Srr.

Flocr CMFFI Building

ReS A , R13 Cor. R. Fapa and S. Loyole~ Sts.,
Sampaloc, Manila
Th..: Review Schoo! of AccountmJcy V 735-9807 I 734-3989/ (0910i 43S-1320
. r8l [email protected] ·, ·i,

AUDl'fiNG THfOWY lose M. lreneo ~ GeofPe R. James' •

~-------~-

ATPB-1: ANS\V.ER~
;
'IrP THE FIRST PREBOARD (Batch :!6- October 2013)
1,
,:
In summary: ·'

·- .., -----
1 A 14 L 2"P ~~c 40 A .53 0 66
...
c '79
-
B 92 :A
2 B 15 0 28, ·:lA 41 D 54 - 0 67 80
B a 93 ,A :
c c
1~
3 16 A 29 i1 A 55 A/0 68 A 81 B 94 8 .'
,......4 0 17 A 30 ·A 43 (; 56 0 69. D 82 B 95 D
5 0 18 D 3:1: .D 144 B 57 A 10 ' B 83 A 95 D
6 A 19 B 32; ·' D 45 (" 58 c __ 71 ., R 84 c 97 a
7 c 20 A 33 'D 46 c__ 59 c 72 c 85 c 98 A:.;
8 D 21 - D 3"} ,B 47 D 60 c 7'3 B
·-
86 D 99 c;
c 22 c 48 61 74 87 c 100 . B.,
is ~
9 B 35 -' [)
10 ·A 23 ~ 36 A 49 B 62 1
0- 88 B :·

11 B 24 D 37 t> 50 B 63 B 76 B 89 I A '
12 D 25 0 38 :8 51 [) 64 f) 77 r-- 0 90 c '
i'
A- ' :i .
-13- - -c 26 A 39 D 52 ll 65 D 78 D j91 :·!-
•
Explanat:ions/Comrr.ents on selected numbers:
!
1 The auditor's report eontajns the aud·iter's opinion (wqua''fied, qualified, or adverse) or his disclaimer:
of opinion. ·PSA 700 ccver5 tt.e Standa rd audit report, while PSA 701 c.Ners modified repo!!S_·------~+"-1
2 The following COitclitions cr;eate a demand by users for r~liaole information:
a. Trans.1ciions t'lat are ntJmerous and complex
b. Decisions aretime-seflSitive.
c. Financie:il decisions tn~t are i m~rwn~ to ir1vestcrs and users - decisions t:1at have significant
ecc,r.omic con:;equeoces.
d. Users are se~rat.ed from ar.cc ~nting records by dista~ and time.
e. ?otential conflict of intere,'t be_!Y1~n inf~rmation providers and information us2rs.
3 Statement 1 - inc::orret.~. Infcr!TkJfk.,n !h-k is the risk that infor.mation is materially mi::;stated or
misleading. -'4udit nsk is the risk that the auditor may express an unqualified opinion on the financial
statements when in fact the financial statements are materially mis,tated.
. Statement 3 - inmrrect. · The assum ptit11 underlying a11 audit of financial statements i:; that they will ·
be used by di:ferent grou~ for (}iffl
4
~~~~-··--~-----·--------~~------~--4
Choke A - · incorrect. The aud;tor ai rr.s to exp~can opinion on the fairness of the FS, rot to detect·
fraud.
Choice B - incorrect. An Juditc r '11CIY deJX~rt frc:n PSAs if in h;s ~rofessional judgment, such
departure 'Noold r5ult in a more zffecdive ~chievemeni: of the objective of an audit.
Choice C- inco~ A:Jdits provicie reasonable (high but not .:tbsolute:) ass:..~rance.
Choice D - correct: t>SA 2GJ requires that the ~ud!tor perfomt the auciit with an attitude of
professional si\eptidsm (v;hich neither assumes that manc;gerne?t is honest, nor assume: that
management ;s dishclllest}.
