The likelihood that the auditor may not be able to detect material misstatement in the financial statement because the auditor is engaged only after the client year-end 93.  Professional scepticism requires that an auditor assume that management a.  Offering reasonable assurance of honesty c. Neither honest nor dishonest  b.  Honest, in the absence of fraud risk factors d. Dishonest until completion of audit fees 8

 

94.  The reason why independent auditor gathers evidence is because a.  To form an opinion on the financial statement c. To detect fraud  b.  To evaluate internal control d. To evaluate management 95.  Which of the following statements about independent financial statement audit is true a.  The auditor opinion is not an assurance as to future viability of the entity as well as the effectiveness and efficiency with which the management had conducted the affairs of the business  b.  An audit is designed to provide limited assurance that the financial statement taken as a whole are free from material misstatement c.  That audit of financial statements relieves management of its responsibilities for the financial statements d.  The procedures required to conduct an audit in accordance with the standards should be determined deter mined by the client who engaged the services of the auditor 96.  By providing high level of assurance on audit reports on financial statements, the auditor a.  Assures the reader that fraudulent activity have been detected  b.  Guarantees the fair presentation of financial statement c.  Enhances the credibility of the financial statement d.  Confirms the accuracy of the financial statement 97.  Which of the following statements statements is not a distinction between independent and internal auditor a.  The internal auditor span of coverage goes beyond financial statement audit to encompass operation and performance audit  b.  Independent auditor represent third party users external to the audit entity, whereas internal auditors report repor t directly to management c.  Although independent auditor strives for both validity and relevance of evidence, internal auditors are concerned almost exclusively with validity d.  Internal auditors are employee of the auditee whereas independent auditors are independent contractors 98.  The overall objective of internal auditing is to a.  Assists members of the organization in the effective discharge of their responsibilities  b.  Attest to the efficiency with which resources are employed c. Provide assurance that financial data have been accurately recorded d.  Ascertain that controls are cost justified 99.  A typical objective of an operation audit is to determine whether an entity a.  Internal control structure is adequately operating as designed  b.  Financial statements present fairly the result of operation c.  Operational information is in accordance with generally accepted accounting principles d.  Specific operating units are functioning effectively and efficiently 100. Independent Independent auditing can be best described as a a.  Regulatory activity that prevents the issuance of improper financial information  b.  Professional activity that measures and communicates financial accounting data c.  Subset of accounting d.  Professional activity that attest to the fair presentation of financial statement 101. IIn n financial statement audit, audit process should be conducted in accordance a.  PFRS b. Audit Program c. PSA d. PAS

 

102. An audit involves ascertaning degree of correspondence between assertion and established criteria. In the case of financial statement audit, which if not a the valid criterion a.  IAS

b. PFRS

c. PSA

d. PAS

103. B Broadly roadly defined, the subject matter of any audit consists of a.  Financial statement b. Economic data

c. Assertion

d. Operating data

104. An An audit of financial statement is conducted to determine if the a.  Organization is operating effectively and efficiently  b.  Auditee is following specific procedures or rules set down by some higher authority c.  Client internal control is functioning as intended d.  Overall financial statement are stated in accordance with the applicable financial reporting framework 105. W Which hich of the following types of auditing is performed most commonly by CPA on contractual basis a.  Internal auditing b. Income tax auditing c. Government auditing d. External auditing 106. Pronouncements Pronouncements of AASC does not cover a.  Review engagement b. Consultancy

c. Compilation

d. Agreed upon procedures

107. Which Which of the following provide moderate level of assurance a.  Audit b. Review c. Compilation d. Agreed upon procedures

