1. is an individual or organization possessing 6.

If the results of the expert’s work do not

expertise in a field other than accounting or provide sufficient appropriate audit evidence
auditing, whose work is used by the auditor or are not consistent with other audit
to assist the auditor in obtaining sufficient evidence, the auditor should
appropriate audit evidence. a. Report the matter to the appropriate
a. Auditor’s Expert regulatory agency of the government
b. Management’s Expert b. Resolve the matter
c. Expert c. Withdraw from the engagement
d. Specialist d. Express an unqualified opinion with
reference to the work of the expert.
2. is an individual or organization possessing
expertise in a field other than accounting or 7. When issuing an unmodified auditor’s report,
auditing, whose work is used by the entity to the auditor
assist the entity in preparing the financial a. May refer to the work of an expert
statements. b. Should refer to the work of an expert to
a. Auditor’s Expert indicate a division of responsibility
b. Management’s Expert c. Should include in the auditor’s report the
c. Expert identity of the expert and the extent of
d. Specialist the expert’s involvement.
d. Should not refer to the expert’s work.
3. When planning to use the work of an expert,
the auditor should evaluate the 8. In issuing the work of an expert, an auditor
I. Professional competence of the expert referred to the expert’s findings in the
II.Objectivity of the expert auditor’s report. This is an appropriate
a. I only reporting practice if the
b. II only a. Auditor, as a result of the expert’s work
c. Both I and II decides to indicate a division of
d. Neither I nor II responsibility with the expert
b. Expert is aware that his/ her work will be
4. Which of the following statements is correct used to evaluate the assertions in the
concerning the auditor’s use of the work of financial statements
an expert? c. Auditor, as a result of the expert’s work,
a. The auditor is required to perform issues a modified auditor’s report
substantive test procedures to verify the d. Auditor, as a result of the expert’s work
expert’s assumptions and findings. adds an emphasis-of-matter paragraph in
b. The auditor should obtain an his/ her unmodified auditor’s report
understanding of the methods and
assumptions used by the expert. 9. The auditor shall agree, in writing when
c. The entity need not have an appropriate, on the following matters with
understanding of the nature of the work the auditor’s expert, except
to be performed by the expert. a. The respective roles and responsibilities
d. The expert need not have an of the auditor and that expert
understanding of the auditor’s b. The need for the auditor’s expert to
corrobative use of the expert’s findings observe confidentiality requirements
c. The use of significant assumptions and
5. Which of the following is not an expert upon methods, and the relevance and
whose work an auditor may rely? reasonableness of those assumptions
a. An actuary and methods in the circumstance
b. An individual with expertise in complex d. The nature, scope and objectives of that
modeling for the purpose of valuing expert’s work
financial instrument
c. An expert in taxation law 10. relates to the possible effects that bias,
d. An individual with expertise in applying conflict of interest, or the influence of others
methods of accounting for deferred may have on the professional or business
income tax. judgment of the auditor’s expert
a. Competence
b. Objectivity
 c. Capability ALWAYS USE the work of an auditor’s expert.
d. None of the above FALSE DETERMINE WHETHER TO USE

1. If the auditor determinates that the work of 10. The risks of material misstatement may
the auditor’s expert is not adequate for the increase when expertise in a field other than
auditor’s purposes, the auditor shall perform accounting is needed for management to
further audit procedures appropriate to the prepare the financial statements. TRUE
circumstances TRUE
1. IAPS 1006 applies to audit of financial
2. An auditor’s EXTERNAL expert may be a statements of banks. True
partner or staff, including temporary staff, of
the auditor’s firm, and therefore subject to 2. If you are to accept an audit engagement of a
the quality control policies and procedures of client engaged primarily in banking
that firm in accordance with PSQC 1 transactions, YOU SHOULD OBTAIN the
(Redrafted). FALSE INTERNAL necessary experience and expertise during the
audit engagement. False
3. The auditor has sole responsibility for the
audit opinion expressed, and that 3. Particular IT concerns for banks include use of
responsibility is REDUCED by the auditor’s use complex valuation models incorporated in the
of the work of an auditor’s expert. FALSE NOT IT systems. True
REDUCED
4. PFRS 7 Financial Instruments: Disclosure may
4. An auditor who is not an expert in a relevant be relevant when auditing banks and other
field other than accounting or auditing may financial institutions. True
nevertheless be able to obtain a sufficient
understanding of that field to perform the 5. BSP is GOVERNED by banking institutions.
audit without an auditor’s expert. TRUE False