5 Statement 1- inc:::onec:t. This ~talement · rt>fers to the typical objective of a financial statement
audit. The o~iective of an' ocerdtional aud1t is tl) determine the effectiveness cr efficiency of operations· •
in a di2nt, and identify~ny room frar passibfe improvement ln performance.
Statemer.t l - inmrrec::t. In a corn pJian~ audit, tile criteria used are laws, rules or regulations which
have be<>_n set by a higher autflorit:Y, not by thP. auditor. ~- :
Statement 3 - .lnrorrect. Ind ependent Juditl)rs are expected by management to be providers of
rea50ncblc assur.:mc..! reQarding the rairn~s of the financial statements. lf'depenc.fence requires that
the auditor shou:~rtldpate in rllai1aC'Iement decision-making.
8 1f the: reasons for !:he. accounting ch an~ are not justifiable, ancl m<lnagement refuses to adjust the
financial statements, the f3Udi1Dr w::l be furred to express a nlC>Cified opinion (qualified or adverse;
o~pending on the r.'li.lteria!ity of the effect of the char.fie}. ·
9 Letter C is incorrect t"Ecause it refers w~vm~~·------~----~~~--~-----------~
10 The professionat accountant can~ :>rovide absotute assurance because of the follcwing reasons:
a. the ~ uf selective testing .
b. the inherent limitltions of con troi systems .
c. the fact: that i.1llCh of tt.e evid~r.ce availal!lc ro the professional accountant is persuasive rather,:•'•
than condu~ve I ~ . I

d. the use cf ;ucigrreht

•
ReSA - nm Review School of 'Accountancy Page i of 5:
 ,ReSA: ThP. Rev.ew School of Accountanc'/
Auditing Theory: Answers to the Fir.it:.~ard (Batch 26- 10/13) ATPB-1
11 Choice B is incorrect ~use the audit plan is n:vieweci ar.d a
signinJL9! the dtlditor's report (not immediately before signrn_g_
: 12 A ste1ff auditors ~rformance is e:al~ctd, bdse<! on output, 001.
13 Auditors perform pre-engagement procedures in order to mini
with clients who leek integrity.
75 In the Phii!Q.~ines~'t>SQC 1 and PSA 220 are standards of gualit:y control.
16:, Terms of Engagement are covered by PSA 210. The auditor's p reliminary assessment of it1ternal control
is documented in the working papers, not the engagerr.er.t Ietter. Wh<!n the enyagement letter is I
·:. prepared and signed, the auditor is yet to perforr.1 risk assP.:SSment procedures and has tlot y~t assessed
the client's internal co.1trols.
-
p
,;: :.· The: QRcshall corsist of seven members: 1 Ch<:irman ar.d 6 representatives. The siA reprE:Sentatives 1
I
are distributed a~ folluws: 1 from the Board of Accot.:ntancy, ~ f, om t.he AK> (P!CPA) -7 2 from P•Jblic
•'
Practice, ~ from Commerce and Ir.d%try, 1 trr:'!• cducatifm, ~nd 1 from Goverr.rr.ent.
---=~------------~
18 Current year'~ bulan~es or ratios are curnpared versrts ex~ ectatior.s derivecl ,from informed judgment,
budoets, indu~ges 1 or audited data (frorr. ~xior perind~l
19 When th~ auditor is exarr.inin.g the contracts of an· audit. dient, the primarf' attP.ntion is tn focus on any
aspect of the Clgreerr:ent aff~ting financial statement presenta doil · and d&.itlsure. SEC regulations and
,:
'' Phi!ippine Financial Re~?Crting Standards (PFRS~ Q(()Vide QUiC:an ct: on disclosure uiremen'is.