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108. The The objective of a review of financial statements is to a.  State whether anything has come to auditor attention that indicates that the financial statements are not fairly  presented  b.  Express an opinion on the overall financial statements c.  Assists the client in the preparation of the financial statement d.  Carry out audit procedures agreed on with the client and other users of report 109. W Which hich of the following is not included in a review engagement of a non-public entity a.  Study and ev evaluation aluation of internal control c. Proce Procedures dures designed designed to identify unusual fluc fluctuations tuations  b.  Inquiries of management d. Inquiries regarding subsequent events 110. When When providing limited assurance that nothing came to the CPAs attention that would indicate that the financial statements are not in accordance with financial reporting standards, the CPA should a.  Develop and audit program  b.  Obtain corroborative audit evidence to support management responses to inquiries c.  Test the accounting records that identify inconsistencies with the prior year’s financial statements   d.  Understand the accounting principles of the industry in which the business entity operates 111. A review does not provide assurance that the CPA will become aware of all significant matters that would be disclosed in an audit. However, should the CPA becomes aware that information coming to his attention is incorrect, incomplete, he should a.  Downgrade the engagement to a compilation and issue appropriate report  b.  Withdraw from the engagement c.  Perform a complete audit and issue a standard audit report with appropriate qualifications d.  Perform the additional procedures he deems necessary to achieve limited assurance 112. IIff the CPA has reason to believe that the information subject to review may be materially misstated, the CPA should a.  Carry out additional or more extensive procedures c. Withdraw from the engagement  b.  Express a qualified negative assurance d. Express an adverse opinion 113. W Which hich of the following is true of the report based on agreed upon procedures a.  The report should state that the procedures performed are limited to analytical procedures and inquiry  b.  The report is restricted to those parties who have agreed to the procedures to be performed c.  The CPA provides the recipients of the report r eport limited assurance as to reasonableness of the assertions presented in the financial information d.  The report states that the auditor has not recognized any basis that requires revision of financial statements 114. Engagement Engagement to apply agreed upon procedures on certain accounts within a financial statement may be accepted provided a.  The distribution of the report is limited only to specified parties involved  b.  The CPA has expressed an opinion on the financial statements taken as a whole c.  The CPA provides only a limited assurance about the reliability of the financial statements d.  The CPA takes full responsibility for the adequacy of the procedures performed 115. An An engagement to apply agreed upon procedure engagement may be accepted provided a.  The adequacy of the procedures to be performed will be determined by the CPA  b.  The CPA has audited the financial statements of the client c.  The distribution of the report will be limited only to specified parties involved d.  The CPA is independent with respect to the client 116. Which Which of the following is true of the report based on agreed upon procedures a.  The report should state that the procedures performed are limited to analytical procedures and inquiry  b.  The report is restricted to those parties who have agreed to the procedures to be performed c. The report states that the auditor has not recognized any basis that requires revision of financial statements d.  The CPA provides the recipients of the report r eport limited assurance as to reasonableness of the assertions presented in the financial information 117. Which Which of the following procedures would an accountant most likely perform in a compilation engagement a.  Test the accounting records c. Apply analytical procedure  b.  Collect, classify and summarized financial information d. Assess risk components 118. The The procedures employed in doing compilation are a.  Less extensive than review procedures but more extensive than agreed upon procedures  b.  Designed to enable the accountant to express a limited assurance c.   Not designed to enable the accountant to express any form of assurance d.  Designed to enable the accountant to express a negative assurance 119. Which Which of the following procedures is normally performed in connection with a compilation engagement a.  Collect, classify and summarize financial information  b.  Inquire of management about subsequent events

 

c.   Applying analytical procedures d. Making inquiries of review management concerning actions taken at board meeting

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120. The The use of negative assurance in audit reports on financial statements is a.  Encourage by PICPA  b.  Violation of the professional standards c.  Properly located in the opinion paragraph of the unqualified report d.  A help in clarifying the degree of responsibility being assumed by the auditor 121. Which Which of the following is not true about reports provided a CPA a.  In a compilation engagement, no assurance is expressed and the users of financial information do not derive any  benefit from the CPAs involvement  b.  In the audit engagement, the auditor provides high level of assurance that the financial information is free of material misstatement c.  In a review engagement, the CPAs moderate assurance is expressed in the form of negative assurance d.  For agreed upon procedures, the CPA provides a report on factual; findings and no assurance is expressed 122. A CPA who is not independent may issue a.  Review report b. Compilation report

