Audit Rev. 3

Let’s Check
EXERCISE 3
1. TRUE. PSAs, PSREs, PSAEs, PSRSs, and PSQC are collectively known as an engagement standards.
2. TRUE. Exposure drafts issued by the AASC, and not coming from the IAASB, still need to be exposed for
comments within 90 days.
3. FALSE. The AASC may extend the exposure draft to more than 90 days if approved by the majority of the
council members.
4. TRUE. The issuance of exposure drafts requires an approval of at least ten members.
5. FALSE. All final Philippine Standards and Practice Statement including interpretations shall be submitted to the
Board of Accountancy for approval.
6. FALSE. Engagement standards are under the scope of the Framework of Assurance Engagements.
7. TRUE. Philippine Standards on Auditing and its practice statements are collectively called auditing standards.
8. TRUE. All existing issuance from the IAASB will be reviewed by all members of the council before exposure
drafts will be facilitated.
9. TRUE. After approval of the Philippine Standards and Practice Statements, the pronouncements becomes
effective 15 days after the publication of the office gazette.
10. TRUE. There will be differences between the IAASB international pronouncements and the AASC
Philippine pronouncement. AASC is mandated to make exposure drafts for the differences for resolution.
Let’s Analyze
Multiple Choice Questions
1. Specifically, the Board of Accountancy is officially represented in the AASC by

a. Secretary of the BOA
b. Chair, BOA
c. Chair, PRC
d. BOA member who handles auditing theory subject
2. How many members of AASC are needed to approve the exposed draft of Philippine Standards in Auditing as
Philippine Standards on Auditing?
a. Majority of the regular members
b. At least eight
c. At least ten
d. At least twelve
3. Which of the following is a correct statement?

a. AASC should normally expose a proposed interpretation of statement
b. AASC should normally expose its opinion on specific queries from a practicing CPA
c. To make the statement on Philippine Standards on Auditing operative, the final statement shall be
submitted to the Board of Accountancy for approval
d. When it is deemed necessary to expose for a comment on proposed interpretations of statements, the
exposure period is understandably shorter than those of the regular drafts of standards.
4. What is the overriding objective of the International Auditing Standards that are issued by the International
Auditing Practices Committee of the International Federation of Accountants?
a. To improve the uniformity of auditing practices and related practices services throughout the world.
b. To override a count’s regulations governing the audit of financial statements.
c. To replace the generally accepted auditing standards.
d. To provide uniformity of specific audit procedures that are acceptable worldwide.
5. Which of the following statements about the standards on assurance engagement is (are) valid?
I. The Philippine Standards of Assurance Engagements always apply to an assurance engagement being
performed by a professional accountant.
II. Where a professional accountant in Public Practice performs an engagements intended to provide a high
level of assurance for which no specific standards exist, the appropriately applicable standard included in
the standards on Assurance Engagements are the followed.
III. Whenever there is a conflict between the standards on Assurance Engagements and an Existing
Philippine Standards on Auditing, the professional accountant should follow the requirements of the
standard on Assurance Engagement.
a. I
b. II
c. I, II
d. II and III
6. The Auditing and Assurance Standards Council (AASC) was established by the
A. Professional Regulation Commission (PRC) upon the recommendation of the Board of
Accountancy (BOA).
B. PICPA.
C. PICPA and the Association of CPAs in Public Practice (ACPAPP).
D. International Federation of Accountants (IFAC).
7. This is published to promote discussion or debate on auditing, assurance and related services and quality control
issues affecting the accounting profession, present findings, or describe matters of interest relating to auditing,
assurance, related services and quality control issues affecting the accounting profession.
a. Technical papers.
b. Exposure drafts.
c. Discussion papers
d. Practices statements.
8. The chairperson of the AASC shall be appointed by

a. The President of the Republic of the Philippines.
b. The Professional Regulatory Board of Accountancy.
c. The Professional Regulation Commission.
d. The Philippine Institute of Certified Public Accountants.
9. The following statements related to Philippine Standards on Auditing. Choose the statement that best describes
the meaning of PSAs.
a. PSAs are acts to be performed by the professional accountant.
b. PSAs are measures of the quality of the professional accountant’s performance.
c. PSAs are procedures to be used to gather evidence to support management assertions.
d. PSAs always apply whenever a CPA performs an engagement.
10.A professional accountant who does not consider and apply the guidance in a relevant Practice Statement should
be prepared to
a. Explain to the Board of Accountancy tribunal why the practice statement was not complied with.
b. Bear the consequences of such non-compliance, such as suspension or revocation of license, plus
imprisonment of not more than two years.
c. Face the shareholders of the entity, and explain in the meeting why such practice statement was not complied
with, provided that the explanation is also put in writing, and signed in the presence of the Chairperson of
the Auditing and Assurance Standard Council.
d. Explain how the basic principles and essential procedures in the Engagement standards
addressed by the Practice Statements have been complied with.

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Let’s Check

1. Specifically, the Board of Accountancy is officially represented in the AASC by

3. Which of the following is a correct statement?

8. The chairperson of the AASC shall be appointed by

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