20'. Choice B- incorrect. When the e,.udrt:or i~ performing pia nn!ng procedures, tlle CPA has already
accepted the: engagement. Choice C - incorrect. The auditor h<.~s yet to gather evidence whict.• will
''
l
form the basis for his <:~udit opin!on. Choice D- inco. r.ec.t. The auditor's conCP.m is to have an
understanding of the entity1 and it5 environment1 rrot to evalc ate_the prOOtability of the busine.%.=.::..;._ _-;
21 The auditee refers to the client. A preliminary or entran(e cun ference with the client is used to reduce
chantes of misunderstanding v1ith the client. Audito~ should be careful not tO d~ to the dient the
audit ~~r.1 to be followed. To do so Wl Jld rendP.r the aud:t ineffective.,
22. Prc-de.termined audit programs are template programs (standa rd !;'lrocedures) which are usually tailored
to suit an engagement. Progressive audit programs are d eve!oped ac.; the audit !)regresses. Pre·
determiiled audit programs discourage i~dependent, constructive ~linking, because tht! staff will have a
'·,i
tendency of just cornp:eting st:ondard programs without consid cring if ~dditiO!lal or modified procedures
would better suir ar engagement.
24. Choice A - i:1correct. The e~uditor i5 t;.Jund by the duty of confidentiality. Choit::e 0- incorrect.
ThE: au:litor's focus is to determine the possible ~ect on the flnaucial statements, not to "pc~lice" the
client. Cl•oice C- incor~. The auditur focuses oniy on HI egal act: which have a material ~ffect on
the financial statements. Ctcice D - corll"ect. t'SA 2!JO proviGes yuidance on audit responses to acts I
of non-comQiiance with laws and regulations.
-
25 Fraud risk factors ind~cate the possible eristence of fraut!. Letter D least likely Indicates frautj because
conservative C\ccounting practices is net a fraud risk f.Ktcr. On the c-~r hand, a dient's use of
aggressive account,'ng techniques is a fraud risk factor.
26 PSA 330 covers the auditor's responses to assessed risks. Ove 111 responses indude:
•
• Increased le·1el of profssiortal skepticism in the per~JrlTK'!nce of audits;
• Inclusion of more experienced audit team members (for exC!mple, those wit11 expertise in
h~ndli:1g cases of fraud)
• Ir.creaseG unprec!ictability~ement of s~r'.se) in the performance 9~urcs._
27 The auditor's cvnc:en• is the expr~ien of an vpinion on ti1P. fdirness cf the financial statements .
.Cortditlons relating t'J fmancial stress of cmplcNees or 3dverse rel2tionships between a company and its
employees indicate a risk vi' possible rr.isapQropriation of cssets or fraur:lul~nt financial reporting.
1 29 Materiality is r.ot J cC~ncern if the audita,· has a direct fina!lcia I interest in a client. If an auditor has a
direct financial intere.:.t in a dient, the auditors ind~ndence is impaire<l. ,
30 The firm's independence is not impaired becau~ the relatior.sh!p with t:tte finandal institution is in
normal terms of business (arm's length basis). i.etter B is in.:orrect because the manager performs
decision-making fur.ctions in favor cf the audit c~;ent. Letter C is !ncorrect because the clie11t owes the
auditor the fees fer two yea:-s (cr~itor-dehto,· reiationshiJJ). Leti:er 0 is incorrect because an audit
team member's dependent son is cousidered as immediate farn·1ly - the son's interest is attributed tu the
audit team member.
• 32•., Letter D is the answer. T.f the ai.Jditor submits a bid below th e ac~Jal cust ot an initial engage~~nt~
31 As additional note1 the concern in !~..er D is the Q~e;ence of a Self-review threat
m
the hope of n1aking up the loss in subsequ(C!'")t years, the aurlitor vioiates the prindples of integrity and
pro."essiona/ behavior
33 Cht'ice A is unethical because: it is a contingent fee arrangement. ';holce B &s unethical hecause
indicating specializaticn is not allowed. Choic~ C Is unclhi cal because it violates the independence
rules under Section 290 of the Code. .
36 - ·Section 25 of RA9298 provides: .
