MULTIPLE CHOICE

1. A requirement of the application of Philippine

Standards on Auditing (PSAs) is for the auditor:
a) Not to obtain clients by solicitation
b) To undertake a proper study and evaluation of
the existing internal control
c) To charge fees fairly and reasonably in relation
to cost so of engagements
d) To inspect all fixed assets acquired during the
year
B
 MULTIPLE CHOICE
2. The PSAs should be looked upon by practitioners
as:
a) Minimum standards of performance which must
be achieved on each audit engagement
b) Ideals to strive for, but which are not achievable
c) Maximum standards which denote excellent
work
d) Benchmark to be used on all audits, reviews
and compilation
A
 TRUE or FALSE

3. As stated in PSA 120, the financial statements

may be prepared in accordance with the
International Accounting Standards

True
 TRUE or FALSE

4. Audit standard requires the auditor to design the

audit program to meet financial statement users’
expectations

False
 MULTIPLE CHOICE
5. Which of the following best describes what is meant
by Generally Accepted Auditing Standards?
a) Pronouncements issued by the Auditing Standards
and Practices Council
b) Procedure to be used to gather evidence to support
financial statements
c) Rules acknowledged by the accounting profession
because of their universal compliance
d) Measures of the quality of the auditor’s performance

D
 MULTIPLE CHOICE
6. The generally accepted auditing standards include a
requirement that CPAs:
a) Assume responsibility for any losses to the client
from fraud which existed during the audit but was not
detected by the auditors
b) Follow accounting principles adopted by the SEC
c) Not accept as audit clients companies which compete
directly with one another
d) Exercise due professional care in the performance of
the examination and the preparation of the report
D
 MULTIPLE CHOICE
7. The standard of due audit care requires the auditor to
a) Apply judgment in a conscientious manner,
carefully weighing the relevant factors before
reaching a decision
1.

b) Ensure that the financial statements are free from

error
c) Make perfect judgment decisions in all cases
d) Possess skills clearly above the average for the
profession

A
 MULTIPLE CHOICE
8. The third general standard states that due care is to be
exercised in the performance of an audit. This
standard is generally interpreted to require:
a) Objective review of the adequacy of the technical
1.

training of firm personnel.

b) Thorough review of the existing internal control
structure.
c) Critical review of work done at every level of
supervision.
d) Periodic review of a CPA firm’s quality control
procedures.
C
 TRUE or FALSE

9. The 10 GAAS are the minimum standard of

performance that the auditors should follow

True
 TRUE or FALSE

10.The 3 general standards should be observed in

all 3 types of auditing

True
 TRUE or FALSE

11.The GAAS are procedures to be used to gather

evidence to support financial statements

False
 TRUE or FALSE

12.The general standards stress the importance of

the personal qualities which the auditor should
possess

True
 TRUE or FALSE

13.A CPA should comply with applicable generally

accepted auditing standards on every
engagement except in examinations of interim
financial statements

False
 TRUE or FALSE

14.Criteria for competence, independence and

professional care of members of the audit team
are the general character of the three generally
accepted auditing standards classified as general
standards

True
 MULTIPLE CHOICE
15. Which of the following is a correct statement
relating to the theoretical framework of
auditing?
a) The financial data to be audited can be verified
b) Short-term conflicts do not exist between
managers who prepare data and auditors who
examine data
c) Auditors do not necessarily need independence
d) An audit is of benefit only to the owners
A