Most of the large national CPA firms 2.

Which of the following statements best describes the logical

relationship among audits, attest engagements, and assurance engagements?

3. Which statement is correct regarding assurance engagements?

4. Assurance services least likely involve

5. The need for assurance services arises for all of the following reasons except:

a. Offer audit, tax, and management advisory services.

b. Emphasize auditing to a lesser degree than do smaller local and regional firms.
c. Are organized as corporations to obtain the benefit of limited liability.
d. Expect professional staff members to be accounting generalists as opposed to the specialization of
CPAs in smaller firms.

a. All attest engagements are audits, but not all audits are attest engagements.
b. All assurance engagements, including audits, involve attestation.
c. An audit provides assurance but does not involve attestation.
d. All audits are attest engagements, but not all attest engagements are audits.
Assurance Engagements
Nature of Assurance Engagements
a. It is an engagement in which a practitioner expresses a conclusion designed to enhance the degree of
confidence of the intended users other than the responsible party about the outcome of the evaluation or
measurement of a subject matter against criteria.
b. All engagements performed by professional accountants are assurance engagements.
c. Whether a particular engagement is an assurance engagement will depend upon whether it exhibits all
the following elements: a three party relationship, a subject matter, and suitable criteria.
d. CPAs are the exclusive providers of assurance engagements as the subject matter of assurance
engagements is limited only to financial information of a business entity.

a. Improving the quality of information for decision making purposes.

b. Improving the quality of the decision model used.
c. Improving the relevance of information.
d. Implementing a system that improves the processing of information.

Demand for Assurance Engagements

a. Expertise and independence of practitioners.
b. Risk management.
c. Enhancement in the reliability of information.
d. Seeking recommendation.
Auditing Review AT.01 – The Practitioner’s Engagement
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6. The need for assurance services arises for all of the following reasons except:

7. Assurance engagements may be classified either as to level of assurance provided (or conveyed) by the
practitioner or as to structure of the engagement. Which of the following refers to an attestation type of
assurance engagement?

8. When the professional accountant has obtained sufficient appropriate evidence to conclude that the
subject matter conforms in all material respects with identified suitable criteria, he or she can provide
what level of assurance?

9. It is the risk that the practitioner expresses an inappropriate conclusion when the subject matter
information is materially misstated.

a. Business risk c. Detection risk

b. Assurance engagement risk d. Audit risk 10. In accordance with the Philippine Framework for
Assurance Engagements, obtaining absolute assurance is generally not attainable as a result of such
factors as:

a. Potential bias in providing information.

b. Closeness between a user and the organization.
c. Complexity of the processing systems.
d. Remoteness between a user and the organization.
Types of Assurance Engagements
a. The objective is a reduction in assurance engagement risk to an acceptably low level as the basis for a
positive form of expression of the practitioner’s conclusion.
b. The objective is a reduction in assurance engagement risk to a level that is acceptable in the
circumstances of the engagement, but where that risk is greater than for a reasonable assurance
engagement, as the basis for a negative form of expression of the practitioner’s conclusion.
c. The evaluation or measurement of the subject matter is performed by the responsible party, and the
subject matter information is in the form of assertion by the responsible party that is made available to the
intended users.
d. The practitioner either directly performs the evaluation or measurement of the subject matter, or
obtains a representation from the responsible party that has performed the evaluation or measurement that
is not available to the intended users. The subject matter information is provided to the intended users in
the assurance report.

a. None c. Moderate
b. High d. Absolute
a. b. c. d.
The use of Yes Yes Yes No
selective testing
The inherent Yes Yes Yes Yes
limitations of
internal control
The use of Yes No Yes No
judgment
Most audit No Yes Yes Yes
evidence are
persuasive
rather than
conclusive
In some cases, No No Yes Yes
the
characteristics
of the subject
matter