• ,. The Board may, c.fter the ex;:>irat!on of two (2) yeatS from the date of revocation of a certificate of
registration and upon a~pEcat:on at1d for reasor.s deemed pre pe1· and sufficient, reinstate lhe vc:1lidity of
;a revoked certificate of reqistration and in so doi.1g, may, ::1 its discretion, exemJJt the a:JpliGtnt from
i
1 takrng another_examrn<:~t!Q!l:___ ____________

ReSA. W 735-9807 I 734-3989 / (0910) 439-1320 [>71 r2-~re·,le\'{@!1otgaJL_::_Q!lJ Page 2 of 5

-..~e.::~.A.:·
r ne Kevrev. Sctai'X>I;of Aa:ountanc'/
_!.uditing Theory: Answers to the First_t>reboau1 (Batch 26- 10112L_
•
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37 Choicec; A to C are indicated by the auditor !n \lUdit rej)Orts issued in connection with an engagement
(SEC Cirrular). c tloce D is indiVIted ir. tr.e lower portior. of t:le C::>A seal (refer to Section '33 of the
I~lemcni:ing Ru~ eS and Regulations to AA9298J..:.·--------- _ _ __
38 Ramones is viUating the :ules ')n promotion of work by CPAs, whir:h s'.:dtes that CP~ should not
denigrate the work of other accourrtants.
40 Annex C of Ule IRR to RA9298, Section 3(b) prov!des the fnllcwing dE'fimitions:
Seminars ~hall refer ·~ the gathering oF professionals which sh all include among others, workshops,
technical Iectures or sub}ect Matter m~ting!'., nor.-degree tra ining courses and scientific meetings.
J Conventions s~al I refP.r tc a g~thering of prnfE <:iunals whir.h ::>ha II include, among oth~rs, conferences,

_ ~mposld 1 or as.c;emblies fer rot:nd tnb~ c1iscussi0ns.

41 Assats re<;uire t:~e ~Jreatest amount c.f a~dit time. ---- r

~ 42 Choice A1 8 and D are all oi::Jtoioed from tlJe pr€XI~essor auditor alleracce~tanc~ of the engagement.
43 Cho~ce A -- 5.-acorrec:e An e~ccounting f>Stimate_G an approximati on of the amount of an item in, the
absence of a precise means of .measurement. Choice B - incorrect. In an engaoement to t>erform
agreed-upon procedures, dO auditor i!; enga~ecl ~o carry out those procedures of an audit nqture to
which ... ~ Letter D. - incorrect. Attend<mce consists of being present during all or part of a :process
bein!J perlonned~~~~··~·--~~~~~~--~
44 An error is ur.ir.tention;:~l, while fraud i~ intentior.al. There is no such thing as unir.tentioral fraud. All
fraud is intanilona J.!
46 PSAs refer to th e c::;ditor as the one who assum-es overall res ponsibility ir ar. audit. Ir. the above
situation, ~t--is a[!elies tO the p<lrtner ·:1 charge_?f_':.he e11gagement
r·
47 PSAs defi!l~ assi
p.-aeitioner. --
stdnts.
[ .
as ali membe1-s ot the eng3gement tea1n asidE ~rom ~r,e oartner or the sole

~8 PSA 210 pffivide; an example sf an engagement let+.er. CPAs should not discuss with the client the
audit procedu.es w~ich .they are to perrorm, ~pecially those which require the element of surprise. An
exr.eption wouid be :the! timing of-certain proceciures which require coordination with the client, such as
the timing of inv__entl:>ry fOunts.
49 Choice A·- incorrect. The-auditor obtains £ufficient, appmpriCite audit evidence to be able to · draw
conclusions on whi.:h tO base that op;nioo. Cholc:e C- l::1correct. The evaru~tion of internal controls
is not the ba!:::S fjor the conclusion or. the fairness of the financia I statements. Choice D- incorrect.
• The evaluat•o'1 of the risk of !TlateriCll lolisstateme'lt is used by the 3Uditvr in planning the audit and
dete.-mini_!!fl_
tlle_amount of evidence to accumulate, not as a basis for formi!!9_ the audit opinion.
