NATIONAL FEDERATION OF JUNIOR PHILIPINNE INSTITUTE OF ACCOUNTANTS –

NATIONAL CAPITAL REGION

AUDITING (AUD)

PROBLEM 1:
The following information was provided by Alinsod Corp. as of the
fiscal year ended September 30, 2015:

August 31 September 30
Loan proceeds directly credited by 200,000 250,000
the bank
Note payable payment by the bank 120,000 80,000
Undeposited collections 450,000 ?
Outstanding checks 180,000 ?
Total credits per bank statement 1,955,000
Total debits per bank statement 1,655,000
Total debits per books 1,795,000
Total credits per books 1,800,000

Additional information:
a. A P100,000 collections was erroneously recorded twice in the
books in September, the company discovered the error and
corrected the same immediately in September.

b. A P50,000 disbursement check was recorded in the books as

P5,000 in August. The correction was made in September.

c. The bank erroneously credited the company P80,000 in August for

a collection of Kare Corp. The bank corrected the error in
September.

d. The unadjusted balance per book in August was at P640,000. The

unadjusted balance per bank in September was at P785,000.

Requirements:
1. What is the correct cash in bank balance as of August 31, 2015?
a. 675,000 c. 720,000
b. 755,000 d. 795,000

2. What is the correct deposit in transit as of September 30?

a. 160,000 c. 340,000
b. 240,000 d. 320,000

3. What is the correct outstanding checks as of September 30?

a. 265,000 c. 220,000
b. 140,000 d. 310,000

4. What is the correct cash in bank balance as of September 30?

a. 760,000 c. 705,000
b. 725,000 d. 805,000

5. In validating the bank reconciliation statements of the client,

the auditor should trace back the unrecorded debits, like
service charges to the:
a. Accounts payable voucher.
b. Cancelled checks returned by the bank.
c. Bank statement of the current month.
d. Cut-off bank statement of the subsequent month.

PROBLEM 2:
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The accountant of Rodriguez Inc. presented to you the following

details of its subsidiary ledger in relation to your audit of the
company’s accounts receivable balance as of December 31, 2014:

Customer Invoice Date Amount

Zulu Inc. December 20 550,000
December 1 1,200,000
October 11 950,000
August 4 420,000

Whiskey Co. November 20 2,000,000

September 4 900,000
August 2 500,000

Uniform Inc. December 10 1,750,000

October 4 600,000
July 5 500,000

Tango Corp. September 9 2,600,000

July 10 1,250,000
March 5 900,000

Romeo Co. December 1 (500,000)

Audit notes:
a. The company’s term is n/60 days.

b. The company’s general ledger shows the following balances as of

December 31, 2014:
Accounts Receivable P13,650,000
Allowance for doubtful (950,000)
accounts

c. The credit balance of the receivable resulted from Romeo Co.’s

overpayment of its account. The same shall be settled by a
delivery of merchandise the following period.

d. You have discovered that Uniform Inc.’s payment of an October 4

invoice amounting to P600,000 was posted against Whiskey Co.’s
account for an invoice Dated December 4, for the same amount.

e. Discussions with the credit department manager revealed the

following appropriate credit policy:
Accounts receivable age % doubtful of
collection
Current 2%
1-60 days past due 5%
61-120 days past due 20%
More than 120 days past 50%
due

Requirements:
6. How much is the unreconciled difference between the control
account the subsidiary ledger?
a. None c. 10,000
b. 20,000 d. 30,000

7. What is the correct accounts receivable balance as of December

31, 2014?
a. 14,150,000 c. 14,120,000
b. 14,130,000 d. 14,140,000

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8. Assuming that there were no other entries affecting the

allowance for bad debts, what is the correct bad debt expense
for 2014?
a. 387,500 c. 396,500
b. 378,500 d. 369,500

9. What is the correct amortized cost of the receivables as of

December 31, 2014?
a. 12,791,500 c. 12,773,500
b. 12,291,500 d. 12,803,500

10. Which of the following populations should the auditor start

form when testing for the completeness of reported sales of a
manufacturing company.
a. Sales receipts
b. Sales invoices
c. Sales orders
d. Goods dispatch notes

PROBLEM 3:
You were assigned to audit the receivables of Sarmiento
Merchandising Company. As instructed by your audit manager, you
have performed a cut-off test of sales. The results of the cut-off
test revealed the following:

Recorded as Sales in December 2016

Selling Cost Terms Shipment Received
price Date by
customers
P18,000 P16,500 FOB shipping 12/26/2016 12/29/2016
point
20,000 14,000 Shipped to 12/26/2016 12/29/2016
consignee
8,680 7,240 FOB destination 12/28/2016 01/02/2017
9,000 7,500 FOB shipping 12/30/2016 01/02/2017
point
10,000 7,750 FOB destination 12/31/2016 01/03/2017
7,800 6,100 FOB shipping 12/31/2016 01/02/2017
point
14,000 12,000 Shipped to 12/31/2016 01/02/2017
consignee

Recorded Sales in January 2017

Selling Cost Terms Shipment Received
price Date by
customers
P21,000 P18,200 FOB shipping 12/30/2016 01/03/2017
point
10,500 8,800 FOB shipping 12/31/2016 01/03/2017
point
4,500 3,200 FOB destination 01/02/2017 01/03/2017
6,500 5,000 FOB shipping 01/02/2017 01/05/2017
point

A count of all inventories within the premises was made in the

morning of December 31,2016 prior to any shipment made during the
day. The total cost of the count was recorded as inventories as of
December 31, 2016. Half of the goods shipped to consignee on
December 26 are still unsold at December 31. The agreed commission
on consignment sales is 20% of the sales price.

The unadjusted ledger balances show the following:

Accounts receivables P376,500
Inventories 525,000

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Sales 1,520,000
Cost of sales 942,000

Determine the adjusted balances of the following:

A B C D
11. Accounts 363,320 329,620 361,120 389,320
receivable
12. Inventories 524,340 506,800 547,440 549,500
13. Sales 1,504,620 1,508,820 1,522,320 1,551,500
14. Cost of sales 928,360 942,660 917,500 973,560

15. To gain assurance that all valid inventory items physically

counted are included the client’s inventory listing schedule,
an auditor most likely would __________ to gather evidence
about ___________ assertion.
a. Items listed in the inventory listing schedule to
inventory tags and the auditor’s recorded count sheets;
Existence.
b. Inventory tags noted during the auditor’s observation to
items listed in receiving reports and vendors’ invoices;
Existence.
c. Inventory tags noted during the auditor’s observation to
items listed in the inventory listing schedule;
Completeness.
d. Items listed in receiving reports and vendors’ invoices
to the inventory listing schedule; Completeness.

PROBLEM 4:
You auditing Adelaida Corp.’s various liability accounts. The
following schedule of liabilities was presented to you by the
company’s accountant in relation to your audit:
Accounts payable P460,000
Warranties payable 153,250
Salaries payable 268,500

Audit notes:
a. You have rendered a purchases cut-off to ascertain the
completeness of the company’s accounts payable balance. The
following is the summary of the entries 10 days before and
after the balance sheet date and your audit observations:

Purchases Journal Entries: Dec. 20 – Dec. 31, 2014:

Receiving Suppliers Amount FOB
Report Date Invoice Date Term/Remark
Dec. 20, 2014 Dec. 19, 2014 60,000 Shipping
Point
Dec. 23, 2014 Dec. 20, 2014 42,000 From
Consignor
Dec. 28, 2014 Dec 26, 2014 45,000 Destination
Jan. 3, 2015 Dec. 29, 2014 30,000 Destination

Purchases Journal Entries: January 2 – January 10, 2015

Receiving Suppliers Amount FOB
Report Date Invoice Date Term/Remark
Jan. 3, 2015 Dec. 28, 2014 P20,000 From Consignee
Jan. 5, 2015 Dec. 3, 2015 55,000 Shipping Point
Jan. 6, 2015 Jan. 3, 2015 84,000 Shipping Point
*note: assume suppliers’ invoice date as suppliers’ shipment
date of goods and ending inventories were appropriately
established through an inventory count.

b. The company started its 2-year warranty program for

merchandise sold starting 2013. The company estimates that it
will incur P350 in part and labor for repairing each unit of

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merchandise. The company further estimates that 70% of the

units sold shall be returned for repairs and that 40% of the
warranty costs shall be incurred in the year of sale with 60%
to be incurred in the year following the year of sale. The
following information is deemed relevant for your audit:

2013 2014
Number of units sold 1,250 1,410
Actual warranty costs 153,000 250,000
The balance of the warranties payable is the accrued warranty
cost at the end of 2013. Actual warranty costs were charged
to current-year warranty expense. Adjusting entry at the end
of 2014 is yet to be made.

