If an amendment is necessary in the other information and the entity refuses to make the amendment,

the auditor, depending on particular circumstance, may do any of the following, except

a.
Describe the material inconsistency as an emphasis of matter in a paragraph following the opinion
paragraph
b.
The auditor may withdraw from the engagement
c.
The auditor to issue either a qualified or adverse opinion
d.
The auditor may not issue the auditor's report
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The correct answer is: The auditor to issue either a qualified or adverse opinion

Question 2
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PSA 800, "The Independent Auditor's Report on Special Purpose Audit Engagements" least likely
applies to auditor's report issued as a result of an audit of

a.
complete set of general-purpose financial statements where the auditor is prohibited from observing
the inventory count
b.
compliance to royalty agreement
c.
summarized financial statements
d.
a component of a complete set of general-purpose financial statements wherein the opinion of the
auditor is unqualified
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The correct answer is: complete set of general-purpose financial statements where the auditor is
prohibited from observing the inventory count

Question 3
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An audit report contains the following paragraph:

"Because of the inadequacies in the company's accounting records during the year ended June 30,
2016, it was not practicable to extend our auditing procedures to the extent necessary to enable us to
obtain certain evidential matter as it relates to Classification of certain items in 1he consolidated
statements of operations. "

This paragraph most likely describes

a.
An uncertainty that should not lead to a qualified opinion
b.
A matter that the auditor wishes to emphasize and that does not lead to a qualified audit opinion
c.
A material departure from PFRS requiring a qualified audit opinion
d.
A material scope restriction requiring a qualification of the audit opinion
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The correct answer is: A material scope restriction requiring a qualification of the audit opinion

Question 4
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Which of the following circumstances requires the modification of both the auditor's responsibility,
and the auditor's opinion paragraphs of the auditor's report?

a.
Limitation on the scope of audit that results to qualified opinion
b.
Disagreement with the client management regarding accounting policies that requires adverse
opinion
 c.
Inadequate disclosures that requires qualified opinion
d.
Auditor's disagreement with the client management on accounting policies that requires qualified
opinion
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The correct answer is: Limitation on the scope of audit that results to qualified opinion

Question 5
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In evaluating whether the financial statements have been prepared and presented in accordance with
the specific requirements of the applicable financial reporting framework for particular classes of
transactions, account balances and disclosures, the auditor should consider

a.
All of the three other choices
b.
that the accounting estimates made by the management are reasonable in the circumstances
c.
that the information presented in the financial statements, including accounting policies, is relevant,
reliable, comparable and understandable
d.
that the accounting policies selected and applied are consistent with the financial reporting
framework
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The correct answer is: All of the three other choices

Question 6
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In determining the items that the auditor shall consider as key audit matters, the auditor takes into
account (choose the incorrect one)

a.
The effect on the audit of significant events or transactions that have taken place during the period
b.
Areas which were considered to be susceptible to higher risks of material misstatement or which
were deemed to be 'significant risks' in accordance with PSA 315
c.
Those that refers to a matter other than those presented or disclosed in the financial statements that,
in the auditor's judgment, is relevant to user's understanding of the audit, the auditor's responsibilities
or the auditor's report
d.
Significant auditor judgments in relation to areas of the financial statements that involved significant
management judgment
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The correct answer is: Those that refers to a matter other than those presented or disclosed in the
financial statements that, in the auditor's judgment, is relevant to user's understanding of the audit,
the auditor's responsibilities or the auditor's report

Question 7
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In accordance with PSA 700 (Revised), Forming An Opinion and Reporting on Financial Statements
(Effective for audits of financial statements for periods ending on or after December 15, 2016), an
independent auditor's report shall contain the following section(s)

A. Opinion
B. Basis for Opinion

a.
Sometimes, Always
b.
Sometimes, Sometimes
c.
Always, Sometimes
d.
Always, always
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The correct answer is: Always, always

Question 8
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The auditor may continue to express unqualified opinion though there are modifications made in the
audit report. Which of the following situations, would the auditor likely modify his opinion?

a.
The prior year's financial statements were audited by other CPAs
b.
An important subsidiary whose financial statements were included in the consolidated financial
statements were audited by other CPAs
c.
A substantial doubt about the client's ability to continue as a going concern that is adequately
disclosed in the financial statements
d.
The existence of multiple uncertainties that are adequately described in the notes to financial
statements
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The correct answer is: The existence of multiple uncertainties that are adequately described in the
notes to financial statements