c. Special report d. Report expressing a qualified opinion

123. Which Which of the following statements about assurance engagements is not correct a.  The Philippine Standards on Assurance Engagements issued by AASC describe the objectives and elements of assurance engagements to provide either a high, moderate or low level of assurance  b.  Assurance engagements are intended to enhance the credibility of information about a subject matter by evaluating whether the subject matter conforms in all material respects with suitable criteria c.   Not all engagements performed by professional accountant are assurance engagements d.  The subject matter of an assurance engagement may take many forms such as data, systems and processes 124. Which Which of the following services provides a moderate level of assurance about client financial statements a.  Compilation b. Review c. Compliance with contractual obligations d. Forecast and projections 125. W Which hich of the following is not one of the requirements before accepting an assurance engagements a.  The responsible party and the intended user of assurance report should be from different organization  b.  The practitioner should be competent and independent c.  The practitioner should accept the engagement only if the subject matter is identifiable and in the form that can be subjected to evidence gathering procedures d.  The practitioner should accept the engagement only if the subject matter is the responsibility of another party 126. Which Which of the following generalization is incorrect about the reliability of evidence gathered by practitioner a.  Evidence in the form of documents and written representation is more likely to be reliable  b.  Evidence from external source is more reliable than the generated internally c.  Evidence generated internally is more reliable when subject to appropriate controls within the entity d.  Evidence obtained indirectly by the practitioner is more likely reliable than that obtained directly 127. W When hen a CPA is associated with the preparation of forecast all of the following should be disclosed, except a.  Probability of achieving the forecast c. Character of work performed  b.  Sources of information d. Major assumption used 128. Given Given one or more hypothetical assumption, ass umption, a responsible party may prepare, to the best of its knowledge and belief, an entity’s entit y’s expected financial position, result of operations and cash flows. Such prospective financial statements are known as a.  Proforma financial statements c. Partial presentation  b.  Financial projections d. Financial forecast 129. An examination of financial forecast is a professional service that involves a.  Evaluating the preparation of the financial forecast and the support underlying management assumption  b.  Assembling financial forecast that is based on management assumption c.  Assuming responsibility on the financial forecast d.  Limiting the distribution of the accountant reports to management and board of directors 130. When When an accountant examines financial forecast that fails to disclose several significant assumptions used to prepare the forecast, the accountant should describe the assumption in the accountant’s report and issue an  an   a.  Qualified opinion c. Unqualified with emphasis of a matter paragraph  b.  Adverse opinion d. Disclaimer of opinion 131. Error Error includes a.  Engaging in complex transactions that are structured to misrepresent the financial position or financial performance of the entity  b.  Concealing or not disclosing facts that could affect the amounts recorded in the financial statements c.  An incorrect accounting estimate arising from oversight or misinterpretation of facts d.  Intentional misapplication of accounting policies relating to amounts, classification, manner of presentation and disclosure

 

132. Fraud one or more or Fraudulent those charge with governance a. involves Management fraud members of management c. financial reporting is referred to  b.  Employee fraud

