A - Only statement 1 is true.

B - Only statement 2 is true.

C - both statements are true.

D - neither or the statements are true.

1. Statement 1: a system audit is the same with considering an entity's internal control since controls such as authorization to particular digital modules are embedded in the system.

Statement 2: Due to time constraints, a sample of each item in the financial statements can only be examined. However, in rare circumstances, the auditor might take 100% of the population in a certain item.

2. Statement 1: Confirmation is effective with bank balances.

Statement 2: audit fee is not required in the audit engagement letter. The auditor can work for free.

3. Statement 1: Fraud with material effect on the financial statements must be reported to the BIR and SEC as they are part of the public and thus benefactors from the audit.

Statement 2: Suitable Criteria in an attestation engagement may be available publicly or agreed-upon by the intended user and the management.

4. Statement 1: Only financial statements of partnership and corporations can be audited. Personal financial statements of individuals and trusts are not subject to audit due to their limited usage. They can be subject to other non-assurance engagement, however.

Statement 2: It is not possible to withdraw from a compilation engagement because neither independence nor assurance will be given by the practitioner.

5. Statement 1: A moderate level assurance is normally provided by the auditor in the audit prospective information.

Statement 2: Specifically developed criteria an also be used in an audit.

6. Statement 1: An auditor appointed in the first quarter of the period prior to the audit cannot perform the recalculation of the period-end adjusting entry of depreciation since timing of auditor is a factor in designing audit procedures Statement 2: Analytical procedures are optional in substantive testing

7. Statement 1: Assurance level and risk level are compliments. Statement 2: The audit ends after the opinion have been communicated with the user of Information.

8. Statement 1: In a compilation report on a prescribed form, the accountants should take exception to all departures from generally accepted accounting principles.

Statement 2: The timing of dissemination and type of confirmation letters to confirm receivables is included in the audit program rather than the audit plan.

9. Statement 1: The auditors must issue a compilation report if they prepare a client's financial statements and submit them to client who intends to use them for eternal purposes

Statement 2: A practitioner will more likely to reject an engagement if the management is unwilling to make financial records to him/her than a negative assessment on his competence to deliver the engagement.

10. Statement 1: To test existence, the auditor would sample from the source documents to general ledger.

Statement 2: Fraud risk factors are observed in almost all the fraudulent events and thus confirms the existence of fraud.

11. Statement 1:

Statement 2:

12. Statement 1:

Statement 2:

13. Statement 1: Sale of treasury stocks below cost is an indication that the entity might be facing difficulty in generating cash flows.

Statement 2: Proof of cash is an audit tool and can provide corroborating evidence on missing cash.

14. Statement 1:

Statement 2:

15. Statement 1:

Statement 2:

16. Statement 1: Actual misstatements can be higher than the performance materiality but not overall materiality.

Statement 2: An audit conforms the compliance of the entity's financial statements with an established criterion. Departure from that criterion does not automatically warrant a modification of the auditor's opinion.

17. Statement 1:

Statement 2:

18. Statement 1: In auditing estimates, accuracy is the key assertion that an auditor satisfies.

Statement 2: The external auditor must assist the client in developing its procedures for implementing PFRS 9 where they will determine the possible scenarios of cash shortfalls. This will lead to reasonable assurance in the future that the entity follows the standard since the policy was developed hand by hand by the two parties.

19. Statement 1: A review engagement will express a positive assurance if something has caught the auditor's attention that leads him to believe that the entity's financial statements might be materially misstated. Statement 2: An internal audit acts as a deterrent against mistakes.

20. Statement 1: a system audit is the same with considering an entity's internal control since controls such as authorization to particular digital modules are embedded in the system

Statement 2: Due to time constraints, a sample of each item in the financial statements can only be examined. However, in rare circumstances, the auditor might take 100% of the population in a certain item.

21. Statement 1: Assertions are made by the auditor on the financial statements under audit can be found in the audit report.

Statement 2: Risk assessment procedures is done throughout the audit.

22. Statement 1: A high turnover of accounting heads will alert an auditor regarding the information in financial statement Statement 2- Reperformance of the preparation of the entity's receiving report will present corroborating evidence on the occurrence of an entity's purchases.

23. Statement 1: The opinion on the entity's internal control is reflected in the auditor's opinion on the financial statement. Statement 2: The predecessor auditor is required to communicate with the successor auditor before accepting the engagement but is not after the acceptance of the engagement.

24. Statement 1: The evaluation of the internal control is included in the management representation letter.

Statement 2: When performing an assurance engagement, assertions are not always required.

25. Statement 1: while assessing the risk of material misstatement auditors identify risk, relate risk to what could go wrong, consider the magnitude of risk and consider the likelihood that the risk could result in material misstatement.

Statement 2: Generally, the auditee can file a lawsuit for damages against a practitioner who handled the audit engagement if it suffered damages due to a wrong audit opinion.