c. Salaries payable reflects the probable unused sick leaves and

vacation leaves in 2013 and prior to 2013 carried over 2014.
No entry had been made during the current year affecting the
salaries payable account. Employees are allowed to carry-over
unused leaves over 2 years from year of grant, thereafter, it
shall expire. Salary rates increased for the current year by
10%. An analysis of the cumulative unused sick leaves and
vacation leaves are as follows:

Prior to 2013 leaves carried over to 2014 270 days

2013 leaves carried over to 2014 625 days
Prior to 2014 leaves used in 2014* 700 days
Leaves earned in 2014 carried over 2015 550 days
*from prior to 2014 leaves used in 2014, 200 were earned by
employees prior to 2013.

d. The Board of Directors approved through a resolution,

additional incentive to key officers in the form of a bonus
which shall be at 10% of the adjusted net income after 30%
income tax and after bonus. The net income of the company
before any adjustments were made is at P2,032,700

Required:
16. What is the adjusted balance of the accounts payable account?
a. 485,000 c. 443,000
b. 473,000 d. 388,000

17. What is the balance of warranties payable as of December 31,

2014?
a. 396,750 c. 284,700
b. 369,750 d. 248,700

18. What is the correct balance of the salaries payable in the form
of liability for compensated absences as of December 31, 2014?
a. 212,250 c. 220,250
b. 202,500 d. 222,750

19. What is the correct amount of bonus to key officers?

a. 130,841 c. 123,481
b. 133,841 d. 132,481

20. In assessing control risk for purchases, an auditor vouches a

sample of entries in the voucher register to the supporting
documents. Which assertion would this test of controls most
likely support?
a. Existence or occurrence
b. Completeness
c. Valuation or allocation.
d. Rights and obligations.

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PROBLEM 5:
Mendoza Corp. has the following non-trading equity securities on
December 31, 2015:

Fair Value
Security # of Cost (12/31/15)
Shares
ABC ordinary shares 9,000 P441,000 P46 per share
DEF ordinary shares 30,000 1,080,000 P35 per share
GHI preference shares 2,400 360,000 P154 per share

Audit notes:
a. The above securities were all bought in 2015. On the initial
recognition, Mariah made an irrevocable election to present
gain/loss on the said securities to other comprehensive income.

b. On April 1, 2016, the company sold all of the ABC ordinary

share for P65 per share.

c. On May 1, 2016, the company purchased 4,200 ordinary shares of

JKL Corp. at P75 per share. The company incurred brokers’ fees
amounting to P10,400.

d. The following additional information in 2016 were deemed

relevant:
Reported Fair Value
Net of shares
Dividends Income (12/31/16)
Declared*

ABC ordinary P2.00 per share P900,000 P62 per

shares share
DEF ordinary P1.50 per share 1,300,000 P38 per
shares share
GHI preference P1.00 per share 750,000 P145 per
shares share
JKL ordinary P0.75 per share 450,000 P77 per
shares share
*all dividends were declared on December 31, 2016.

Requirements:
Based on the results of your audit answer the following:
21. What is the realized gain on sale of ABC ordinary shares in
2016, under PAS 39?
a. 190,000 c. 144,000
b. 171,000 d. None.

22. What is the unrealized holding gain/loss to be reported in the

stockholders’ equity portion of the 2016 statement of financial
position?
a. 56,400 c. 66,400
b. 46,000 d. 76,800

23. Assuming that the company elected to report gains/losses in the

profit or losses instead, what is the unrealized holding
gain/loss to be reported in the 2016 statement of comprehensive
income?
a. 46,000 c. 66,400
b. 56,400 d. 76,800

24. Assuming that the 4,200 JKL shares acquired in 2016 represent
20% interest on JKL’s outstanding ordinary shares, what is the
correct carrying value of the investment in JKL shares?
a. 371,850 c. 382,250

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b. 412,250 d. 401,850

25. How should the auditor establish existence and ownership of the
non-trading equity securities subjected to the audit?
a. Corresponding with the investee company to verify the
number of shares owned.
b. Confirming the number of shares owned that are held by an
independent custodian.
c. Inspecting the audited financial statements of the
investee company.
d. Determining that the investment is carried current fair
market value.

