Practice Questions Psa 210 Amp 300 PDF Free
Practice Questions Psa 210 Amp 300 PDF Free
Practice Questions Psa 210 Amp 300 PDF Free
B. If the client has integrity D. Client’s business risk & the CPA firm’s
C. If the auditor is competent to perform engagement risk.
the engagement, has the capabilities
including time & resources.
D. The auditor can comply with the 20. Limbaco requested permission to
relevant ethical requirement. communicate with the predecessor auditor
& review certain portions of the
predecessor’s work papers. The prospective
16. Which of the following would not be a client’s refusal to permit this will bear
consideration of a CPA firm in deciding directly on Limbaco’s decision concerning
whether to accept a new client? the:
A. Client’s standing in the business A. Integrity of management
community B. Adequacy of the preplanned audit
B. Client’s probability of achieving an program
unmodified opinion. C. Apparent scope limitation
C. Client’s financial ability D. Ability to establish consistency in
D. Client’s relation with previous CPA firm application of accounting principles
between years.
II. Develop an overall strategy for the general merchandising operations. Mr. Lee
expected conduct and scope of may properly
audit A. Accept the engagement & carry it out
III. Obtain client’s written consistent with the standards in
representation auditing.
IV. Prepare engagement letter B. Accept the engagement but exercise
V. Perform substantive tests due professional care.
C. Accept the engagement & acquire the
A. IV, I, II, V, III necessary competence.
B. IV, II, I, V, III D. Decline the engagement for lack of
C. V, II, III, I, IV experience or competence in an
D. V, IV, II, I, III entirely new line of specialization.
24. In which of the following situations would 27. In making arrangements for an audit, there
the auditor be unlikely to send a new should be a clear understanding between
engagement letter to a continuing client? the auditor and the client as to the
A. Change in terms of engagement following except:
B. Significant change in the nature or size A. The type of audit to be performed
of the client’s business B. Terms of settlement for audit services
C. Recent change in the partner &/or staff C. Official to whom audit report shall be
in the audit engagement addressed.
D. Recent change of client management D. Assurance of auditor’s independence.
25. The primary purpose of engagement letter 28. Mr. Tolentino, CPA, requested permission
is to: to communicate with the predecessor
A. Provide a written record of the auditors of Agri Best Corporation, a
agreement with the client as to services prospective client. Agri Best Corporation’s
to be provided. refusal to permit will bear directly on Mr.
B. Provide a starting point for the auditor’s Tolentino’s decision concerning the:
preparation of the preliminary audit A. Adequacy of the preplanned audit
program program
C. Satisfy the requirements of the CPA’s B. Integrity of management
liability insurance policy. C. Apparent scope limitation
D. Remind management that the primary D. Ability to establish consistency in the
responsibility for the F/S rests with application of accounting principles
management between years.
26. Prime Corporation Inc. engages the services 29. The predecessor auditor is required to
of Mr. Lee, CPA, to make a project study on respond to the request of the successor
the expanded food vending operations of auditor for information, but the response
the corporation with the corresponding can be limited to stating that no
staffing & compensation package for its information will be provided when
executive staff. Mr. Lee, however, has A. Predecessor auditor has poor relations
primarily auditing expertise & only in with successor auditor.
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2. PSA 510, if the prior period’s F/S were 10. An auditor who accepts an audit
audited by a predecessor auditor, the engagement and does not possess the
auditor may be able to obtain sufficient industry expertise of the business entity
appropriate audit evidence regarding the should engage financial experts familiar
opening balances by reviewing the with the nature of the business entity.
predecessor auditor’s working papers. TRUE FALSE
3. In conducting the initial audit engagement, 11. Opening balances are based upon the
the auditor’s objective with respect to the closing balances of the prior period and
opening balances is to obtain sufficient reflect the effects of transactions and
evidence whether misstatements that events of prior periods and accounting
materially affect the current period’s F/S policies applied in the current period. FALSE
are present. TRUE
12. The auditor shall obtain sufficient
4. Audit engagement letter generally include appropriate audit evidence about whether
reference such as identification of the audit the opening balances contain
team members. FALSE misstatements that materially affect the
current period’s financial statements. TRUE
5. For initial engagements, the auditor should
obtain sufficient appropriate audit evidence 13. If the prior period’s financial statements
that the opening balances do not contain were audited by a predecessor auditor and
misstatement that materially affect the there was a modification to the opinion, the
current period’s financial statements. TRUE auditor shall evaluate the effect of the
matter giving rise to the modification in
6. Before accepting an engagement with new assessing the ROMM in the prior period’s
client, the CPA firm shall assess if the client financial statements in accordance with PSA
has the financial capacity to pay the 450. FALSE
estimated audit fee. FALSE
14. On recurring audits, the auditor may decide
7. Making inquiries of the predecessor auditor not to send a new engagement letter each
after obtaining the consent of the period. An example of this situation is when
prospective client, is generally done before there is a recent change of middle
accepting an engagement to audit a new management and rank and file organization
client. TRUE structure. TRUE
8. Client’s financial ability is a consideration 15. The objective of the auditor is to accept or
for a CPA firm in deciding whether to accept continue an audit engagement only when
a new client. TRUE the basis upon which it is to be performed
has been agreed, through confirming that
there is a common understanding between
9. After preliminary audit arrangements have the auditor and management and, where
been made, an engagement confirmation appropriate, TCWG of the terms of the
letter should be sent to the client. Usually audit engagement. TRUE
the letter would not include a statement
that MAS would be made available upon 16. Request to Change the Terms of the Audit
request. TRUE Engagement should consider the
justification given for the request,
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