AAP 2017 Updated Answer Key

 AS!E" #E$ % &'AP(E" 1 :

 AS!E" #E$ % &'AP(E" 1 : )undamentals o* Assurance Ser+ices)undamentals o* Assurance Ser+ices 11

11 1

1 FFAALLSSEE AAssssuurraanncce e rreeffeerrs s tto o tthhee practitioner’s practitioner’s   satisfaction...  satisfaction... 2 2 TTRRUUEE 3 3 FFAALLSSEE 4 4 TTRRUUEE 5 5 TTRRUUEE 6

6 FAFALLSESE ThThe re resespoponsnsibibe e papartrt! a! an" n" ththe ie intntenen"e"e" u" useser nr neeee" n" not ot bbe fe froro# s# sepepararatate oe or$r$anani%i%aatitionons.s. &

& TTRRUUEE TThhe e tteerr# # pprraaccttiittiioonneer r iiss broa"er broa"er  in scope co#pare" to the ter# au"itor. in scope co#pare" to the ter# au"itor. '

' FFAALLSSEE A pA prrooffeessssiioonnaa a accccoouunnttaannt st shhaa not not  a$ree to perfor# an assurance en$a$e#ent (hich the! a$ree to perfor# an assurance en$a$e#ent (hich the! are not co#petent to carr! out.

are not co#petent to carr! out. )

) TTRRUUEE 1*

1* FAFALLSESE ThThe ie intntenen"e"e" u" useser #r #a! a! bbe te the he onone (e (hho eo en$n$aa$e$es ts the he prprofofesessisionona a aaccccouountntanant.t. 11

11 FAFALSLSEE SeSee ne notote ie in nn nu#u#beber 1r 1*. *. ThThe ie intntenen"e"e" u" useser ir is ts the he pepersrson on or or ccasass os of pf perersosons ns fofor (r (hoho# t# thehe practitioner prepares the report.

practitioner prepares the report. 1 122 TTRRUUEE 1 133 TTRRUUEE 1 144 TTRRUUEE 1

155 FFAALLSSEE TThhe e ccrriitteerriia a iin n aan n FFS S aauu""iit t iis s ++FFRRS S oor r ,,AAAA++.. 1

166 FFAALLSSEE AApppprroopprriiaatteenneesss rs reeffeerrs ts too -uait! -uait!  (hie sufficienc! refers to (hie sufficienc! refers to -uantit! -uantit! ... 1

1&& FFAALLSSEE E/E/ii""eenncce e oobbttaaiinnee" " ""iirreecctt! ! bb! ! tthhe e pprraactctiittiiononeer r iiss #ore #ore  reiabe... reiabe... 1

1'' FFAALLSSEE TThhee practitionerpractitioner e0presses a concusion that pro/i"es a e/e of assurance...e0presses a concusion that pro/i"es a e/e of assurance... 1)

1) FAFALLSESE ThThis is ststaatete##enent "t "esescrcribibes es a "a "irireect ct rerepporortitin$ n$ asassusurarancnce ee en$n$aa$e$e#e#entnt.. 2

2** TTRRUUEE 2

211 FFAALLSSEE AAbbssoouutte e aassssuurraanncce e iiss $enera! not $enera! not  attainabe... attainabe... 2

222 FFAALLSSEE ++AAs s ##aa! ! ppeerrffoorr# # nnoonnaassssuurraanncce e eenn$$aa$$ee##eennttss.. 23

23 FAFALSLSEE A$A$reree"e"uupopon n prprococe"e"urures es aac c a a (r(rititteten n asassusurarancnce e rerepoport rt or or coconcncuusisionon. . t t is is a a nononn assurance en$a$e#ent.

assurance en$a$e#ent. 24

24 FAFALLSESE oo#p#piianance ce auau"i"its ts arare e ccaassssififieie" " aas s asassusurarancnce e enen$$a$a$e#e#eentnts.s. 2 255 TTRRUUEE 12 12 1 1 A A  2 2  3

3  EEnn$$aa$$ee##eennt t pprroocceesss s iis s aan n eeee##eennt t aaccccoorr""iinn$ $ tto o tthhe e ssuuppeerrssee""ee" " ++SSA A 11****.. 4 4 A A  5 5  6 6  &

&  SSuubb77eect ct ##aatttteer #r #aa! i! innccuu""e fe fiinnaanncciaia o or nr noonnfifinnaanncciiaa i innffoorr##aattiioonn p phh!!ssiicaca c chhaarraaccteterriisstticicss s!ste#s an" processes an" beha/ior.

s!ste#s an" processes an" beha/ior. '

' A A  )

)  SSuuffffiicciieenncc! ! iis s aan n aattttrriibbuutte e oof f aauu""iit t ee//ii""eennccee.. 1

1** AA EEffffiicciieenncc! ! aann" " eeffffeeccttii//eenneesss s ##aa! ! iinn//oo//e e ssuubb77eeccttii//e e ffaaccttoorrss.. 11

11  12 12  1

133  oo##ppiiaattiioonns s aarre e nnoonnaassssuurraanncce e eenn$$aa$$ee##eennttss.. 1

144  hhooiicce e   rreeffeerrs s tto o uussiinneesss s RRiiss  AAsssseessss##eennt t sseerr//iiccee.. 15

15  16 16  1& 1& A A  1' 1' A A  1) 1)  2* 2*  1 1

 AS!E" #E$ % &'AP(E" 2 :

 AS!E" #E$ % &'AP(E" 2 : Audits o* )inancial Statements : Audits o* )inancial Statements : An IntroductionAn Introduction 21

21 1

1 TTRRUUEE 2

2 FFAALLSSEE ...ccoo##ppiiee" " ((iitth h $$eenneerraa! ! aacccceeppttee"" accountin$ principes accountin$ principes  or +FRS or +FRS 3

3 FFAALLSSEE TThhiis s rreeffeerrs s ttoo operationa au"its operationa au"its .. 4

4 FAFALLSESE +r+reepapararatition on of of fifinnanancicia a ststatate#e#enents ts is is ththe e rerespspononsisibibiitit! ! of of ##anana$a$ee#e#entnt.. 5

5 TTRRUUEE 6

6 FAFALLSESE An An auau"i"it at ai"i"s is in tn the he coco###u#uninicacatition on oof ef ecoconono#i#ic "c "aata ta bbececauause se iit pt prro/o/i"i"es es rereaasosonanabbee assurance that the financia state#ents are fair! state".

