1. What audit opinion would be appropriate when the auditor has formed an opinion that the financial statements are not fairly presented in all material respects due to a departure from GAAP?

a. Unqualified c. Adverse

b. Qualified d. Denial

STRICTLY GIVE ONLY CORRECT ANSWERS

2. If the scope of the examination has been satisfactory for all items except for one of material amount, the auditor should issue a (an)

a. Unqualified opinion. c. Disclaimer of opinion.

b. Qualified opinion. d. Adverse opinion.

3. Which of the following would require a denial (disclaimer) of the audit opinion?

a. There is a material misstatement that in the auditor's opinion will overstate the value of an investment by P1,000,000.

b. There is a misstatement that is in the range of P200,000 to P300,000 (materiality is P100,000), but that cannot be calculated exactly because it involves an estimate.

c. The auditor concludes that there is a going-concern issue for the auditee company.

d. The auditor was not appointed as the auditor until after year end, after the inventory count, and was unable to satisfy herself concerning inventory values by other means.

4. In which of the following situation would a decision of selecting between a qualified or adverse opinion be inappropriate?

a. A limitation in the scope of the audit.

b. The financial statements are significantly misleading.

c. A disagreement between the auditor and the client arose because of capitalization of research and development costs.

d. A required disclosure that is significant is omitted from the financial statements.

5. Misstatements detected during the audit that were initially deemed to be immaterial (unless clearly trivial) must be summarized to determine their:

a. control.

b. quantitative effect.

c. aggregate effects.

d. nature of misstatement.

6. What happens to the sufficiency of audit evidence collected if in the final review new information causes the engagement partner to decide that a lower materiality threshold is required and as a result the partner reduces planning materiality for the audit?

a. more evidence may be required.

b. less evidence may be required.

c. the client may be asked to make correcting entries.

d. Both A and C.

7. Which of the following is not a required communication with the audit committee?

a. accounting policies.

b. accounting estimates.

c. economic trends.

d. difficulties encountered.

8. Which of the following shall be included in the written communication of significant deficiencies in internal control?

a. A description of the deficiencies and an explanation of their potential effects.

b. The purpose of the audit was for the auditor to express an opinion on the financial statements.

c. The audit included consideration of internal control relevant to the preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control.

d. All of the above.

9. How is the auditor's report on the financial statements that require final approval by stockholders before such financial statements are issued publicly dated?

a. The auditor's report should be dated coinciding the date of approval of the financial statements by the stockholders.

b. The auditor's report should be dated after the approval of the financial statements by the stockholders.

c. The date of the auditor's report coincides the date of approval of the financial statements by the board of directors.

d. The audit report should be dual dated, the first date coinciding the approval by the board of directors and the second date to coincide with the approval by the stockholders.

10. In addition to the company's financial statements, which of the following would be covered by the auditor's standard report?

a. The notes to the financial statements

b. Comparative figures in the financial statements

c. The company's tax return for the year being audited

d. The company's budget for net income for the year being audited