PROBLEM 6:
Your audit of Tantoco Company’s property plant and equipment account
disclosed the following data as of December 31, 2015:

Machinery Original Date of Useful life Salvage Depreciation

Cost purchase Value Method
Aye P700,000 2009 10 years P62,000 SYD
Bee 1,020,000 2010 15,000 60,000 Working hours
hours
See 1,600,000 2011 15 years 100,000 Straight-line
Dee 1,600,000 2013 10 years 100,000 Double-
declining

You have noted that the client’s policy in depreciating asset is to

take no depreciation on the year of purchase and full year’s
depreciation on the year of disposal.

The following is a summary of the transactions in 2015:

A. On May 5, Machinery Aye was sold for P260,000 cash. The

company’s bookkeeper recorded this retirement in the following
manner in the cash receipt journal:
Cash 260,000
Machinery 260,000

B. On December 31, 2015, it was ascertained that Machinery Bee

had been used for a cumulative number of hours of 13,100
hours, 2,100 of which was utilized in 2015. Starting 2015
however, the management revised its estimate of the total
useful life of Machinery Bee from 15,000 hours to 18,000 hours
with the salvage value being revised to P36,000.

C. On December 31, 2015, before computing for depreciation

expense on Asset See, the management decided that the asset’s
remaining useful life is 10 years from January 1, 2015.

D. On December 31, 2015, it was discovered that the plant asset

purchased in 2014 has been charged to repairs expense in 2014.
The asset costs P440,000 and had a useful life of 10 years
with no salvage value. Management has decided to use double
declining balance method for this asset and was referred to as
machinery Eff.

Based on the information above and as a result of your audit:

26. What is the adjusted gain on sale of Machinery Aye?
a. 82,000 c. 87,640
b. 93,600 d. 58,000

27. What is the depreciation expense on asset Bee for 2015?

a. 84,000 c. 134,400
b. 100,400 d. 142,800

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28. What is the depreciation expense on asset See for 2015?

a. 120,000 c. 130,000
b. 171,430 d. 54,550

29. What is the total carrying value of the remaining machineries

as of December 31, 2015?
a. 2,436,000 c. 3,044,000
b. 2,544,800 d. 2,788,000

30. In testing for unrecorded retirement of equipment, an auditor

most likely would:
a. Compare depreciation journal entries with similar prior
year entries in search of fully depreciated equipment.
b. Inspect items of equipment observed during the plant tour
and then trace them to the equipment subsidiary ledger.
c. Scan the general journal for unusual equipment additions
and excessive debits to repairs and maintenance expense.
d. Select items of equipment from the accounting records and
then locate them during the plant tour.

PROBLEM 7:
YambaoInc .had the following selected information in its December
31, 2015 Stockholders’ Equity portion of its balance sheet:

10% Preference shares, P100 par value, 50,000

shares authorized, 10,000 shares issued and P1,000,000
outstanding
Ordinary shares, P50 par value, 100,000 shares
authorized, 50,000 shares issued, 5,000 2,500,000
sharesreacquired at P75 per share
Share premium on preference shares 250,000
Share premium on ordinary shares 250,000
Accumulated profits 2,450,000

Transactions in 2016 are as follows:

a. On January 2, the company issued 5,000, P1,000 12% bonds

payable with detachable warrants. One warrant is attached to
each P1,000 bond. The bonds which pay semi-annual interest
every June 30 and December 31 were issued at total lump sum of
P5,700,000. On the date of issuance, the bonds were quoted at
105 without the warrants while each warrant can be sold in the
market at P25. Five warrants surrendered together with P60
exercise price entitle the holder to acquire one ordinary
share. Warrants can be exercised 2 years from the date of the
issuance.
b. On March 1, 4,000 treasury shares were reissued at P70 per
share. The remaining treasury shares were retired and reverted
to unissued basis.
c. On April 15, stock rights were issued to ordinary shareholders.
Ten stock rights plus P62 per share entitle the holder to
acquire one additional ordinary share.

d. On June 1, 60% of the warrants issued with the bonds were

exercised.

e. On August 15, all but 9,000 stock rights were exercised by the
ordinary shareholders.

f. Adjusted net income for the year amounted to P1,250,000.