assurance that the financia state#ents are fair! state". &

& FFAALLSSEE TThhe fe fiinnaanncciiaa s statattee##eennts ts rree##aaiin #n #aannaa$$ee##eenntt’’s rs reessppoonnssiibbiiiit!t!.. ' ' TTRRUUEE ) ) TTRRUUEE 1 1** TTRRUUEE 11

11 FAFALSLSEE ThThe #e #osost ct cososttbebenenefificicia a opoptition on to to rere"u"uce ce ininfofor#r#atatioion rn risis i is ts to ho ha/a/e te the he fifinanancnciaia state#ents au"ite".

state#ents au"ite". 12

12 FAFALLSESE An An auau"i"it "t "oeoes ns not ot prpro/o/i"i"e ae assssururaancnce re re$e$aar"r"inin$ t$ the he prpree/e/entntioion on of ff frarau"u".. 1

133 TTRRUUEE 14

14 FAFALSLSEE ThThe ae au"u"ititor or of of ththe pe pasast ft fococususe" e" on on "e"etetectctinin$ f$ frarau"u" ( (hihie e ththe ae au"u"ititor or of of toto"a"a! f! fococususe" e" onon e0pressin$ an opinion on the fairness of financia state#ents.

e0pressin$ an opinion on the fairness of financia state#ents. 1

155 TTRRUUEE 1

166 FFAALLSSEE TThhe e rruuees s aann" " rree$$uuaattiioonns s aarre e sseet t bb! ! aa hi$her authorit! hi$her authorit!  8such as e$isation9. 8such as e$isation9. 1&

1& TRTRUEUE :o:ote te hoho(e(e/e/er r ththat at e0e0teternrna a auau"i"ititin$ n$ #a#a! a! asso ro refefer er to to opopereratatioionana a au"u"itits as an" n" coco#p#piianancece au"its that are perfor#e" b! in"epen"ent au"itors.

au"its that are perfor#e" b! in"epen"ent au"itors. 1

1'' TTRRUUEE 1)

1) FAFALSLSEE nnteternrna a auau"i"its ts arare ie intntenen"e"e" t" to so serer/e /e ththe ne neeee"s "s of of #a#anana$e$e#e#entnt n not ot to to aiai" t" the he e0e0teternrnaa au"itor.

au"itor. 2

2** FFAALLSSEE ThThe #e #aa77or or bbeenneefficiciaiarr! o! of if inntteerrnnaa a auu""iits ts iis #s #aannaa$$ee##eenntt.. 2

211 FFAALLSSEE 2

222 FFAALLSSEE AuAu""iittiinn$ $ rree--uuiirrees s tthhaat t ""aatta a sshhoouu" " bbe e //eerriiffiiaabbee.. 2

233 TTRRUUEE 2

244 TTRRUUEE 25

25 FAFALSLSEE ThThe #e #aiain "n "ififfefererencnce be betet(e(een en auau"i"itotors rs anan" a" accccouountntanants its is ts the he ababiiitit! t! to $o $atatheher ar an" n" e/e/aauauatete e/i"ence.

e/i"ence.

22 22 1

1  ee$$rreee e oof f ccoorrrreessppoonn""eenncce e bbeett((eeeen n aasssseerrttiioonns s aann"" estabishe" criteria estabishe" criteria .. 2 2  3 3  4 4  5

5  TThhiis s rreeffeerrs s tto o tthhe e ccoo##ppeetteenneesss s aasssseerrttiioonn 6 6  & &  ' '  ) )  1* 1*  11 11  1

122  hhoioicce e A A is is ((rroonn$ $ bbeeccaauusse e iinn""eeppeenn""eennt t aauu""iittinin$ $ iis s nnot ot a a bbrraanncch h oof f aaccccoouunnttiinn$$. . hhooicice e  refers to accountin$.

refers to accountin$. hoice  is incorrect because au"hoice  is incorrect because au"itin$ cannot assure the accurac! ofitin$ cannot assure the accurac! of financia state#ents.

financia state#ents. 13

13 A A  1

144 AA LLiinne fe fuunnctctiioonns as arre pe poossiititioonns ts thhaat et e00eerrcciisse "e "eecciissiioonn##aaiinn$ $ ppoo((eerrs os or rr reessppoonnssiibbiiiititieess.. 15

15 

2 2

16 16 A A  1& 1&  1' 1'  1) 1)  2* 2*  21 21  2

222 AA nnfforor##aatitioon rn riiss  iis s tthhe e iieeiihhoooo" " tthhaat t iinnffoorr##aattiioon n ppreresseenntete" " is is ffaasse e oor r ##isiseeaa""inin$$.. 2

233  TThhe be beesst rt reeaassoon fn for or aauu""iitts is is ts thhe ce coonnffiicct ot of if innteterreesst bt beet(t(eeeen pn prreeppaarreerrs as ann" u" usseers rs oof ff fiinnaanncciiaa state#ents.

state#ents. 2

244  hhoioicce e  r reeffeerrs s tto o tthhe e oobb77eectcti/i/e e oof f a a ffiinnaanncciiaa  sstatattee##eennt at auu""iitt  nnoot t a a rreeaassoon n ffoor ar auu""iittss.. 25

25  2

266  SStatattee##eennt 1 t 1 iis fs faasse be beecacauusse e ++AAs hs haa//e ae as ts thheeiir pr prri#i#aarr! r! reessppoonnssiibbiiiitt! t! thhe pe peerrffoorr##aannce ce ofof the au"it function on pubishe" financia stat

the au"it function on pubishe" financia stat e#ents of pubic! tra"e" corporations.e#ents of pubic! tra"e" corporations. 2& 2&  2' 2'  2) 2)  3

3**  SSo#o#e e ee//ii""eennce ce ssuuppppoorrtitinn$ $ ppeesso o rreepprreesseenntatatitionons s iin n tthhe e ffiinnaanncciiaa  sstatattee##eennts ts ##uusst t bbee obtaine" b! ora or (ritten representation of

obtaine" b! ora or (ritten representation of #ana$e#ent #ana$e#ent ..

