1.

Which statement is incorrect regarding the pronouncements of ASPC?

a. The PSAs and Interpretations may also have application, as appropriate, to other related activities of auditors.
b. PSAs contain basic principles and essential procedures (identified in bold type black lettering) together with related
guidance in the form of explanatory and other material.
c. PSAs need only be applied to material matters.
d. The Interpretations have the same authority as the PAPSs.

2.

A meaningful experience shall be considered as satisfactory compliance with the requirements of Section 28 of RA 9298 if it
is earned in (Choose the incorrect one)
a. Commerce and industry and shall include significant involvement in general accounting, budgeting, tax administration,
internal auditing, liaison with external auditors, representing his/her employer before government agencies on tax and
matters related to accounting or any other related functions.
b. Academe/education and shall include teaching for at least three (3) trimesters or two (2) semesters subjects in either
financial accounting, business law and tax, auditing problems, auditing theory, financial management and management
services.
c. Government and shall include significant involvement in general accounting, budgeting, tax administration, internal
auditing, liaison with the Commission on Audit or any other related functions.
d. Public practice and shall include at least two years as audit assistant and at least one year as auditor in charge of audit
engagement covering full audit functions of significant clients.

3.

Which statement is correct regarding CPE requirements for renewal of professional license?
a. The total CPE credit units required for CPAs shall be sixty (60) units for three (3) years, provided that a minimum
of twenty (20) credit units shall be earned in each year.
b. A registered professional shall be permanently exempted from CPE requirements upon reaching the age of 60
years old.
c. A registered professional who is working abroad shall be temporarily exempted from compliance with CPE
requirement during his/her stay abroad, provided that he/she is has been out of the country for at least one year
immediately prior to the date of renewal.
d. Those who failed to renew professional licenses for a period of five (5) continuous years from initial registration,
or from last renewal shall be declared delinquent.

4.

Examples of situations where the auditor may find it impossible to design effective substantive procedures that by
themselves provide sufficient appropriate audit evidence that certain assertions are not materially misstated include the
following:
i. An entity that conducts its business using IT to initiate orders for the purchase and delivery of goods
based on predetermined rules of what to order and in what quantities and to pay the related accounts
payable based on system-generated decisions initiated upon the confirmed receipt of goods and terms of
payment. No other documentation of orders placed or goods received is produced or maintained, other
than through the IT system.
ii. An entity that provides services to customers via electronic media (for example, an Internet service
provider or a telecommunications company) and uses IT to create a log of the services provided to its
customers, initiate and process its billings for the services and automatically record such amounts in
electronic accounting records that are part of the system used to produce the entitys financial
statements.
a. I and II
b. I only
c. II only
d. Neither I nor II

5.

Which statement is incorrect regarding the discussion among the engagement team about the susceptibility of the entitys
financial statements to material misstatements?
a. The members of the engagement team should discuss the susceptibility of the entitys financial statements to material
misstatements.
b. The objective of this discussion is for members of the engagement team to gain a better understanding of the potential
for material misstatements of the financial statements resulting from fraud or error in the specific areas assigned to
them, and to understand how the results of the audit procedures that they perform may affect other aspects of the audit.
c. The discussion provides an opportunity for more experienced engagement team members, including the engagement
partner, to share their insights based on their knowledge of the entity, and for the team members to exchange
information about the business risks.
d. All the team members should have a comprehensive knowledge of all aspects of the audit

6.

Which statement is incorrect regarding analytical procedures?

a.
b.
c.
d.

Analytical procedures may be helpful in identifying the existence of unusual transactions or events, and amounts,
ratios, and trends that might indicate matters that have financial statement and audit implications.
In performing analytical procedures as risk assessment procedures, the auditor develops expectations about plausible
relationships that are reasonably expected to exist.
When comparison of those expectations with recorded amounts or ratios developed from recorded amounts yields
unusual or unexpected relationships, the auditor considers those results in identifying risks of material misstatement.
When such analytical procedures use data aggregated at a high level (which is often the situation), the results of those
analytical procedures provide a clear-cut indication about whether a material misstatement may exist.

7.

Which of the following is incorrect regarding PSA 315?

a. The purpose of this PSA is to establish standards and to provide guidance on obtaining an understanding of the entity
and its environment, including its internal control, and on assessing the risks of material misstatement in a financial
statement audit.
b. This PSA requires the auditor to make risk assessments at the financial statement and assertion levels based on an
appropriate understanding of the entity and its environment, including its internal control.
c. The requirements and guidance of this PSA are to be applied in conjunction with the requirements and guidance
provided in other PSAs.
d. This PSA discusses the auditors responsibility to determine overall responses and to design and perform further audit
procedures whose nature, timing, and extent are responsive to the risk assessments.

8.

Which of the following is an effective internal control over accounts receivable?

a. Only persons who handle cash receipts should be responsible for the preparation of documents that reduce accounts
receivable balances.
b. Responsibility for approval of the write-off of uncollectible accounts receivable should be assigned to the cashier.
c. Balances in the subsidiary accounts receivable ledger should be reconciled to the general ledger control account once a
year, preferably at year-end.
d. The billing function should be assigned to persons other than those responsible for maintaining accounts receivable
subsidiary records.

9.

After the auditor has prepared a flowchart of internal control for sales, and cash receipts transactions and evaluated the
design of the system, the auditor would perform tests of controls on all control procedures
a. Documented in the flowchart.
b. Considered to be deficiencies that might allow errors to enter the accounting system.
c. Considered to be strengths that the auditor plans to rely on in assessing control risk.
d. That would aid in preventing irregularities.

10. An auditor's tests of a client's cost accounting system are designed primarily to determine that
a. Quantities on hand have been computed based on acceptable methods that reasonably approximate actual quantities on
hand.
b. Physical inventories substantially agree with book inventories.
c. The system complies with generally accepted accounting principles and functions as planned.
d. Costs have been assigned properly to finished goods, work in process, and cost of goods sold.