TRUE / FALSE

1. A CPA firm offers management advisory services to clients to Furnish professional True
advice and assistance which will enable the client to improve operations.

2. A code of professional conduct is not one of the most important distinguishing False
characteristics of a profession.

3. A CPA certificate is evidence of basic competence in the discipline of accounting at the True
time the certificate is granted.

4. To merit public trust and confidence, the professional person must convince the public True
that he will place public service ahead of personal reward.

5. Internal Auditing is not normally a service rendered by public accountants. True

6. The government agency tasked by law of implementing and enforcing the regulatory
False
policies of the national government with respect to the regulation and licensing of the
various professions and occupations under its jurisdiction is Board of Accountancy.

7. Securities and Exchange Commission is the government agency that is represented both True
to the Auditing Standards and Practices Council and the Auditing and Assurance
Standards Council.

8. Statements on financial accounting standards constituting GAAP are issued by the True
Accounting Standards Council.

9. The amount of audit fees doesn’t largely depend on the volume of audit work and degree False
of competence and responsibilities involved.

10. In determining audit fees, an auditor may take into account the size and amount of False
capital of client.

11. In the audit of historical financial statements, the GAAP (Generally Accepted True
Accounting Principles) is the most common accounting basis.

12. An audit of historical financial statements most commonly includes the Income
False
Statement, Statement of Cash Flows and the Statement of Net Working Capital.

13. The primary purpose of an independent financial statement audit is to assure False
management that the financial statements are unbiased and free from material error.

14. Independent auditing can best be described as a professional activity that measures and False
communicates financial accounting data.

15. Internal auditing often extends beyond examinations leading to the expression of an
opinion on the fairness of financial presentation and includes audits of efficiency, False
effectiveness, and internal control.
16. In “auditing” financial accounting data, the primary concern is with determining if False
fraud has occurred.

17. The criteria by which an auditor evaluates the information under audit may vary with
the information being audited. True

18. Results of compliance audits are typically reported to someone within the
organizational unit being audited rather than to a broad spectrum of outside users. True

19. Statements on Auditing Standards relate to the filing requirements and enforcement
activities of the SEC.
False
20. An independent audit is important to readers of financial statements because it
measures and communicates the financial data included in financial statements.

21. The factor which distinguishes an error from fraud and other irregularity is whether it is False
caused by the auditor or the client.

22. . Inherent risk is the probability that material misstatements have occurred in False
transactions entering the accounting system used to develop financial statements.

23. An audit is an independent examination of only the financial information of an entity. True

24. Maintenance of accounts is the function of Accounting, auditing has nothing to do with
it. False

25. The cut-off point marks the dividing line between a transaction to be recorded in one
True
accounting period and that of the next period.

26. Post-audit is the examination of proposed disbursements before payment (voucher True
audit) or of sales transactions before delivery

False
27. Independent audit is described as providing reasonable assurance that published audited
financial reports are free from material misstatement and are in accordance with
legislation and relevant accounting standards.

28. Auditor does not need communication skills, as he is concerned only with financial True
information.

29. Internal auditing is an assurance and consulting activity that provides management with
information regarding efficient and effective operations; compliance with laws, False
regulations, policies, and procedures; and other organizational performance issues
designed to reduce risk and add value to the organization.
30. It is not the duty of auditor to check the accuracy of the books of account by checking False
the proper posting and balances of the books of accounts.

31. In performing an assurance engagement, a professional accountant typically expresses a True

conclusion about an assertion.

32. When the professional accountant has obtained sufficient appropriate evidence to False
conclude that the subject matter confirms in all material respects with identified
suitable criteria, he/she can provide limited level of assurance.

33. Non-assurance engagements include compliance audit. False

34. Business risk is not a component of engagement risk. True

35. Evidence from external sources is less reliable than that generated internally. True

36. Assurance over website controls and electronic commerce assurance services are True
examples of Assurance Services on Information Technology.

37. In assurance engagement risk, control risk is the susceptibility of the subject matter False
information to a material misstatement, assuming that there are no related controls.

38. Agreed-upon procedures are an assurance engagement that provides a high level of False
assurance that the financial statements are free of material misstatement.

39. Compilation is an assurance engagement. False

40. Assurance engagement is simply an engagement conducted by a practitioner at the end

of which he expresses his opinion on the measurement of subject matter against True
criteria.