 AS!E" #E$ %

 AS!E" #E$ %&'AP(E" -&'AP(E" - : (.e : (.e Pro*essional Pro*essional Practice Practice o* o* AccountingAccounting -1 -1 1 1 FFAALLSSEE 2 2 TTRRUUEE 3

3 FFAALLSSEE TThheerre ae arre 1e 1* s* sii$$nnaattoorriieess a a # #ee##bbeerrs os of Af ASSEEAA:: o of tf thhe ;e ;RRAA.. 4

4 FAFALLSESE ThThe e ++A A tteaeachchinin$ $ is is ppraractcticicinin$ $ ththe e prprofofesessision on in in ththe e e"e"ucucatatioion n sesectctoror.. 5

5 FFAALLSSEE ...hhaas s ppaaii""uup p ccaappiittaa  oof f aat t eeaasstt F4<E #iionF4<E #iion an"=or annua re/enue of at eastan"=or annua re/enue of at east TE: TE: #iion #iion .. 6

6 FAFALLSESE A A ++A #A #a! a! ppraractctiice ce in in #o#ore re ththan an onone se secectotor r prpro/o/ii"e"e" s" sucuch ph praractcticice "e "oeoes ns not ot i#i#papair ir ththee -uait! of ser/ices ren"ere" in a sectors in/o/e".

-uait! of ser/ices ren"ere" in a sectors in/o/e". &

& FFAALLSSEE TThhe e FFRRSS  iis s tthhe e ooffffiicciiaa accountin$ accountin$  stan"ar"  stan"ar" settin$ bo"! in settin$ bo"! in the +hiippines. the +hiippines. For au"itin$For au"itin$ stan"ar"s in the +hiippines the Au"itin$ an" Assurance Stan"ar"s ounci is the

stan"ar"s in the +hiippines the Au"itin$ an" Assurance Stan"ar"s ounci is the responsibe bo"!.

responsibe bo"!. '

' TTRRUUEE )

) FAFALSLSEE ThThe e >A >A coconsnsisists ts of of a a chchaiair#r#an an anan" s" si0 i0 #e#e#b#berers s aa a appppoiointnte" e" b! b! ththe +e +hihiiippppinine +e +reresisi"e"entnt.. 1

1** FFAALLSSEE TThhe +e +++A hA haas 1s 15 n5 naattiioonnaa " "iirreeccttoorrss.. 1

111 TTRRUUEE 12

12 FAFALSLSEE SuSuch ch cacan"n"i"i"atate se shaha  be be rere-u-uirire" e" to to tatae e a ra refefrereshsher er cocoururse se of of at at eeasast 2t 24 u4 uninits ts of of susub7b7ecectt $i/en in the +A

$i/en in the +A oar" e0a#s. oar" e0a#s. After the refresher course the can"i"ate After the refresher course the can"i"ate #a! be ao(e" t#a! be ao(e" too tae the +A oar" E0a#s a$ain.

tae the +A oar" E0a#s a$ain. 13

13 FAFALSLSEE ThThe e +A +A cecertrtifificicatate ie is a s a ononeetiti#e #e isissusuanance ce onon!!. . ThThe pe prorofefessssioionana i i"e"entntifificicatatioion cn carar" s" shaha  bebe rene(e" e/er! 3 !ears.

rene(e" e/er! 3 !ears. 14

14 FAFALLSESE ,e,enenerara! ! foforereii$n $n ++As As arare ne not ot aaoo(e(e" t" to po praractcticice ie in tn the he ++hihiiippppinineses.. 1

155 TTRRUUEE 1

166 FFAALLSSEE >n! t>n! thhe ce couourrtts os of f aa( c( caan #n #eette oe ouut it i##ppririssoonn##eennt st seenntetenncceess.. 1

1&& TTRRUUEE 1

1'' FFAALLSSEE TThhiis s rreeffeerrs s tto o iinnttee$$rriitt!!.. 1

1)) FFAALLSSEE +S+SAAs s ccoonnttaaiinn basic principes basic principes  an" essentia proce"ures... an" essentia proce"ures... 2*

2* FAFALSLSEE A A +A +A #a#a! "! "epeparart ft froro# a# an An AASASisissusue" e" ststanan"a"ar" r" if if susuch ch "e"epapartrturure se shaha  reresusut t in in a #a #ororee effecti/e achie/e#ent of the ob7ecti/e

effecti/e achie/e#ent of the ob7ecti/e of an en$a$e#ent. of an en$a$e#ent. ?o(e/er the +A #ust be?o(e/er the +A #ust be prepare" to 7ustif! such "eparture in his or her au"it report.

prepare" to 7ustif! such "eparture in his or her au"it report. 21

21 FAFALSLSEE +r+racactitice Sce Statatete#e#entnts (s (hihie he ha/a/inin$ au$ auththororitit! ! seser/r/e one on! a! as ps proro/i/i"e"ers ors of tef techchninicaca $ $uiui"a"ancnce ie inn i#pe#entin$ the re-uire#ents of +SAs.

i#pe#entin$ the re-uire#ents of +SAs. 2

222 FFAALLSSEE TThhe e ##iinnii##uu# # ++E E uunniitts s ppeer r !!eeaar r iis s 115 5 uunniittss..

3 3

2

233 FFAALLSSEE ++eerr##aanneennt et e00ee##ppttiioon sn shhaa b be $e $rraannttee" u" uppoon rn reeaachchiinn$ a$ a$$ee 65 65 .. 2

244 FFAALLSSEE TThhee +R1 1+E 1ounci...+R1 1+E 1ounci... 25

25 FAFALSLSEE + + 6)6)2 h2 has as aarerea"a"! b! beeeen sn supuperersese"e"e" b" b! R! Repepububiic Ac Act ct :o:o. ). )2)2)' ' ththe +e +hihiiippppinine Ae Accccouountntananc!c!  Act of 2**4  Act of 2**4 -2 -2 1 1  2 2  3 3  4

4  TTo o bbe e coconnssii""eerree" " aas s pprraacctiticicinn$ $ ththe e pprrooffeessssiioonn  tthhe e ++A A ##uusst t bbe e uussinin$ $ hhiiss==hheer r nnoo((ee""$$e e oorr e0pertise in accountin$.

e0pertise in accountin$. 5

5 A A  6

6  FFuunn""aa##eennttaa p prriinncciippees rs reeffeer tr to eo etthhiiccaa r ree--uuiirree##eenntts ts thhaat #t #uusst bt be ce coo##ppiiee" (" (iitth ih in an a en$a$e#ents of the +A.

en$a$e#ents of the +A. n"epen"ence (hie bein$ n"epen"ence (hie bein$ an ethica re-uire#ent is notan ethica re-uire#ent is not necessar! in so#e +A ser/ices 8such

necessar! in so#e +A ser/ices 8such as co#piation of financia state#ents9.as co#piation of financia state#ents9. &

&  '