Question 9
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An auditor concludes that there is substantial doubt about an entity's ability to continue as a going
concern for a reasonable period of time. If the entity's disclosures concerning this matter are
adequate, the audit report should include a(an)
A. Adverse Opinion
B. "Except for " Qualified Opinion
 a.
Yes, no
b.
No, yes
c.
Yes, yes
d.
No, no
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The correct answer is: No, no

Question 10
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If the scope of the auditors procedures in conducting an, audit is significantly restricted by the client
management, the audit opinion will most likely be a(n)

a.
Adverse opinion
b.
Disclaimer of opinion
c.
Unqualified with explanatory paragraph
d.
Qualified opinion
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The correct answer is: Disclaimer of opinion

Question 11
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 Question text
When there is a limitation on. the scope of the auditor's work that requires a modification of the audit
report

a.
Should always contain a disclaimer of opinion
b.
The auditor's report should describe the limitation and indicate the possible adjustments to the
financial statements that might have been determined to be necessary had the limitation not existed
c.
The auditor's report should either contain a qualified or adverse opinion
d.
The auditor's report may contain an unqualified opinion with an emphasis of matter paragraph that
follows the opinion paragraph
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The correct answer is: The auditor's report should describe the limitation and indicate the possible
adjustments to the financial statements that might have been determined to be necessary had the
limitation not existed

Question 12
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Under which of the following sets of circumstances might an auditor disclaim an opinion?

a.
There were significant limitations on the scope of the audit
b.
The principal auditor decides to make. reference to the report of another auditor who audited a
subsidiary
c.
There has been a material change between periods in the method of the application of accounting
principles
d.
The financial statements contain a departure from PFRS, the effect of which is material
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The correct answer is: There were significant limitations on the scope of the audit

Question 13
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Which of the following statements is a basic element of the independent auditor's report?

a.
The financial statements are consistent with those of the prior period
b.
The disclosures provide reasonable assurance that the financial statements are free of material
misstatements
c.
An audit includes assessing significant estimates made by the management
d.
The auditor tested compliance to internal control by the client
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The correct answer is: An audit includes assessing significant estimates made by the management

Question 14
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Which of the following statements is not true?

a.
A one-paragraph report is generally used when the auditor is not independent
b.
An addition of another paragraph to an otherwise standard audit report always requires a
modification of an unqualified opinion
c.
An unqualified opinion may be issued though the audit report requires an additional explanatory
paragraph
d.
A modification of the audit report that involves modified wordings may contain an unqualified
opinion
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The correct answer is: An addition of another paragraph to an otherwise standard audit report always
requires a modification of an unqualified opinion

Question 15
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If the auditor encounters circumstances that lead him to conclude that compliance with a specific
requirement results to financial statements that are misleading, the auditor

a.
needs to disclaim his opinion
b.
considers the need to appropriately modify the auditor's' report
c.
needs to issue qualified opinion
d.
does not need to modify the report
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The correct answer is: considers the need to appropriately modify the auditor's' report

Question 16
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Salmon Company's financial statements adequately disclose uncertainties that concern future events,
the outcome of which cannot reasonably be estimated. The auditor's report should include a(an)

a.
unqualified opinion
b.
adverse opinion
c.
"except for" qualified opinion
d.
"subject to" qualified opinion
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The correct answer is: unqualified opinion

Question 17
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Which of the following statements is incorrect regarding the relationship between Emphasis of
Matter Paragraphs and Key Audit Matters in the Auditor's Report?

a.
There may be a matter that is not permitted to be a key audit matter in accordance with PSA 701, but
which in the auditor's judgment, is fundamental to users' understanding of the financial statements
b.
All matters that in the auditor's judgment 'fundamental to users' understanding of the financial
statements may be considered as key audit matter
c.
Matters that are determined to be key audit matters in accordance with PSA 701 may also be, in the
auditor's judgment, fundamental to users' understanding of the financial statements
d.
In communication a matter as a key audit matter in accordance with PSA 701, the auditor may wish
to highlight or draw further attention to its relative importance like presenting the matter more
prominently than other matters in Key Audit. Matters section or by including additional information
in the description of the key audit matter
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The correct answer is: All matters that in the auditor's judgment 'fundamental to users' understanding
of the financial statements may be considered as key audit matter