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Based on the information above, answer the following:

31. The entry to recognize the retirement of the treasury shares on

March 1 shall involve a debit to accumulated profits at:
a. 22,500 c. 20,000
b. 2,500 d. None

32. What is the credit to the share premium account as a result of

the exercise of the stock warrants on June 1?
a. 270,000 c. 276,000
b. 226,000 d. 306,000

33. What is the credit to the share premium account as a result of

the exercise of the stock rights on August 15?
a. 20,000 c. 48,000
b. 45,000 d. None

34. What is the total Additional paid in capital as of December 31,

2016?
a. 999,000 c. 1,001,500
b. 1,004,000 d. 953,500

35. What is the total stockholders’ equity as of December 31, 2016?

a. 8,339,000 c. 8,303,000
b. 8,189,000 d. 8,193,000

36. Where does the phrase below best relateto?

“Nothing has come to our attention which indicates that the
financial statements have not been prepared according to the
framework”
a. Absolute assurance
b. Positive assurance
c. Negative assurance
d. Reasonable assurance

37. Which is true about quality control?

a. Engagement quality control review is required for all
completed audit engagement
b. Promotion of a culture of quality is related to the element
of monitoring
c. The firm’s managing board of partners is ultimately
responsible for a firm’s quality control system
d. Final assembly of working papers must not be later than 45
days after the auditor’s report date

38. What is the best purpose of a financial statements audit?

a. Comply with regulatory and statutory requirements
b. Enable auditor to express an opinion based on gathered
evidence
c. Suggest operational improvements on inefficient areas
d. Assist those charged with governance in directing the entity

39. What is the objective of a reasonable assurance engagement?

a. Eliminate assurance engagement risk to an acceptably high
level
b. Reduce assurance engagement risk to an acceptably low level
c. Reduce assurance engagement risk to an acceptably high level
d. Eliminate assurance engagement risk to an acceptably low
level

40. Initiation, recording, processing and reporting transactions

and balances are related to which internal control component?
a. Control environment
b. Risk assessment process

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c. Information systems
d. Monitoring

41. Which of the following best describes the practice of charging

less than market audit rates for new clients?
a. Highballing
b. Lowballing
c. Midballing
d. Deballing

42. Which of the following is a high-risk indicator with respect to

a potential client?
a. Well-financed operations
b. Competent and management
c. Unexplained and significant related party transactions
d. Strong internal controls for finance, operations and
compliance

43. During client acceptance and continuance, what is the

appropriate response if the auditor has determined that the
financial reporting framework is unacceptable?
a. Accept or continue the engagement since audit pre-conditions
were met
b. Decline or withdraw from the engagement since audit pre-
conditions were met
c. Accept or continue the engagement since audit pre-conditions
were not met
d. Decline or withdraw from the engagement since audit pre-
conditions were not met

44. Which of the following document contains the terms of the

engagement?
a. Management Letter
b. Management Representation Letter
c. Comfort Letter
d. Engagement Letter

45. If a request for change in engagement is justified, which of

the following is true?
a. No new engagement letter is needed
b. Report on the revised engagement will refer to the previous
engagement
c. Report on the revised engagement will not refer to the
previous engagement
d. Two reports will be issued, one for the old engagement and
another for the revised

46. Which is the most appropriate materiality benchmark (base) and

percentage for a profitable listed and regulated audit client?
a. 5% of profit before tax
b. 10% of profit before tax
c. 5% of total assets
d. 10% of total assets

47. What is the amount or amounts set by the auditor at less than
materiality for the financial statements as a whole to reduce
to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds
materiality for the financial statements as a whole?
a. Planning Materiality
b. Preliminary Materiality
c. Performance Materiality
d. Prudent Materiality

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48. Which of the following is a risk assessment procedure?

a. Analytical procedures to detect misstatements
b. Re-performance of a control procedure
c. Re-calculation of interest expense
d. Inquiry with management regarding operations

49. Which of the following is the correct assessment of the risk of

material misstatement if inherent risk and control risk are
high?
a. Risk of material misstatement is minimal
b. Risk of material misstatement is low
c. Risk of material misstatement is medium
d. Risk of material misstatement is high

50. What is the expected response if the expected deviation rate is

significantly higher than the tolerable deviation rate?
a. Control risk is assessed as less than high and no test of
controls are performed
b. Control risk is assessed as high and no test of controls are
performed
c. Control risk is assessed as less than high and test of
controls are performed
d. Control risk is assessed as high and test of controls are
performed

51. What is the risk being addressed by vouching and tracing

transactions, respectively?
a. Overstatement, Understatement
b. Understatement, Overstatement
c. Understatement, Understatement
d. Overstatement, Overstatement

52. The accounts receivable subsidiary ledger account of Ken

Company is composed of three categories of customers based on
size. The categories make the population highly variable.
Risk of material misstatement is determined to be high for
accounts receivable. Which of the following is the correct
sample selection technique and confirmation type, respectively?
a. Simple Random Sampling, Positive Confirmation
b. Simple Random Sampling, Negative Confirmation
c. Stratified Sampling, Positive Confirmation
d. Stratified Sampling, Negative Confirmation