'  RReepprreesseennttaattiioon on of cf ciieenntts bs beeffoorre $e $oo//eerrnn##eennt at a$$eenncciiees os on tn taa0 0 aann" o" otthheer #r #aatttteerrs #s #uusst bt bee reate" 

reate"  to accountin$. to accountin$. ) ) A A  1* 1*  11 11  12 12 A A  1

133  ;;uusst t nnoot t hhaa//e e aann! ! ppeeccuunniiaarr! ! iinntteerreesstt "irect or in"irect "irect or in"irect ... 14 14  15 15  16 16  1& 1&  1' 1' A A  1)

1)  Toerance Toerance  of /ioations of the +hiippine Accountanc! Act is a $roun" for suspension or of /ioations of the +hiippine Accountanc! Act is a $roun" for suspension or re#o/a of a #e#ber of the >A.

re#o/a of a #e#ber of the >A. 2* 2*  21 21  22 22  23 23  24 24  25 25  2

266 AA ::aattuurraaii%%ee" " FFiiiippiinno o cciittii%%eenns s ##aa! ! ttaae e tthhe e ++A A ooaarr" " EE00aa##ss.. 2& 2&  2' 2'  2) 2) A A  3* 3*  31 31  32 32 A A  33 33  4 4

 AS!E" #E$ %

 AS!E" #E$ %&'AP(E" /&'AP(E" / :  : Setting p and Maintaining Setting p and Maintaining An Accounting PracticeAn Accounting Practice /1

/1 1

1 TTRRUUEE 2

2 FFAALLSSEE At At eeaasst 't '* u* unniitts bs b! 2! 2**11& i& innccrreeaassiinn$ $$ $rraa""uuaa! t! to 1o 122* u* unniittss 3

3 FAFALLSESE ThThe e cocorprpororatate e fofor# r# is is nonot at aoo(e(e" " ffor or ththe e prpracactitice ce of of ppububiic c acaccocoununtatancnc!.!. 4

4 FFAALLSSEE TThhiis s ##eetthhoo" " oof f bbiiiinn$ $ rreeffeerrs s tto o ppeer r ""iiee# # bbaassiiss.. 5

5 TTRURUEE :o:ote te hoho(e(e//er er ththaat tt thihis is is ns not ot ththe #e #aain in "e"eteter#r#ininanant ot of tf the he a#a#ouount nt oof pf prorofefessssioionana f feeees. s. SeSeee reate" -uestion nu#ber 6.

reate" -uestion nu#ber 6. 6

6 TTRRUUEE &

& FFAALLSSEE TThhiis s iis s a a ccoonnttiinn$$eennt t ffeee e aarrrraann$$ee##eenntt.. '

' FFAALLSSEE ::oot t aann!!##oorre e rree--uuiirree" " ppeer r >>A A RReessoouuttiioon n ::oo. . 55)) )

) FFAALLSSEE TThhiis s rreeffeerrs s tto o ssooiicciittaattiioonn.. 1

1** FFAALLSSEE ...sshhaa  bbe e //aaii" " ffoor r a a ppeerriioo" " ooff three !ears three !ears ... 1

111 FFAALLSSEE @@33* * ""aa!!s s ffrroo# # ""aatte e oof f ssuucch h ""eeaatthh 1

122 FFAALLSSEE @@aaoo((ee" " ssuubb77eecct t tto o cceerrttaaiin n ccoonn""iittiioonnss 1

133 TTRRUUEE 14

14 FAFALLSESE @t@thehere re is is no no susuch ch coconn"i"itition on fofor r rere/o/ocacatition on of of pparartntneer’r’s s iicecensnsee 1

155 FFAALLSSEE @+R@+R  ++E E oouunnccii c caan "n "eeee$$aate te ththe (e (oorr t to +o +++A A ++E E oouunnccii 16

16 FAFALSLSEE @n@not ot i#i##e#e"i"iatatee!. !. ThThreree !e !eaears rs of of #e#eananinin$f$fu u e0e0peperirienence ce shshaa  be be eaearnrne" e" fifirsrst bt b! ! ththe e +A +A  1&

1& FAFALSLSEE @i@it’t’s ths the cee certrtifificicatate oe of ref re$i$iststraratition on ththat iat is $rs $ranantete" on" on! o! oncnce. e. erertitifificacate ote of Af Accccrere"i"itatatition ion iss /ai" for three !ears.

/ai" for three !ears. 1

1'' TTRRUUEE 1

1)) FFAALLSSEE @@ffiirrsst t nnaa##e e iis s aaoo((ee"" 2

2** TTRRUUEE TThheesse e aarre e aatteerrnnaattii//e e ##eetthhoo""s s oof f eeaarrnniinn$ $ ++ u unniittss..

/2 /2 1 1  2 2  3 3  4 4  5 5  6 6  & &  ' '  ) ) A A  1* 1*  11 11  12 12  13 13  14 14  15 15  16 16  1& 1& A A  1' 1'  1) 1)  2* 2*  5 5

 AS!E" #E$ %

 AS!E" #E$ %&'AP(E" &'AP(E"  : : uality uality &ontrols&ontrols 1

1 1

1 TTRRUUEE 2

2 FFAALLSSEE TThhe e ffiirr##’’ss partners partners  assu#es uti#ate responsibiit!... assu#es uti#ate responsibiit!... 3

3 FFAALLSSEE AAt t eeaasst t aannnnuuaa!! 4

4 FFAALLSSEE AA fa#iiarit! threatfa#iiarit! threat occurs...occurs... 5

5 TTRRUUEE SS##aaeer r ffiirr##s s ##aa! ! ee##ppoo!! ess ess  for#a... for#a... 6

6 TTRRUUEE &

& FAFALLSESE oonsnsuutatatition on is is a na noror#a#a p parart ot of a f a ++A’A’s es en$n$a$a$e#e#eentnts s aan" n" aappppiies es iin pn parartiticucuaar tr too contentious or "ifficut #atters.

contentious or "ifficut #atters. '

' TTRRUUEE )

) FFAALLSSEE AAn en enn$$aa$$ee##eennt -t -uuaaiitt! c! coonntrtroo r ree//iiee( i( is rs ree--uuiirree" f" foor ar a a auu""iits ts ooff iste"iste" entities.entities. 1

1** FFAALLSSEE TThhe e eenn$$aa$$ee##eennt t ppaarrttnneerr #a! consut #a! consut  (ith the en$a$e#ent -uait! contro re/ie(er... (ith the en$a$e#ent -uait! contro re/ie(er... 1

111 FFAALLSSEE ...iinnccuu""e e aat t eeaasstt one en$a$e#ent one en$a$e#ent  for each en$a$e#ent partner o/er an inspection c for each en$a$e#ent partner o/er an inspection c !ce.!ce. 1

