1021. Which of the following statements does not properly describe a limitation of an audit?
A.Many audit conclusions are made on the basis of examining a sample of evidence.
B.Some evidence supporting peso representation in the financial statement must be obtained by oral or written representation of management.
C.Fatigue can cause auditors to overlook pertinent evidence.
D.Many financial statement assertions cannot be audited.

1022. Which of the following is not one of the general principles governing the audit of financial statements?
A.The auditor should plan and perform the audit with an attitude of professional skepticism.
B.The auditor should obtain sufficient appropriate evidence primarily through inquiry and analytical procedure to be able to draw reasonable conclusions.
C.The auditor should conduct the audit in accordance with PSA.
D.The auditor should comply with the Philippine Code of Professional Ethics.

1023. Which of the following statements does not describe a condition that creates a demand for auditing?
A.Conflict between an information preparer and a user can result in biased information.
B.Information can have substantial economic consequence for a decision-maker.
C.Expertise is often required for information preparation and verification.
D.Users can directly assess the quality of information.

1024. Which of the following statements does not properly describe an element of theoretical framework of auditing?
A.The data to be audited can be verified.
B.Short-term conflicts may exist between mangers who prepare the data and auditors who examine the data.
C.Auditors act on behalf of the management.
D.An audit benefits the public

1025. An intentional act by one more individuals among management, employees, or third parties which results in misrepresentation of financial statement refers to
A.Error
B.Noncompliance
C.Fraud
D.Illegal acts

1026. The auditor’s best defense when material misstatements in the financial statements are not uncovered in the audit is that
A.The audit was conducted in accordance with generally accepted accounting principles
B.Client is guilty of contributory negligence
C.The audit was conducted in accordance with PSAs
D.Issuing a representation letter to the auditor

1027. What primarily differentiates fraud from an error
A.Materiality
B.Effect on misstatements
C.Intent
D.Frequency of occurrence

1028. Which of the following best identifies the two types of fraud?
A.Theft of assets and employee fraud.
B.Misappropriation of asset and defalcation.
C.Management fraud and employee fraud.
D.Fraudulent financial reporting and management fraud.

1029. Which of the following statements best describe an auditor’s responsibility to detect errors and fraud?
A.An auditor should assess the risk that errors and fraud may cause the financial statements to contain material misstatements and should design the audit to provide reasonable assurance of detecting errors and fraud that are material to the financial statements.
B.An auditor is responsible to detect material errors, but has no responsibility to detect material fraud that are concealed through employee collusion or management override of the internal control structure.
C.An auditor has no responsibility to detect errors and fraud unless analytical procedures or tests of transactions identify conditions causing a reasonably prudent auditor to suspect that the financial statements were materially misstated.
D.An auditor has no responsibility to detect errors and fraud because an auditor is not an insurer and an audit does not constitute a guarantee.

1030. “The auditor would ordinarily expect to find evidence to support management representations and not assume that they necessarily correct”. This is an example of
A.Unprofessional behavior
B.An attitude of professional skepticism
C.Due diligence
D.A rule in code of professional conduct.

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