5. Auditor’s external experts’ working papers are 6. A specialized industry distinguished industry
their own and do not form part of the audit set apart from others for it’s unique way of
documentation. TRUE accounting their daily transactions and
reporting its financial results that are allowed
6. When an auditor’s expert’s work involves the under the applicable accounting framework,
use of source data that is significant to that such as IFRS or GAAP. True
expert’s work, procedures such as the
following may be used to test that data; 7. Specialized industries are UNUSUAL entities
verifying the origin of the data and reviewing False
the data for RELEVANCE and internal
consistency FALSE COMPLETENESS AND 8. The audit process may be revised for an audit
INTERNAL CONSISTENCY of a specialized industry. True

7. In some cases, law or regulation may require a 9. The auditor may OVER RELY on the opinion of
reference to the work of an auditor’s expert, expert/ specialists of banks and other financial
for example, for the purpose of transparency institutions False
in the public sector. TRUE
10. RA 8791 is otherwise known as “The General
8. PSA 220 deals with the auditor’s Banking Law of 2000”. True
responsibilities regarding the use of an
individual or organization’s work in a field of 1. Which of the following statements best
expertise other than accounting or auditing, describes assurance services?
when that work is used to assist the auditor in a. Independent professional services that
obtaining sufficient appropriate audit are intended to enhance the credibility of
evidence. FALSE PSA 620 information to meet the needs of an
intended user
9. If expertise in a field other than accounting or b. Services designed to express an opinion
auditing is necessary to obtain sufficient on the fairness of historical financial
appropriate audit evidence, the auditor shall
 statements based on the result of an perform the engagement, and has the
audit. capabilities, including time and resources to
c. The preparation of financial statements or do so.
the collection, classification and a. PSA 620
summarization of other financial b. PSQC 1
information. c. IFRS 9
d. Services designed for the improvement of d. PAPS 1006
operations resulting in better outcomes.
9. According to RA 10574: AN ACT ALLOWING
2. All the information used by the auditor in THE INFUSION OF FOREIGN EQUITY IN THE
arriving at the conclusions on which the audit CAPITAL OF RURAL BANKS, Non-Filipino
opinion is based is called citizens may own, acquire or purchase up to
a. Audit information % of the voting stocks in a rural bank.
b. Audit evidence a. 40%
c. Accounting records b. 60%
d. Corroborating information c. 100%
d. 0%
3. RA 9160 otherwise known as:
a. The New Central Bank Act 10. is a crime whereby the proceeds of an
b. General Banking Law of 2000 unlawful activity are transacted, thereby
c. Anti-Money Laundering Act of 2001 making them appear to have originated from
d. None of the above legitimate sources.
a. Estafa
4. The only one offshore bank in the Philippines b. Money Laundering
as of October 2021 c. Graft and Corruption
a. BNP Paribas d. Plunder
b. J.P. Morgan International Finance, Ltd.
c. Taiwan Cooperative Bank 11. Tests of the completeness assertion are
d. MUFG particularly important in the audit of bank’s
financial statements particularly in respect of
5. The most important risk in banking a. Capital
operations. b. Assets
a. Interest rate risk c. Liabilities
b. Credit risk d. None of the above
c. Operational risk
d. Reputational risk 12. consists of the response to an inquiry to
corroborate information contained in the
6. the risk of loss arising from factors such as accounting records.
failure to maintain safe custody or a. Inquiry
negligence in the management of assets on b. Confirmation
behalf of other parties c. Analytical Procedures
a. Liquidity Risk d. Inspection
b. Modeling Risk
c. Reputational Risk 13. Obtaining a knowledge of the bank’s business
d. Fiduciary Risk requires the auditor to understand:
I. The economic and regulatory
7. The law that created the Bangko Sentral ng environment in which the bank
Pilipinas. operates
a. RA No. 7653: The New Central Bank Act II. The bank’s corporate governance
b. RA No. 8791: The General Banking Law of structure
2000 III. The market conditions existing in
c. RA No. 9160: Anti-Money Laundering Act each of the significant sectors in
of 2001 which the bank operates
d. None of the above IV. Products and services offered by the
bank
8. The standard that requires the audit firm to a. I and II only
consider whether the firm is competence to b. I, II, and III only
 c. IV only
d. I, II, III, and IV 7. The PEZA law passed in 1992 to encourage
economic growth through establishment of
14. In auditing financial statements of banks, economic zones or “ecozones” that are
these are the areas where inspection is used treated as separate customs territory with
as an audit procedure except minimal government intervention. False 1995
a. Loan agreements
b. Collateral 8. In a BPO company, delays in raising invoices
c. Securities can indicate weaknesses in internal controls
d. IT System related to invoicing processes True