122 FFAALLSSEE AAuu""iit t ((oorriinn$ $ ppaappeerrs s aarre e tthhe e pprrooppeerrtt! ! oof f tthhe e aauu""iittoorr.. 1

133 TTRRUUEE 14

14 FAFALSLSEE +S+SA 2A 22* 2* fofoo(o(s ts the he ccasassisifificacatition on of of eee#e#enents ts of of -u-uaaitit! c! conontrtro o #e#entntioionene" i" in +n +SS : :o. o. 11 15

15 FAFALSLSEE +S+SA 22A 22* a* appppiies es to to auau"i"its ots of hf hisistotoriricaca f fininanancicia a ininfofor#r#atatioion n (h(hiie +e +SS : :o. 1 o. 1 apapppieies ts too assurance ser/ices in $enera.

assurance ser/ices in $enera. 2 2 1 1  2 2  3

3  EEnn$$aa$$ee##eennt t --uuaaiitt! ! ccoonnttrroo  rree//iiee( ( aappppiiees s tto o eenn$$aa$$ee##eennttss prior to issuance of the report prior to issuance of the report  (hie inspections app! to

(hie inspections app! to co#pete" co#pete"  en$a$e#ents. en$a$e#ents. 4

4  5

5  ;;oonniittoorriinn$ $ iis s tthhe e rreessppoonnssiibbiiiitt! ! oof f tthhe e eeaa""eerrs s oof f tthhe e ffiirr##.. 6 6  & &  ' '  ) ) A A  1

1**  RoRottaatition on oof sf seenniior or ppeerrssononnnee 8 8ii..ee.. p paartrtnneerr9 i9 is "s "oonne ee e//eerr! f! fii//e !e !eeaarrss a as #s #aann""aattee" b" b! ! tthhee o"e of Ethics.

o"e of Ethics. 11

11  1

122  TThhe e oo""e e oof f EEtthhiiccs s ""ooees s nnoot t rree--uuiirre e ccoonnttiinnuuaanncce e oof f tthhe e eenn$$aa$$ee##eenntt.. 1

133  ...ccooaacchhiinn$ $ bb!! #ore #ore  e0perience" staff. e0perience" staff. 1

144 AA hhooicice e   is is iinnccororrreecct t bbeeccaauusse e ssuuppeerr//iissiion on iinnccuu""ees s ccoonnssii""eerriinn$ $ tthhe e cacappaabbiiiittiiees s aann"" co#petence of in"i/i"ua #e#bers of the

co#petence of in"i/i"ua #e#bers of the assurance tea# assurance tea# . . hoice  hoice  is incorrect is incorrect becausebecause super/ision incu"es a""ressin$

super/ision incu"es a""ressin$ si$nificantsi$nificant issues... hoice  is incorrect becauseissues... hoice  is incorrect because super/ision incu"es i"entif!in$ #atters for consutation or consi"eration b!

super/ision incu"es i"entif!in$ #atters for consutation or consi"eration b! #ore #ore  e0perience" en$a$e#ent tea# #e#bers.

e0perience" en$a$e#ent tea# #e#bers. 15 15  16 16 A A  1& 1&  1' 1' A A  1) 1)  2* 2* A A  21 21  22 22  23 23  24 24  25 25  6 6

 AS!E" #E$ %

 AS!E" #E$ %&'AP(E" 3&'AP(E" 3 :  : (.e &ode o* E(.e &ode o* Et.ics *or &PAs in t.ics *or &PAs in t.e P.ilippinest.e P.ilippines 31 31 1 1 FFAALLSSEE 2 2 TTRRUUEE 3

3 FFAALLSSEE ThThe e aauu""iittoor r sshhoouu" " aass  tthhe e cciieennt t tto o ccoorrrreecct t tthhe e eerrrroorr.. 4

4 FFAALLSSEE A A ++A A ##aa!! not not  /ountari!... /ountari!... 5

5 TTRRUUEE 6

6 TTRRUUEE &

& FFAALLSSEE AA fa#iiarit! threat fa#iiarit! threat ... '

' TTRRUUEE )

) FFAALLSSEE A pA prrooffeessssiioonnaa  aaccccoouunnttaannt t iin n ppuubbiic c pprraaccttiicce e ((ii or"inari! nee" or"inari! nee"  ... ... 1

1** FFAALLSSEE A pA prrooffeessssiioonnaa a accccoouunnttaannt it in pn puubbiic pc prraaccttiicce #e #aa!! not not  rea"i!... rea"i!... 1

111 TTRRUUEE 12

12 FAFALSLSEE :e:et(t(oror f firir#s #s arare ae asso ro re-e-uiuirere" t" to bo be ie in"n"epepenen"e"ent nt of of a fa fininanancicia a ststatate#e#enent at au"u"it it ccieientnt.. 1

133 TTRRUUEE 14

14 FAFALLSESE >n>n! ! ee$i$ititi##atate e aai#i#s s #u#ust st be be fufurtrtheherere" " aan" n" susupppporortete" " b! b! ththe e ++A.A. 1

155 FFAALLSSEE ++AAs cs caannnnoot pt prroo//ii""e ae assssuurraanncce oe of if innffaaiibbiiiitt!!.. 16

16 FAFALSLSEE ThThe fie firsrst ret re#e#e"! i"! is to s to apappp! th! the pe pooicicieies of ts of the ohe or$r$anani%i%atatioion on on ren resosouutition oon of ef eththicica ca cononfficict.t. 1&

1& FAFALSLSEE >b>b7e7ectcti/i/itit! i! is "s "ififfefererent nt frfro# o# ststububbobornrnnenessss. . >b>b7e7ectcti/i/itit! s! si#i#pp! r! refeferers ts to bo beiein$ n$ neneututrara o orr unbiase". unbiase". 1 1'' TTRRUUEE 1 1)) FFAALLSSEE SSeee e ccoo####eenntts s iin n nnuu##bbeer r 1144 2*

2* FAFALSLSEE ;a;a! b! be ae ao(o(e" e" onon! ! if if ththe ne nececesessasar! r! sasafefe$u$uarar"s "s arare ie in pn paace ce 8t8to reo re"u"uce ce or or eei#i#ininatate te thrhreaeatsts to co#piance (ith fun"a#enta principes9.

to co#piance (ith fun"a#enta principes9. 32 32 1 1 A A  2 2 A A  3 3  4 4  5 5  6 6  & &  ' '  ) )  1* 1*  11 11 A A  1