-50· Fraud risk factors indicate the posc,iole existence of fraud. Letter B is the exc"=!ption. Management does
not rr.ake unrealistic promises or commitwants ~o analysts, creditors 'and other third parties, there is no
rnd~cation of the existence of fraud. On the otr~r hand, making unrealistic promises or commitments,is
a fraud risk. fat:tor. ·
51
~--~--~~~-----------
Choke A - inccrrect. .1-.nalytica: procedures are ~sed if the aud itor believes 1~hat these procedures;
..
are more effective or et;rcentthan test5 ot' details in reducing detectdon risk. l..etb!r B- in~orrect-
Anal~cal procedures are not used in testing internal controls. letl..er C - Incorrect - Th'e
engagement is an audit of tinandal stztement;, not an audit of ntemal controls. ':• ,.:
PA5 24 defines re~ted parties as follows:
-
Related party-A pa~ is 'related to an entity if:
(3) Directty, or inditUt:ly thruugh or.e 01 more ir.tennE'diaries, the party
(i) Controls, is control:ed by, or is ~·1der ro1nmon control with r the entity (this includes
[Jarents, subsidiaries and ft::Uow sut6idiaiies); '
(ii) lias an ir~erest in the entity tt-at g:Ves it siqn!f.cant ini'Juenee over u,e entity; or ...'
(iii) Has joint oontrol over the entity;
(b) The party Is an associitte (as defined m PAS 28, "InvP.Stments In Assoc. J;;~tes'') of the entity;
(c) The party i:i a joint venture in which the entity;~ a venturer (see IAS 31, "Interest in Joint
"
Ventures"); 'j :1

(d) Tite party is d member of the key mana9cment personnel of thee ntity or ~ts parent; !'
(e) The party ic; a close member of l:t!e family of anv indiV.cl~al referred to in (a) or (d); . :
(f) The pc!ltt is an entity tnat is controlled, jor;1tly contrclled or signifJCaney influenced ~y, or fur
which sig:lifJCant VC>Ung power in st•ch entity resid6 with, directly or indirectly, any individua!
referred to In (d)'or (e); or •
(g) The party Is a ~t-employment runefit plan fo; the ben<2:'it of employcec:; of rhe entity, or of any·
entity that Is a related party of the enttty. _ •:•.
Related party t:rilnsaction!r-A transfer cf resou~, se;vlces or obligations between related parties,
r----+----·~--'-"'__ardless of whether a price is char Qed.
53 In summary, the ruJe:on confidentiality may be overriddcr, by the fo!l,pwing:
a. Where spe(:ific authority has been obtained frcrn the client.
b, Where disclosure is required by I~'N.
f---+---c'-._\VhE>re there is e:s .prof~siona' riyht or dutv to disclose'-.-----------------,---1,,· ·
54 PSA 300 cover3 Au<:!:t Planning. All of th~ above ite:ns are considered by the c.ud:tor in develop:ng tHe ' •
overa!l audit plan. Ir. addition, otler matters, such as goin9 concern and tne existence. of related
1 parties and r-::latal ;:>arty transaction5, are also ronsidE'red. ' ·;

ReSA V 735-Y8C7 1/34-39891 (0910) 439-1320 l8l [email protected] PCJge 3 of:S• .. '\
,•l ,,i
 AUCitmg rneory: Answers to the First ?reboard rsc.~ct• 26- 1.0/13) ATPB-1

r··
, · .. ' ! I --. • -

Statement 1 - correct. Refer to Section 4 of RA9298

Statemen~ 2 - incorrect. A profession is disti n0uisheri by certain characteristics. ~ follows:
'

I' ..
r~ast~ry of a particular in~le:tual s!-:ill:.
• Adherence to a common c:OOe of values or conauct; and
I • .~cceptance cf a duty to society •
Statement 3 ...; ·inoorrect. The statement rE. f~rs to ttl~ per di~m or attual charges basis, not the
:retainer fee basis. •
' .~(-- 'statement 4 - correct. The corporc~te :orm i~ not allo~ed,~Section 2S
of ;:'A9298.
59 • . Section 'l (a) of Anna C of theIR~ to RA No. 9298
~· - - - -"7""":""-:----:,..-'
Letter C is incorrect because the review does no.·reduce t .~ ~P?ns~bilities of the ~~nt rtner.
