Auditor's Overall Objectives in Financial Statements Audit

The Philippine Standard on Auditing (PSA) establishes the independent auditor’s responsibilities when conducting an audit of financial statements.

PSAs are not applicable to audits of other historical financial information.

The purpose of an audit is to decrease the confidence of intended users in the financial statements.

The independent auditor is referred to as 'the accountant' in the context of PSAs.

PSAs include requirements establishing the specific responsibilities of the independent auditor applicable in all audits.

PSAs do not address the scope, authority, and structure of the PSAs.

An audit conducted in accordance with PSAs and relevant ethical requirements enables the auditor to form an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with the framework.

The financial statements subject to audit are those of the entity, prepared and presented by management of the entity with oversight from those charged with governance.

An audit in accordance with PSAs relieves management or those charged with governance of their responsibilities.

PSAs require the auditor to obtain absolute level of assurance about whether the financial statements as a whole are free from material misstatement.

The auditor's opinion deals with the financial statements as a whole and therefore the auditor is responsible for the financial statements.

The concept of materiality is only applied by the auditor in performing the audit, and not in planning and evaluating the effect of identified misstatements on the audit.

Misstatements, including omissions, are considered to be material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Reasonable assurance is obtained when the auditor has obtained sufficient appropriate audit evidence to reduce audit risk to an unacceptably high level.

PSAs impose responsibilities on management and those charged with governance, overriding laws and regulations that govern their responsibilities.

An audit in accordance with PSAs is conducted on the premise that management and those charged with governance have no responsibilities fundamental to the conduct of the audit.

The overall objective of the auditor is to obtain absolute assurance about the absence of material misstatement in the financial statements.

The auditor's responsibility is to express an opinion on whether the financial statements are prepared in accordance with an applicable financial reporting framework.

If reasonable assurance cannot be obtained, the PSAs require the auditor to disclaim an opinion or withdraw from the engagement where withdrawal is legally permitted.

The concept of materiality is only applied by the auditor in planning and evaluating the effect of identified misstatements on the audit.

The term 'fair presentation framework' refers to a financial reporting framework that requires compliance with the framework's requirements, and acknowledges that it may be necessary for management to provide additional disclosures beyond those specifically required by the framework. True or False?

Sufficiency of audit evidence is the measure of the quality of audit evidence; that is, its relevance and its reliability in providing support for the conclusions on which the auditor’s opinion is based. True or False?

The term 'compliance framework' requires compliance with the requirements of the framework, but does not contain acknowledgements regarding additional necessary disclosures by management. True or False?

Audit risk is the risk that the auditor expresses an appropriate audit opinion when the financial statements are materially misstated. True or False?

The term 'auditor' is used to refer to the person or persons conducting the audit, usually the engagement partner or other members of the engagement team, or, as applicable, the firm. True or False?

Detection risk is the risk that the procedures performed by the auditor to reduce audit risk to an acceptably low level will not detect a misstatement that exists and that could be material. True or False?

PSAs include requirements establishing the specific responsibilities of the independent auditor applicable in all audits. True or False?

An audit conducted in accordance with PSAs and relevant ethical requirements relieves management or those charged with governance of their responsibilities. True or False?

The financial statements subject to audit are those of the entity, prepared and presented by management of the entity with oversight from those charged with governance. True or False?

Audit evidence includes only information contained in the accounting records underlying the financial statements. True or False?

The term 'applicable financial reporting framework' refers to a financial reporting framework adopted by management and those charged with governance in the preparation and presentation of the financial statements that is acceptable in view of the nature of the entity and the objective of the financial statements. True or False?

'Reasonable assurance' is obtained when the auditor has obtained sufficient appropriate audit evidence to reduce audit risk to an unacceptably high level. True or False?