122  A A sseecconon" " rree##ee""! ! (o(ouu" " bbe e tto o eenn$$aa$$e e tthhe e sseerr//iiccees s oof f ee00ppeerrttss. . n n tthhe e aabbsseenncce e of of rree##ee""iieess the +A has no choice but to "ecine the en$a$e#ent.

the +A has no choice but to "ecine the en$a$e#ent. 13 13  14 14  15 15 A A  16 16  1& 1&  1' 1'  1) 1)  2* 2*  2

211  oonnttiinn$$eennt ft feeees rs reessuut t tto so sii$$nniiffiiccaannt tt thhrreeaats ts tto co coo##ppiiaanncce (e (iith th ffuunn""aa##eennttaa p prriinncciippees (s (hheenn ao(e" for assurance en$a$e#ents.

ao(e" for assurance en$a$e#ents. 22

22  2

233 AA ::ootteeB B AAssssuu##e e ththaat t ththe e ++AAs s hhaa//e e nnoot t eesstatabbiisshhee" " tthhe e nneececessssaarr! ! ssaaffee$$uuaarr""s s to to rree""uucece threats to co#piance (ith fun"a#enta principes.

threats to co#piance (ith fun"a#enta principes.

& &

2

244  CCiitthh""rraa((aa  oof f ffeeees s ffrroo# # cciieenntt’’s s ##oonniiees s rree--uuiirre e cciieennt t aapppprroo//aa.. 2

255 AA TThheerre #e #aa! b! be te tii##ees (s (hheen tn thhe ae aii##s os of tf thhe pe prrooffeessssiioon an ann" t" thhe ee e##ppoo!!eer ar arre ie in cn coonnffiicctt.. 26

26  2& 2& A A  2' 2'  2) 2) A A  3* 3*  3

311  eeaar r $$uuii""eeiinnees s ffoor r ##ee##bbeerrs s oof f tthhee au"itau"it personne on issues of securit! an" confi"entiait!.personne on issues of securit! an" confi"entiait!. 32

32  3

333  oorrrreeccttiioonnB B TThhe e cchhooiiccees s sshhoouu" " bbe e nnuu##bbeerrss  nnoot t eetttteerrss.. 34

34  35 35 

&'AP(E" 7 :

&'AP(E" 7 : (.e )inancial (.e )inancial Statements Audit ProcessStatements Audit Process 71 :

71 : (rue or (rue or )alse)alse 1

1 FAFALLSESE +r+rofofesessisionona a coco#p#petetenence ce anan" "" "ue ue cacare re is is obobttaiainene" t" thrhrouou$h $h a ca co#o#bibinanatition on of of e"e"ucucatatioionn an" an"  e0perience.

e0perience. t cannot be t cannot be obtaine" throu$h e"ucation obtaine" throu$h e"ucation aone.aone. 2

2 TTRRUUEE 3

3 FAFALSLSEE ;a;ateteririaaitit! i! is os one ne of of ththe #e #a7a7or or fafactctorors cs cononsisi"e"erere" i" in n "e"eteter#r#inininin$ t$ traransnsacactitionons ts thahat (t (ouou" " bebe re/ie(e".

re/ie(e". 4

4 FAFALSLSEE RiRis s of of #a#ateteriria a #i#isssstatatete#e#ent nt is is $r$reaeateter (r (hehen tn traransnsacactitionons as an" n" babaaancnces es inin/o/o//e" e" esestiti#a#atetess 5 5 TTRRUUEE 6 6 TTRRUUEE & & TTRRUUEE ' ' TTRRUUEE ) ) TTRRUUEE 1*

1* FAFALSLSEE ThThe se sucuccecessssor aor au"u"ititor or hahas ts the he "u"ut! t! to to ininititiaiate cte co#o##u#uninicacatition on (i(ith tth the he prpre"e"ececesessosor ar au"u"ititoror since the atter is boun" b! t

since the atter is boun" b! t he "ut! of confi"entiait!.he "ut! of confi"entiait!. 1

111 TTRRUUEE 12

12 FAFALSLSEE ThThe pe priri#a#ar! r! obob7e7ectcti/i/e oe of tf the he ststu"u"! a! an" n" e/e/aauauatition on of of ininteternrna a cocontntroro i is ts to "o "eteterer#i#ine ne ththee nature e0tent an" ti#in$ of substanti/e tests to be perfor#e".

nature e0tent an" ti#in$ of substanti/e tests to be perfor#e". 1 133 TTRRUUEE 1 144 TTRRUUEE 1 155 TTRRUUEE 72

72 : : Multiple Multiple &.oice&.oice 1

1 AA ++eeaasse e cchhaann$$e e cchhooiicce e A A ttoo Fairness Fairness  an" reiabiit! of accountin$ "ata. an" reiabiit! of accountin$ "ata. 2 2  3 3  4 4 A A  5 5 A A  6 6  & & A A  ' '  ) )  1* 1* A A  11 11  12 12  13 13  14 14  ' '

15 15 A A  16 16  1& 1& A A  1' 1'  1) 1)  2* 2*  21 21  22 22  23 23  24 24  25 25  26 26 A A  2& 2& A A  2' 2'  2) 2)  3

3**  hhooicice e A A rreeffeerrs s tto o EE00iisstteennccee. . hhooicice e   rreeffeerrs s to to oo##ppeetteenneessss. . hhoioicce e   rreeffeerrs s to to rrii$$hhtsts an" obi$ations.

an" obi$ations.

&'AP(E"

&'AP(E" 4 4 : : Audit Audit PlanningPlanning 41

41 : : (rue (rue or or )alse)alse 1

1 FFAALLSSEE +a+annnniinn$$ assists assists  in proper assi$n#ent of (or to assist in proper assi$n#ent of (or to assist ants.ants. 2

2 FAFALLSESE ThThe te t!p!pe oe of of oppininioion tn to bo be ee e0p0preresssse" e" is is nonot a ct a cononsisi"e"eraratition on in in ""eteterer#i#ininin$ n$ ththe ee e0t0teent nt ofof pannin$. pannin$. 3 3 TTRRUUEE 4 4 TTRRUUEE 5

5 FAFALSLSEE ieientnt’s ’s coconsnsenent st shohouu" b" be e obobtatainine" e" bebefofore re ththe e susuccccesessosor r auau"i"itotor r cacan n #a#ae e inin-u-uiririeies s (i(ithth pre"ecessor au"itor an" accept an en$a$e#ent fro# a ne( cient.