}62 Letter A- Incorrect. The financial statements a.-e not assu :ed to ble falrty stdted.
Letter B - incorrect. An auditor should give a n :Jpimon, not a statement of fact.
Letter C - incorrect, Th~ phrast! requires an opinion by the ailditor, not an C'bject.iv~ Measure of
· complian-:e. This cho:ce would be more appr:c>....Q.ri ate for a comp'iar:ce audit
63 Due care requir~ th~ auditor to conscientious! y ~rform evert aspect of the audit n requires the
application oi' skill Clr:9 diliqence in pel forming an e~1ent. ______' - - - - - - - - - - 1
64 The expectation gap ;s the difference betwet.fl the auditor's actual standard of perto.mance and the
various public ex~.ctaticns o~ auditor's perfio;mance (as opposed to the!r required st2ndard of
performance). Many members of the p•JI:-Iic expect that:
. a. the iluditor should accept prime responsi bility for the financial state111en~;
_II•
b. auditor!~ certify financia! statements;
c. a clean opinion guarantees the accuracy of finandal ~.nents;
• d. auditors perfom• a 100% c!leck;
),''; e. auditors should provide early warr.ing about the JY.Lsibilities of bus;ne55 failure; =md
I• f. auditors .are suQposed to detect frau~
65 , The Implementing Rules and RegJJiations to RA9 298, Annex C Sa.tion 5 provides tJ:at Excess ctedit units
eamed shall not be camed over to the next thff:Y:'-year perixf except credit units $med fo1 doctoml or
masters degrees.
67
-=------- ~--~--:~-------------~
Compliance with PSAs is the beSt defense of the al'di!:or against a charge of,neg!igeo1c~.
l 69 Professional sk~pticism requires that an oral representatior of management must be corroborated by
I evider,ce from othE:r audit Qrocedur~.
i 70 PSA Gloss~ ofTer;ns
171 A CPA engJged in interne.! auditing is conside red to be practicing the profession in cammerce and
f--::-'. industty._
72 Letter C poses a t.igh risk of dsalcation du~ ~o laG< of ~regation of dutie.: Segregaoon of duties
require that the functions of (1) autilorization; ( 2) record-keeping; and (3} .custody of as'>et:s should be
assigned to different persons.
73 PSA 210 requires thJt an understanding with th e client should be established. AccordirQIY, if such an
understandi1;g is not reached, the auditor soould decline t0 accept or perform t'le eng'-a:...,_g~e;_rn_e;_n.;..:.t._ _ _~
74 Choice A - incorrect. The President of the Pf!ilippines has the authority to remove, after due process,
.any member of the Board ofAccountaficyfor neg rgence... r , •
· Choice B ·- 1:orrP.Ct. See Section 9 of RA9?.98. •
. Choice C- incorract. After two years, subject m.cerbin conciti0ns, the BoA 'mayoreer...
Letter D- incorrec.t. Insanity is not a gtVund for issuing a certif!catc of registration to a successfu:
CPA candidate. .
76 ' Choice A- in~orre...""t. Dete..i:ion risk refers t c tr,e risk that the auditor's audit p.-ocedures will fail to
detect material misstatements. Choice C- in rorrect. De'.:ec.tion risk is related to the effeLtivePess of
audit procedures, not to overauditif19. Choke D- incorrecc. Tr.is ~tement defines auctit ..:Sk.
----~-==~=:.:.:.:=:~:::.c.:c:~:.:.=..-o--
77 Current yezr fmancial cata may~ romp.1r~ a9 ai~t exl)ff.tations develo~ from:
:
a. Prior-year financial data
b. Rudg~t data for the same year
c. Industi)' averag~
78 The Board of Accountdncy has no power to senrmce violators to imprisvnment. The most severe
punishment within the BoA's powers is the re vOcation of C?A licenses. ·Only th~ cotlrts of law Gin
mete out sentences of imprisonment. -·~-~--:------------·-----

79 Refer tc Section /.SA_of the Implementing Rules and Regwations t~Rt\9298. ______
80 Suppression or omissiol"' ot the effect<; of tran sactions from rerords or documents is an ex"lmole of
fraud.