15. Which of the following is not a principal 9. The highest cost for any entity operating in
objective in auditing accounts receivable? the BPO Industry would be the payroll cost.
a. To determine whether accounts True
receivable is carried at their net realizable
value 10. Lease expenses could be of the nature of
b. To determine whether receivables are leasing of office building for workspace, or
properly classified, described, and leasing of assets for official purpose or
disclosed in the financial statements, accommodation provided to the employees
including notes, in conformity with GAAP AND TRANSPORTATION RENTAL. False
c. To determine whether the entity has real
claims in all receivables on the balance 1. What is the main focus of the audit process
sheet on the BPO industry?
d. To determine whether the accounts are a. Ensuring proper controls and risk
collected by the balance sheet date. management
b. Maximizing profitability through billing
1. PEZA-registered entities enjoy numerous fiscal methods
incentives. One of these is Special Income Tax c. Analyzing employee performance metrics
Rate of 5%. True d. Verifying compliance with tax laws

2. Since the effectivity of CREATE, the VAT 2. Which type of billing method is commonly
exemption on imports and VAT zero-rating of used by voice-based support service
newly registered and existing registered providers in the BPO industry?
business enterprises (RBEs) only applied to a. Per Transaction
goods and services that are directly and b. Per Time
exclusively used in the registered project or c. Full Time Equivalent
activity of registered export enterprises True d. Per Call

3. BPO are ALWAYS allowed to sub-contract a 3. What are some common areas where BPO
part of their operations to an external party. company may provide services?
False a. Marketing and tech support
b. Animation and game development
4. BOI registered pioneer firms MAY avail c. Engineering design and medical
income tax holiday for a period exceeding transcription
eight (8) years. False IN NO CASE d. All of the above

5. For the first five years from registration, a 4. Why is compliance with Service Level
BOI- registered enterprise shall be allowed an Agreement crucial for entities operating in
additional deduction from the taxable income the BPO industry?
of 30% of the wages of additional workers in a. To ensure adherence to tax regulations
the direct labor force if the project meets the b. To maintain quality standards as per
prescribed ratio of capital equipment to agreement terms
number of workers set by the BOI. False 50 % c. To maximize profits through efficient
billing methods
6. Audit procedures that apply to any industry d. To monitor employee performance
also apply to an entity operating in the BPO effectively
industry. True
5. What is the main focus of an internal auditor IDENTIFICATION
when observing significant fluctuations in 1. outsourcing is when an organization hires a service
revenue from a contract in the BPO industry? provider in a different country. OFFSHORE
a. Assessing employee performance
b. Understanding client's business 2. The billing is done for the no. of minutes/ hours/
c. Identifying irregularities days the entity has provided service to the client. PER
d. Analyzing project profitability TIME

3. is a contract that defines the quality and scope of

6. How can an internal auditor assess project services a provider offers to a customer . SERVICE
performance in the BPO industry? LEVEL AGREEMENT
a. Comparing revenue per employee
project-wise 4. Internal audit becomes significant in the BPO
b. Analyzing revenue earned per hour industry due to increasing frauds in the software field
c. Calculating operating costs to revenue and vulnerability to data modification, helping in
ratio verifying controls' sufficiency and effectiveness in light
d. Evaluating total calls handled to total calls of overall business and assessing - faced by the entity.
received ratio RISKS

7. What is a key aspect that the internal auditor 5. Communication expenses in a BPO company
should verify regarding invoicing in a BPO represent charges related to leased lines and are part
company? of the __________ costs. OPERATING
a. Compliance with tax regulations
b. Accuracy of financial statements 6. First contact center in the Philippines. ACCENTURE
c. Adherence to Service Level Agreement
d. Understanding billing methods 7. It involves the transfer of the management and/or
day-to-day execution of an entire business
8. Why is it important for an internal auditor to function/process to an external service provider.
compute operational margins period-wise in BUSINESS PROCESS OUTSOURCING
the BPO industry?
a. To identify potential fraud 8. risk refers to the possibility that the processes used
b. To assess project profitability to deliver a service might need to change
c. To understand client's business model dramatically during the term of a sourcing
d. To evaluate management effectiveness arrangement. PROCESS

9. What does the internal auditor aim to achieve 9. is using the computer in some way to commit
by computing the total calls handled to total dishonesty by obtaining an advantage or causing loss
calls received ratio in a call center setting? of something of value. COMPUTER FRAUD
a. Assessing employee performance
b. Evaluating project profitability 10. In what stage of audit process when the auditor
c. Verifying compliance with tax laws conducts interviews, reviews documentation and
d. Ensuring service quality standards process and tests transactions. FIELDWORK

10. Why is it important for the internal auditor to

compare project-wise profitability and
budgeted profit margins in the BPO industry?
a. To assess employee performance
b. To identify irregularities in financial
statements
c. To verify compliance with tax regulations
d. To ensure profitability aligns with
budgeted expectations