pre"ecessor au"itor an" accept an en$a$e#ent fro# a ne( cient. 6

6 FAFALSLSEE ThThe e obob7e7ectcti/i/e e of of peperfrforor#i#in$ n$ ananaa!t!ticica a prprococe"e"urures es in in ppananninin$ n$ an an auau"i"it t is is to to obobtatain in anan un"erstan"in$ of the transactions an" e/ents that

un"erstan"in$ of the transactions an" e/ents that are refecte" in the financia state#entsare refecte" in the financia state#ents an" "eter#inin$ unusua ite#s (hich cou" in"icate possibe #isstate#ents in the financia an" "eter#inin$ unusua ite#s (hich cou" in"icate possibe #isstate#ents in the financia state#ents.

state#ents. &

& FFAALLSSEE SShhoouu" f" fooccuus os on un unn""eerrsstatann""iinn$ t$ thhe ce cieienntt’’s bs buussiinneesss es enn//iirroonn##eenntt '

' TTRRUUEE )

) TTRRUUEE 1

1** FFAALLSSEE AAn n aauu""iit t ""ooeess not not  nor#a! incu"e au"it proce"ures specifica! "esi$ne" to "etect ie$a nor#a! incu"e au"it proce"ures specifica! "esi$ne" to "etect ie$a acts that ha/e an in"irect but

acts that ha/e an in"irect but #ateria effect on the financia state#ents.#ateria effect on the financia state#ents. 1

111 TTRRUUEE 1

122 TTRRUUEE 13

13 FAFALSLSEE An An auau"i"itotor sr shohouu" "" "esesi$i$n thn the (e (riritttten en auau"i"it pt proro$r$ra# a# so tso thahat tt the he spspececifific ic auau"i"it ot ob7b7ecectiti/e/es os off the en$a$e#ent are achie/e".

the en$a$e#ent are achie/e". 1

144 TTRRUUEE 15

15 TRTRUEUE ThThe ce ciienent’t’s #s #anana$a$e#e#enent it is es e0p0pecectete" t" to ho ha/a/e a e a "e"eepeper er unun"e"ersrstatan"n"inin$ o$ of tf the he enentitit! t! anan" i" itsts en/iron#ent.

en/iron#ent. 16

16 FAFALSLSEE RiRis s asassesessss#e#ent pnt prorocece"u"ureres as are re auau"i"it pt prorocece"u"ureres "s "esesi$i$nene" t" to oo obtbtaiain an an un un"n"ererststanan"i"in$ n$ ofof the entit! an" its en/iron#ent.

the entit! an" its en/iron#ent. 1

1&& FFAALLSSEE t t iiss not not  necessar! for a tea# #e#bers to ha/e a co#prehensi/e no(e"$e of a aspects necessar! for a tea# #e#bers to ha/e a co#prehensi/e no(e"$e of a aspects of the au"it.

of the au"it. Chat is i#portant is that coChat is i#portant is that coecti/e! the! possess the nee"e" ecti/e! the! possess the nee"e" no(e"$e.no(e"$e. 1

1'' TTRRUUEE 1)

1) FAFALSLSEE StStraratete$i$ies es arare oe opeperaratitionona a apapprproaoachches es b! b! (h(hicich #h #anana$a$e#e#enent it intntenen"s "s to to acachihie/e/e ie itsts

) )

ob7ecti/es.

ob7ecti/es. >b7ecti/es are the >b7ecti/es are the o/era pans o/era pans for the entit!.for the entit!. 2 2** TTRRUUEE 2 211 TTRRUUEE 2 222 TTRRUUEE 2 233 TTRRUUEE 2 244 TTRRUUEE 2 255 TTRRUUEE 42

42 : : Multiple Multiple &.oice&.oice 1 1  2 2  3 3 A A  4 4  5 5 A A  6 6  &

& AA RReepprreesseennttaattiioon n eetttteerrs as arre ce coonnssii""eerree" a" at at auu""iit ct coo##ppeettiioonn.. '

' AA TThhe e ##oosst t ccoosstt! ! pprrooccee""uurre e iis s tteesst t oof f bbaaaanncceess.. ) )  1* 1*  11 11  12 12 A A  1

133  TThhiis is is as arreeaa""! a ! a ffuurrtthheer ar auu""iit pt prrooccee""uurre 8e 8ppeerrffoorr##ee" a" afftteer pr paannnniinn$$99.. 14

14  1

155  ::ootte e tthhaat t tthhe e cciieennt t uunn""eer r ccoonnssii""eerraattiioon n iis s aa continuin$ continuin$  au"it cient. au"it cient. 1

166  oo##ppaarrisisoon n oof f aactctuuaa  reressuuts ts //eersrsuus s bbuu""$$eettee" " ffii$$uurrees s is is nnoo(n (n aas s //aarriiaannce ce aannaa!!ssiiss.. 1& 1&  1' 1'  1) 1)  2* 2*  2

211  ++SSA A 5555* * ccoo//eerrss reate" parties.reate" parties. Reate" parties are Reate" parties are in"icate" b! in"icate" b! transactions (hich ha/etransactions (hich ha/e abnor#a ter#s of tra"e.

abnor#a ter#s of tra"e. 22 22  23 23 A A  24 24 A A  2

255  ieiennt #t #aannaa$$ee##eennt t is is ee00ppeeccttee" " to to hhaa//e a e a ""eeeeppeer ur unn""eerrsstatann""iinn$ o$ of tf thhe ee ennttiit!t!’’s os oppeerraatitioonnss.. The au"itor is e0pecte" to obtain an un"erstan"in$ of t

The au"itor is e0pecte" to obtain an un"erstan"in$ of t he entit! sufficient for hi#=her tohe entit! sufficient for hi#=her to perfor# the au"it effecti/e! but not

perfor# the au"it effecti/e! but not so #uch as to be co#parabe to the e/e oso #uch as to be co#parabe to the e/e o ff operationa no(e"$e possesse" b! #ana$e#ent.

operationa no(e"$e possesse" b! #ana$e#ent. 2

266  TThhiis s pprrooccee""uurre e iis s aa substanti/e test substanti/e test .. 2&

2&  2' 2' A A  2

2))  ;;oosst t bbuussiinneesss s rriisss s ""o o hhaa//e e ffiinnaanncciiaa  ccoonnssee--uueenncceess.. 3*

3* 

1* 1*

&'AP(E"

&'AP(E" 5 5 : : Study Study and and E+aluation E+aluation o* o* Internal Internal &ontrol&ontrol 51

51 : : (rue (rue or or )alse)alse 1

1 FAFALLSESE >b>btatain in unun"e"ersrstatann"i"in$ n$ of of iintnterernana c conontrtroos rs reeaatete" t" to fo fininananciciaa s statatete#e#entnts as au"u"itit 2