d. Misappropriation of assets

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133. The The auditor is concerned with fraud that causes a material misstatement in the financial statements. There are two type of intentional misstatement that are relevant to the auditor, misstatement arising from fraudulent financial reporting and misstatement arising from a.  Management fraud c. Misappropriation of asset  b.  Employee fraud d. Collusion within the entity or with third parties 134. T The he primary responsibility for the prevention and detection of fraud rests with a.  Those charged with governance of the entity  b.  Management of the entity c.  Both A and B d.  The auditor 135. Which Which of the following statement best describes an auditor responsibility regarding misstatement a.  An auditor should obtain reasonable assurance that the financial statement taken as a whole are free from material misstatement whether caused by fraud or error  b.  An auditor shall obtain an absolute assurance that material misstatement in the financial statements will be detected c.  An auditor is responsible to detect material errors but has no responsibility to detect material fraud that is concealed through employee collusion or management override of internal control d.  An auditor failure to detect a material misstatement resulting from fraud is an indication of noncompliance with the requirements of the standards 136. When When obtaining an understanding of the entity and its environment, including its internal control, the auditor may identify events or conditions that indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Such events or conditions are referred to as a.  Fraud conditions b. Fraud risk factors c. Fraudulent activities d. Fraud environment 137. Opportunities Opportunities to misappropriate asset increase when there a.  Known or anticipated future employee layoff  b.  Promotions, compensation or other rewards inconsistent with expectations c.  Recent or anticipated changes to employee compensation or benefit plan d.  Inventory items that are small in size of high value or in high demand 138. Because of the risk of material misstatement, an audit of financial statements in accordance with standards should be planned and performed with an attitude of a.  Impartial conservatism c. Independent integrity  b.  Objective judgment d. Professional scepticism 139. When When planning the audit, auditor should make inquiries of management. Such inquiries should address the following except a.  Management assessment of the risk that the financial statements maybe misstated  b.  Management process for identifying and responding to the risk of fraud in the entity c.  Management consideration of how an element of unpredictability will be incorporated into the nature, timing and extent of the audit procedures to be performed d.  Management communication if any to those charged with governance regarding its processes for identifying and responding to the risk of fraud in the entity 140. When When the auditor identifies misstatement in the financial statements, the auditor should consider whether such misstatement may be an indicator of fraud and of there is such, the auditor should a.  Consider the implication of the misstatement in relation to other aspect of the audit  b.  Withdraw from the engagement c.  Communicate the information to regulatory and enforcement authorities d.  Report the matter to the person or persons who made the audit appointment 141. Documentation Documentation standard requires the auditor to document matters which are important in providing evidence to support the audit opinion, and state that the working papers include the auditor reasoning on all significant matter which requires the auditor  judgment, together with the auditor conclusion thereon. Which of the t he following should be documented by the auditor a.  Fraud risk factors identified as being present during the auditor risk assessment process  b.  Auditor responses to identified risk factors c.  Both fraud risk factors identifi9ed as being present during the auditor risk assessment process and the auditor responses to any such factors d.  The standard does not require documentation of the identified fraud risk factors and the auditor responses to them 142. The The following statements relate to communication of misstatement resulting from fraud to management and to these charged with governance. Which is false a.  The auditor need not bring to the attention of those charged with governance any material weaknesses in internal control related to the prevention and detection of fraud  b.  If the auditor has identified a fraud, whether or not it results in a material misstatement in the financial statement, the auditor should communicate these matter to the appropriate level of management on a timely basis and consider the need to report such matter to those charged with governance

 

c.

If the auditor hasnot obtained evidence that indicate fraud maythese exitsmatters (even to if the the appropriate potential effect financial statement would be material) the auditor should that communicate l evelon level of the management on a timely basis and consider the need to report such matters to those charged with governance d.  The auditor communication with those charged with governance maybe orally or in writing 12

 