82 See Definitions under Section 4 {A) of the !m['ernentil"'g Rules a11d Regulations to PA9298
83 The Vio=.-c.hairman of the SoA shall ~rve t~ree yer~rs as a member VI' the Board (an<J or:e year as vice-
chairmc.r ). See &'!ction 7 of PA9298 for the terrr.s of office of the Boaro of J\a:ountan.:y.
84 Letter C should be "mor.itor t!le pi egress of the o~ram on the study of accounting and ... " See Section
. 98 of the Im~ementing Rules and ~tions to RA9298 .
'~

S!;, : Choice ~. - incorrect. Incependence .is requi red in as&!rtion-based e:,gagements, hence ad'locacy of
dient position is not allowed. ChGice 8 - inccrrect. A consulting e11gagement is a two-pzrty j
relationship.' Assertion-cased engagements are __!!)~~rty r~l<!ti~nship;. _
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• ',f
 .r
Tne l'.eview School of Accountancy
ATPB~l
Ke.:)A:
Auditing Thec•ry: Answers to
the f'irst Preboard (Batch 26 - 10/13)

Choice C - correct. This is a c:omp/ifmce aud~ which is an examp e of i!n assertion.:.ba5ed ·

• engagement. Choice D- incorrect. Compilation$ are non-assurance engagements, since they 1 laf:k
the conclusion element.
86 The COA is knowni.as th~ Surreme Audit Instl1l.tion in the Philipp..:;in:.....es,=·:.._.,.._-.,--,-___,,---..,....,..---=----1
87 Choice A - !nc:orrect The CPA rE:adily acr..eptL"Cl the oral represe~tatior.s of the client without further
work or requesting foi support fer the representations. Choice B - irirorrect. Professional skepticism
does not mean utt;er disbelief in the represe.'l.!atirtus of the client. Choice o- incorrect. The CPA is
the one ~hC' evaluflteS the veracity of the clitnt's ~-epr ~entations, it is not the other way arou.:..:.nd:=;·:..._.._I·"------1
90 The amourt of ~mated audr. fee is considered during pre.-2ngagement, n9i: duriQQ_Qianning:
91 Cl1oice 8 - ~ncorr-OCt. A r~"iew comprises only inqi.riry and analytical procedures. Choice C -
inoorrect. In a CC\mpllation e'lyagemcnt, the c:lf.CO•Jntar;t is e11oaged to use accounting experpse
rathe~ than auditing expertise. Cl:olce D - Incorrect. Use!f of comp:Jed information deri\~e1 some·
benefit since the setvice has been performed with due professional skill and care. J. ' , i

95 . Refer !a Secti<H1 35 otRA9298. Letrer D is a violation because the tempor~ry/soecial permit of q, ;cp~,l
should be restricted tx)ite3cb.!!!Q 0nly. _ ; : r'. •
97 Refer to Annex A Section 2 of tt.e Implementmg Rules and Regulations to RA9298. Jhere shall qnly be
mteen national directors. f : ··•· :
99 Choi..:e A- !nco~ This procedure ~rtains to consuitation (unc1er Engage:n~nt Periormancej .•
Choice B -lncol'f!!Ct, This proce<ltrrG relates to as:;ignment (under Human Resources) ;1
Choice C- incorrect. This pertains to proll'Otion (under Hum~n Resources) '· · ;
100 Refer to_ the Philippine Framework fN Assurane:~ Engagements (PFAE). ":
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The Lord h?s made a solemn promise, i:llld by His power He will carry it out: "Your grain will·qa,
longer be food for yout enemies,. and foreigners will no longer drink your wifle. But you that planted •
and harvested the grain will eat tht! bread and praise the Lord. You th1t tended and gathered the
grapes will drink the w!ne ir: the courts of my Te;nple." /:;aial: 62: !J-9

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ReSA V 735-9807/734-3989/
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439·1320 ~ :,[email protected]'l Page Spf 5