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UNIVERSITY
Accountancy Department
5:00 PM – 8:00 PM
Session 2
Last Week’s Topic
• Coverage of Auditing Exams
• Course Description and Learning Outcomes
• Framework for Auditing Standards (PSA 120)
– Definition of Auditing
– Definition of Assurance
– Levels of Assurance
– Audit and Related Activities
QUIZ
• According to PSA 120, what is the difference
between audit and the related services?
Explain the differences of audit and the
related services in terms of:
the level of assurance provided,
the reports provided
MULTIPLE CHOICE.
Choose the letter of the Correct Answer
1. The auditor communicates the results of his
or her work through the medium of the
a) Engagement letter
b) Management letter.
c) Audit report
d) Financial statements.
2. It refers to the level of auditor’s satisfaction as
to the reliability of an assertion being made by
one party for use by another party.
a) Confidence level
b) Assurance level
c) Reasonableness level
d) Tolerable level
3. Which of the following is true of the report based on
agreed-upon-procedures?
a) The report is restricted to those parties who have agreed
to the procedures to be performed.
b) The CPA provides the recipients of the report limited
assurance as to reasonableness of the assertion(s)
presented in the financial information.
c) The report states that the auditor has not recognized any
basis that requires revision of financial statements.
d) The report should state that the procedures performed
are limited to analytical procedures and inquiry.
ANSWERS
1. In an audit engagement, the auditor provides
a high, but not absolute, level of assurance
that the information subject to audit is free of
material misstatement. This is expressed
positively in the audit report as reasonable
assurance.
2. In a review engagement, the auditor provides
a moderate level of assurance that the
information subject to review is free of
material misstatement. This is expressed in
the form of negative assurance.
3. For agreed-upon procedures, as the auditor
simply provides a report of the factual findings,
no assurance is expressed. Instead, users of the
report assess for themselves the procedures
and findings reported by the auditor and draw
their own conclusions from the auditor's work.
A. General Standards
B. Fieldwork Standards
C. Reporting Standards
A. General Standards
• Code of Ethics -
..\Auditing Theory\Code of Ethics.pdf
Philippine Accountancy
Act of 2004
• RA No. 9298
1. Theory of Accounts
2. Business Law and Taxation
3. Management Services
4. Auditing Theory
5. Auditing Problems
6. Practical Accounting Problems I
7. Practical Accounting Problems II