143. According According to PSA 250, the term “noncompliance” as used in the standard ref ers ers to acts of omission or commission by b y the entity  being audited, either intentional or unintentional unintentional which are contrary to the prevailing laws and regulations. Such Such do not include a.  Transaction entered into by the entity  b.  Transactions entered into the name of the entity c.  Transactions entered into on the entity’s behalf by its management or employees  employees   d.  Personal misconduct by the entity’s management or employee  employee   144. IIn n order to plan the audit, the auditor should obtain a general understanding of the legal and regulatory framework applicable to the entity and the industry and how the entity is complying with that framework. To obtain this understanding, the following  procedures would ordinarily be considered by the auditor except a.  Use the existing understanding of the entity industry, regulatory and other external factors  b.  Inquire of management concerning the entity policies and procedures regarding compliance with laws and regulations r egulations c.  Inquire of management as to the laws and regulations that may be expected to have a fundamental effect on the operation of the entity d.  Inspect correspondence with relevant licensing or regulatory authority 145. W Which hich of the following statements is incorrect concerning reporting of noncompliance a.  The auditor, as soon as practicable, either communicate with those charged with governance or obtain evidence that they are appropriately informed, regarding noncompliance that comes to the auditor attention  b.  If the auditor suspect that members of senior management including members of board of directors are involved in non-compliance, the auditor should report the matter to the next next higher level of authority, if it exists such as an audit committee or a supervisory board c.  The auditor should, as soon as practicable communicate with those charged with governance governan ce regarding noncompliance including matters that are clearly inconsequential; or trivial d.  If in the auditor judgment, the noncompliance is believed to be intentional and material, the auditor should communicate the finding without delay 146. If If the auditor concludes that the noncompliance has a material effect on the financial statements and has not been properly reflected in the financial statement, the auditor should express a.  A qualified or an adverse opinion c. Disclaimer of opinion  b.  Qualified or disclaimer opinion d. Qualified opinion 147. IIff the auditor is precluded by the entity from obtaining sufficient appropriate audit evidence to evaluate whether non-compliance that maybe material to the financial statement has or is likely have, occurred, the auditor should express a.  Qualified or adverse opinion c. Adverse opinion  b.  Qualified or disclaimer opinion d. Adverse or disclaimer of opinion 148. U Under nder which of the circumstances below would the auditor conclude that withdrawal from the engagement is necessary a.  The auditor concludes that the non-compliance has a material effect on the financial statements and has not been  properly reflected in the financial statement  b.  The auditor is precluded by the entity from obtaining sufficient appropriate audit evidence to evaluate whether noncompliance that maybe material to the financial statements has or is likely to have c.  The auditor is unable to determine whether noncompliance has occurred because of limitations imposed by the circumstances rather than by the entity d.  The entity does not take the remedial action that the auditor considers necessary in the circumstances 149. Under Under to PSA 260, those matters that arise from the audit of financial statements and in the opinion of the auditor, are both important and relevant to those charged with governance in overseeing the financial fi nancial reporting and disclosure process are called a.  Audit matters of governance interest c. Auditor findings  b.  Significant audit matters

d. Material misstatement in the financial statements

150. Audit Audit matters of governance interest to be communicated to those charged with governance ordinarily include a.  Audit adjustments whether or not recorded by the entity that have, or could have material effect on its financial statements  b.  Expected modification to the auditor report c.  Material uncertainties related to events and conditions that may cast significant doubt on the entity ability abilit y to continue as a going concern d.  All of the above 151. W Which hich of the following statements best describes the auditor’s responsibility regarding the detection of material errors and frauds? A.  The auditor is responsible for the failure to detect material errors and frauds only when such failure results from the misapplication of generally accepted accounting principles. B.  The audit should be designed to provide reasonable assurance that material errors and frauds are detected. C.  The auditor is responsible for the failure to detect material receivables or observe inventories. D.  Extended auditing procedures are required to detect unrecorded transactions even if there is no evidence that material errors and frauds may exist.