Question 18
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Once the auditor has determined that an exception is material enough to warrant a qualification of his
auditor's report, he must then determine if the exception is sufficiently material to negate an overall
opinion. If the auditor is applying this decision process to an exception base on a departure from
Philippine financial reporting standards, he is deciding

a.
Nothing because such a decision process is not applicable to this type of exception
b.
Whether to issue an adverse opinion rather than a qualified opinion
c.
Whether to issue a' disclaimer of opinion rather than a qualified opinion
d.
Whether to issue an adverse opinion rather than a disclaimer of opinion
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The correct answer is: Whether to issue an adverse opinion rather than a qualified opinion

Question 19
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Why is the date of the auditor's report important?

a.
The date of the auditor's report informs the readers that the auditor has considered the effect of events
and transactions of which the auditor became aware and that occurred up to that date
b.
To inform the users of the financial statements. that the auditor complied with the applicable
Philippine Standards on Auditing
c.
To have a basis of determining the audit fees to be paid to the auditor
d.
To emphasize completeness assertion
 Feedback
The correct answer is: The date of the auditor's report informs the readers that the auditor has
considered the effect of events and transactions of which the auditor became aware and that occurred
up to that date

Question 20
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S1 For audits of complete sets of general purpose financial statements of listed entities, the auditor
shall communicate key audit matters in the auditor's report in accordance with PSA 701.

S2 When the auditor is otherwise required by law or regulation or decides to communicate key audit
matters in the auditor's report, the auditor shall do so in accordance with PSA 701.

a.
Both statements are incorrect
b.
First Statement is correct; Second Statement is incorrect
c.
Both statements are correct
d.
First Statement is incorrect; Second Statement is correct
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The correct answer is: Both statements are correct

Question 21
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Management's responsibility for the financial statements is

a.
Implicitly represented in the independent auditor's report
 b.
Explicitly represented in the basis for opinion paragraph of the independent auditor's report
c.
Explicitly represented in the opinion paragraph of the auditor's standard report
d.
Explicitly represented in the scope - responsibility of the management paragraph of the independent
auditor's report
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The correct answer is: Explicitly represented in the scope - responsibility of the management
paragraph of the independent auditor's report

Question 22
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In forming an opinion on the financial statements

a.
the auditor evaluates whether sufficiently appropriate audit evidence has been obtained to eliminate
the risk of material misstatements
b.
the auditor evaluates whether there is a reasonable assurance about whether the financial statements
are free from any misstatements
c.
the auditor should evaluate the conclusions drawn from the audit evidence obtained during the course
of the audit
d.
the auditor verifies that all errors that misstate the financial statements have been corrected by the
client
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The correct answer is: the auditor should evaluate the conclusions drawn from the audit evidence
obtained during the course of the audit

Question 23
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Which of the following is least likely considered by the auditor when he has to evaluate the fair
presentation of the financial statements?

a.
Whether the results of analytical procedures performed at or near the end of the audit help to
corroborate conclusion formed during the audit
b.
Whether the financial statements are approved by the client's board of directors
c.
Whether the financial statements, after any adjustments made by the management as a result of audit
process, are consistent with the auditor's understanding of the entity and its environment
d.
Whether the financial statements, including the disclosures, faithfully represent the underlying
transactions and events In a manner that gives a true and fair view of, in all material respects, the
information conveyed in the financial statements within the context of the financial reporting
framework
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The correct answer is: Whether the financial statements are approved by the client's board of
directors

Question 24
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Which of the following information is not required when an auditor's report is issued on financial
statements to be filed with the Securities and Exchange Commission?

a.
Audit report is manually signed
b.
Accreditation with SEC
c.
Partner's Tax Identification Number
d.
Certifying partner to sign his name
e.
Certificate of Registration date
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The correct answer is: Certificate of Registration date

Question 25
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When there is uncertainty about a company's ability to continue as a going concern, the auditor's
concern is the possibility that the client may not be able to continue its operations or meet its
obligations. for a "reasonable period of time." For this purpose, a reasonable period of time is
considered not to exceed

a.
one year from the date of the financial statements
b.
six months from the date of the audit report
c.
one year from the date of the audit report
d.
six months from the date of the financial statements
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The correct answer is: one year from the date of the financial statements