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Aud Theo

During an assessment of the risk associated with sales contracts and related commissions, which of the following factors would most likely result in an expansion of the engagement scope? A An increase in product sales, O along with an increase in commissions B. An increase in sales returns, O along with an increase in commissions C. A decrease in sales O commissions, along with a decrease in product sales O D. A decrease in sales returns, along with an increase in product salesSSS & Co., an auditing firm is commissioned to perform an initial audit of the financial statement of XYZ Company. In performing the audit, SSS & Co obtains appropriate audit evidence regarding the opening balances. Which of the following shall SSS & Co. perform? I Read the most recent financial statements of XYZ Company II Review working paper of the predecessor auditor Ill Immediately express a qualified opinion O A. I only O B I and II only O C. I, II and Ill O D. None of I, II and IllReasonable assurance means: a. Gathering of all available corroborating evidence for the O auditor to conclude that there are no material misstatements in the financial statements, taken as a whole b. Gathering of the audit evidence necessary for the auditor to conclude that there are no material misstatements in the financial statements, taken as a whole c: Gathering of the audit evidence necessary for the auditor to conclude that the financial statements, taken as a whole, are free from any misstatements d. Gathering of the audit evidence necessary for the auditor to conclude that the financial statements are free of material unintentional misstatementsThe fourth standard of reporting requires the auditor's report to contain either an expression of opinion regarding the financial statements taken as a whole or an assertion to the effect that an opinion cannot be expressed. The objective of the fourth standard is to prevent * a An auditor from expressing O different opinions on each of the basic financial statements b. Restrictions on the scope of the O examination, whether imposed by the client or by the inability to obtain evidence c Misinterpretations regarding the O degree of responsibility the auditor is assuming d. An auditor from reporting on one O basic financial statement and not the othersOther information that the auditor may use as audit evidence least likely includes a Minutes of meetings. b. Confirmations from third parties c. Information obtained by the auditor from such audit procedures as inquiry, observation, and inspection d. Adjustments to the financial O statements that are not reflected in formal journal entriesWhich of the following specific considerations in obtaining audit evidences for audit of inventory is false?A If inventory is immaterial to the financial statements, the auditor shall obtain sufficient appropriate audit evidence regarding the existence and condition of inventory B If the auditor is unable to attend physical inventory counting due to unforeseen circumstances, the auditor shall make or observe some physical counts on an alternative date and perform audit procedures on intervening transactions C If physical inventory counting is conducted at a date other than the date of the financial statements, the auditor shall perform audit O procedures to obtain audit evidence about whether changes in inventory between the count date and the date of the financial statements are properly recorded D. The auditor may request confirmation from the third party as to the quantities and condition of O inventory held on behalf of the entity when inventory under the custody and control of a third party isWhich of the following actions may be appropriate if the auditor is unable to agree to a change of the engagement and is not permitted to continue the original engagement I. Issue a qualified opinion due to a significant scope limitation. II. Auditor should withdraw from the engagement. Ill. Consider whether there is any obligation to report to the board of directors or shareholders the circumstances necessitating withdrawal * a I only b ll and Ill c. I and Il d. I, ll and IllThe subject matter of an assurance engagement can take the following forms except * O a Historical or Prospective financial statements b. Performance of an entity that could indicate efficiency and effectiveness O c. The entity's internal control d. Evaluation of a capital investment proposalThe Philippine Framework for Assurance Engagements identifies two types of assurance engagements a practitioner is permitted to perform: a reasonable assurance engagement and a limited assurance engagement. Which of the following is the objective of a reasonable assurance engagement?a a reduction in assurance engagement risk to a level that is O acceptable in the circumstances of the engagement as a basis for a negative form of expression of the practitioner's conclusion. b. a reduction in assurance engagement risk to a very low level O in the circumstances of the engagement as a basis for a disclaimer of the practitioner's conclusion. c. a reduction in assurance engagement risk to an acceptable O low level in the circumstance of the engagement as a basis for a positive form of expression of the practitioner's conclusion. d a reduction in assurance engagement risk to an acceptable O low level in the circumstance of the engagement as a basis for a qualified form of expression of the practitioner's conclusionAccording to PSA 210, which of the following statements is correct? * a The auditor and the client need O not agree on the terms of the engagement b. Where the terms of the engagement are changed, the O auditor and the client need not agree on the new terms if they already agreed on the old terms c. The engagement letter assists in O the supervision and review of the audit work d. The auditor may agree to a change of engagement where there is reasonable justification for doing SO

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