53. Which of the following is least likely to be confirmed?

a. Inventory held by third parties
b. Cash in bank
c. Accounts receivables
d. Obsolete inventory in the warehouse

54. Vince CPA selects a sample of official receipts and locates

them in the cash receipt records. Which of the following
assertion is being addressed by this procedure?
a. Rights and obligations
b. Existence
c. Completeness
d. Valuation

55. Which is the correct report if going concern assumption is

inappropriate and management refuses to use another suitable
framework?
a. Unmodified
b. Unqualified with emphasis of a matter
c. Disclaimer
d. Adverse

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56. Which is the appropriate date of the representation letter if

the auditor’s report is on March 26, 2017?
a. December 31, 2016
b. March 26, 2017
c. March 26, 2016
d. April 4, 2017

57. Which is true about facts after the date of the auditor's
report but before the financial statements are issued?
a. Auditor should inform the management about such facts
b. Those charged with governance should inform the management
about such facts
c. Management should inform the auditor about such facts
d. The auditor has an active duty to search for such facts

58. Which is true about the code of ethics for professional

accountants?
a. It is only applicable to accountants in public practice
b. Independence is a fundamental principle
c. Safeguards must be applied to threats which are not clearly
insignificant
d. Accountants must comply to the majority of the fundamental
principles

59. An audit client refuses to furnish the auditor a management

representation letter. This is judged to be a significant
evidence and its impact is pervasive. Which is the most
appropriate report for the situation?
a. Unqualified
b. Adverse
c. Disclaimer
d. Qualified

60. The property, plant and equipment account of Catherine Company

is understated by a material amount (but not pervasive). Which
is the most appropriate report for the situation?
a. Unqualified
b. Adverse
c. Disclaimer
d. Qualified

61. Cathy CPA failed to observe the audit client’s yearend

inventory count. However, Cathy was satisfied with the
alternative procedures she was able to perform (e.g., interim
count plus reconciliation). The effect of the matter is
pervasive. Which is the most appropriate report for the
situation?
a. Unqualified
b. Adverse
c. Disclaimer
d. Qualified

62. In which section of the auditor’s report is a brief description

of an audit included?
a. Introductory
b. Management’s Responsibility
c. Auditor’s Responsibility
d. Opinion

63. What type of threat is involved in selling, underwriting or

dealing in financial securities or shares of a client?
a. Intimidation Threat
b. Self-Review Threat

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c. Advocacy Threat
d. Familiarity Threat

64. Which of the following is true about white box approach?

a. Auditing with the computer; for simple systems
b. Auditing around the computer; for complex systems
c. Auditing through the computer; for complex systems
d. Auditing by the computer; for simple systems

65. An auditor creates a dummy division of the organization and

sends test transactions through the system along with valid
transactions. This is an example of:
a. An integrated test facility.
b. A tagging and tracing approach.
c. Generalized audit software.
d. Audit procedures using manual efforts.

66. An auditor sends fictitious information through the system for

processing is an example of which of the following?
a. An integrated test facility.
b. A test data
c. Generalized audit software.
d. Audit procedures using manual efforts

67. Which is true about the audit of summary financial statements?

a. The form of the opinion is similar to the audited financial
statements
b. The auditor of the summary financial statements may or may
not be the auditor of the audited financial statements
c. The auditor of the summary financial statements must be the
auditor of the audited financial statements
d. Summary financial statements are a substitute for reading
the audit financial statements

68. Which is correct when it comes to reporting to summary

financial statements coming from an audited financial statement
with an adverse opinion?
a. Unmodified opinion on the summary financial statement is
still possible
b. It is inappropriate to give an opinion on the summary
financial statements
c. A qualified opinion is given to the summary financial
statements
d. An adverse opinion is given to the summary financial
statements

69. Which is true about prospective financial information?

a. No opinion is given on the achievability of the forecast
b. If a significant assumption is unrealistic then the opinion
is unmodified.
c. If presentation and disclosure is incomplete then the
opinion is unqualified.
d. All of the above are true

70. Which is true about a review?

a. It is a non-assurance engagement
b. Requires only inquiry and analytical procedures
c. Level of assurance is reasonable
d. No assurance is provided

AUD – NCR Frontliners 2017