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152. T The he auditor has considerable responsibility for notifying users as to whether or not the financial statements are properly stared. This imposes upon the auditor a duty to A.  Be an insurer of the fairness of the presentation of the financial statements. B.  Be a guarantor of the fairness in the statements. C.  Be equally responsible with management for the preparation of the financial statements. D.  Provide reasonable assurance that material misstatements will be detected. 153. Which Which of the following statement best distinguishes ordinary negligence from goes negligence? A.  Failure to detect material errors, whether internal control is strong or weak, suggests gross negligence. B.  Failure to exercise reasonable care denotes ordinary negligence, whereas failure to exercise minimal care indicates gross negligence. C.  Gross negligence is most probable when the auditor fails to detect errors that occurred under conditions of strong internal control. D.  The more material the undetected error is, the greater the likelihood of ordinary negligence being committed. 154. The The auditor’s responsibility for failure to detect fraud arises   A.  When such failure clearly results from non-compliance to generally accepted auditing standards. B.  Whenever the amounts involved are material. C.  Only when the examination was specifically designed to detect fraud. D.  Only when such failure clearly results from negligence so gross as to sustain an inference of fraud on the part of the auditor. 155. Which Which of the following statements stat ements is correct concerning the auditor’s responsibility with respect to noncompliance with laws and regulations? An auditor must design tests to: A.  Obtain reasonable assurance of detecting material direct-effect noncompliance with laws and regulations. B.  Detect both immaterial and material direct-effect noncompliance with laws and regulations. C.  Detect both direct-effect and indirect-effect noncompliance with laws and regulations. D.  Detect both material direct-effect and material indirect-effect noncompliance with laws and regulations. 156. M Most ost accounting and auditing professionals agree that when an audit has failed to uncover material misstatements, and the wrong type of audit opinion is issued, the audit firm. A.  Has failed to follow Philippine standards on auditing (PSAs). B.  Deserves to lose the lawsuit. C.  Should be asked to defend the quality of the audit. D.  Should not be held responsible for the financial loss suffered by others. 157. What What is the independent auditor’s responsibility prior to the completion of fieldwork when he believes that a material fraud may have occurred? A.   Notify the appropriate law enforcements authority. B.  Investigate the persons involved, the nature of the fraud, and the amounts involved. C.  Reach an understanding with the appropriate client representatives as to the desired nature and extent of subsequent audit work. D.  Continue to perform normal audit procedures and write the audit report in such a way to disclose adequately the suspicions of material fraud. 158. T The he risk that an audit will fail to uncover a material misstatement is eliminated. A.  If client has good internal control. B.  If client follows generally accepted accounting principles. C.  When the auditor has complied with generally accepted auditing standards. D.  Under no circumstances. 159. The The auditor’s evaluation of the likelihood of material employee fraud is normally done initially as a part of A.  The assessment of whether to accept the audit engagement. B.  Understanding the entity’s internal control structure.  structure.   C.  The tests of controls. D.  The test of transactions. 160. In In connection with the examination of financial statements, an independent auditor could be responsible for failure to detect a material fraud if A.  statistical sampling techniques were not used on the audit engagement B.  the auditor planned the work in a hasty and inefficient manner C.  accountants performing important parts of the work failed to discover a close relationship between the treasurer and the cashier D.  the fraud was perpetrated by one client employee, who circumvented the existing internal control 161. A CPA is criminally liable if he A.  Refuses to turn over the schedules or working papers prepared by the client staff to the client B.  Performs an audit in a negligent manner C. Intentionally allows an omission of a material fact required to be stated in a financial statement D.  Was not able to submit the audited financial statements on time

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162. Audit Audit standards require an auditor to: A.  Perform procedures that are designed to detect all instances of fraud B.  Provide reasonable assurance that the financial statements are not materially misstated C.  Issue an unqualified opinion only when the auditor is satisfied that no instances of fraud have occurred D.  Design the audit program to meet financial statement users expectations concerning fraud 163. If If a specific information comes to an auditor’s attention that implies the existence of possible noncompliance with laws and regulations that could have a material, but indirect effect on the financial statements, the auditor should next A.  Apply audit procedures specifically directed to ascertaining whether a noncompliance with laws and regulations has occurred B.  Seek the advice of an informed expert qualified to practice law as to possible contingent liabilities C.  Report the matter to an appropriate level of management at least one level about those involved D.  Discuss the evidence with the client’s audit committee, or others with equivalent authority   164. Which of the following statements is true? A.  It is usually easier for the auditor to uncover irregularities than errors B.  It is usually easier for the auditor to uncover errors than irregularities C.  It is usually equally difficult for the auditor to uncover errors or irregularities D.  Usually, none of the given statements is true 165. An An auditor who believes that a material irregularity may exist shou should ld initially A.  Discuss the irregularity to the person who caused it B.  Discuss the matter with a higher level of management C.  Withdraw from the engagement D.  Consult legal counsel The End!

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