2 FAFALLSESE nnteternrna a cocontntroro " "ooes nes not aot a""""reress ss aa b bususininesess rs risiss 8s 8onon! ! ththosose re risiss (s (hhicich hh haa/e /e bbeeeenn i"entifie" b! #ana$e#ent9.

i"entifie" b! #ana$e#ent9. 3

3 FAFALLSESE t t is is ththe ae au"u"ititoror’s ’s sesecocon"n"arar! c! cononsisi"e"eraratition on to to prpro/o/i"i"e ce cononsstrtrucuctiti/e /e susu$$$$eeststiiononss.. 4

4 FFAALLSSEE SS##aaeer r eennttiittiiees s uussee ess for#a ess for#a  #eans an" si#per processes. #eans an" si#per processes. 5 5 TTRRUUEE 6 6 TTRRUUEE & & TTRRUUEE '

' FAFALSLSEE RiRis s asassesessss#e#ent nt is is ththe ie i"e"entntifificicatatioion an an" n" ananaa!s!sis is of of rereee/a/ant nt ririsss ts to o acachihie/e/e#e#enent t of of ththee ob7ecti/es for#in$ a basis for "eter#inin$ ho( the riss shou" be #ana$e".

ob7ecti/es for#in$ a basis for "eter#inin$ ho( the riss shou" be #ana$e". )

) TTRRUUEE 1

1** TTRRUUEE 11

11 FAFALLSESE oontntroro a acctiti/i/ititiees #s #aa! a! asso bo be ae appppiie" e" in in a ca coo#p#pututereri%i%ee" e" en/n/irironon#e#ennt.t. 1

122 TTRRUUEE 1

133 TTRRUUEE 14

14 TRTRUEUE :o:ote te hoho(e(e/e/er r ththat at #o#oninitotoririn$ n$ is is #a#ainin! ! peperfrforor#e#e" " fofor r ththe e pupurprposose e of of "e"eteter#r#inininin$ $ ththee a"e-uac! an" effecti/eness of interna contros.

a"e-uac! an" effecti/eness of interna contros. 1

155 TTRRUUEE 1

166 FFAALLSSE E ::oot at a  ccoonnttrroos as arre re reeee//aannt tt to o tthhe e aauu""iitt.. 1

1&& TTRRUUEE 1'

1' FAFALSLSEE >b>btatainininin$ a$ an un un"n"ererststanan"i"in$ n$ of of ininteternrna a cocontntroros s inin/o/o//es es e/e/aauauatitin$ n$ ththe "e "esesi$i$n an an"n" i#pe#entation 8or operation9

i#pe#entation 8or operation9 of contros.of contros. 1)

1) FAFALSLSEE A (A (eaeannesess in s in ininteternrna a cocontntroro t thahat ct couou" " haha/e /e a #a #atatereriaia e effffecect on t on ththe fe fininanancicia a ststatate#e#enentsts is no(n as a #ateria

is no(n as a #ateria (ea3ness in interna contro (ea3ness in interna contro .. 2

2** TTRRUUEE 21

21 FAFALLSESE f f cconontrtroos s arare e nonot t efeffefectcti/i/e e cconontrtro o riris s is is asasssesessese" " at at ??,?,?.. 2

222 TTRRUUEE 2

233 TTRRUUEE 24

24 FAFALSLSEE FuFurtrtheher r auau"i"it t prprococe"e"urures es ininccu"u"e e teteststs s of of cocontntroros s anan" " susubsbstatantnti/i/e e teteststs os onn!.!. 2

255 TTRRUUEE 26

26 FAFALSLSEE TeTeststs of s of cocontntroros s arare pe pererfofor#r#e" e" onon! ! (h(hen en ththe pe prereii#i#inanar! cr! conontrtro o riris s asassesessss#e#ent int is ?s ?,,?.?. 2

2&& TTRRUUEE 2'

2' FAFALSLSEE AsAssesessss#e#ent nt of of cocontntroro r risis  is is susub7b7ecect tt to o popossssibibe e rere/i/isision on in in ii$h$ht ot of sf sububsese-u-uenentt "e/eop#ents "urin$ the au"it.

"e/eop#ents "urin$ the au"it. 2

2)) TTRRUUEE 3*

3* FAFALSLSEE LaLac c of of sese$r$re$e$atatioion on of "f "ututieies is is ns not ot an an ininhehererent nt ii#i#itatatition on of of ininteternrna a cocontntroro..

52

52 : : Multiple Multiple &.oice&.oice 1

1 A A  2

2  hhooiicce e A A iis s iinnccoorrrreecct t bbeeccaauusse e tthhe e aauu""iittoor r ##uusst t ssttii  oobbttaaiin n aan n uunn""eerrssttaann""iinn$ $ oof f tthhee accountin$ s!ste# an" contro proce"ures of

accountin$ s!ste# an" contro proce"ures of an entit!. an entit!. hoice  is incorrect becausehoice  is incorrect because contro proce"ures 8ree/ant to the au

contro proce"ures 8ree/ant to the au"it9 aso re-uire the au"it9 aso re-uire the au"itor’s consi"eration. "itor’s consi"eration. hoice hoice  is incorrect because not a contro

is incorrect because not a contro  proce"ures are consi"ere" b! the au"itor 8on! those proce"ures are consi"ere" b! the au"itor 8on! those ree/ant to the au"it9.

ree/ant to the au"it9. 3

3  4 4  5

5  TThhe e iinntteerrnnaa  ccoonnttrroo  ss!!ssttee# # oof a f a ccoo##ppaann! ! iis s bbrrooaa""eer r iin n ssccooppe e ccoo##ppaarree" " tto o tthhe e aaccccoouunnttiinn$$

11 11

s!ste# of the entit!. s!ste# of the entit!. 6

6  & &  '

'  ::oot t aa  ccoonnttrroos s aarre e rreeee//aannt t tto o tthhe e aauu""iittoror’’s s rrisis  aasssseessss##eennt t 88oonn! ! ththoosse e ((hhicich h ##aa! ! aaffffeecctt the entit!’s abiit! to pro"uce fair! state" financia state#ents9.

the entit!’s abiit! to pro"uce fair! state" financia state#ents9. )

) A A  1

1**  hhooicice e A A rreeffeerrs s tto o rriiss  aasssseessss##eennt t pprrococeessss. . hhooiicce e   rreeffeers rs to to ththe e iinnfforor##aatitioon n ss!!sstete##.. hoice  refers to contro acti/ities.

hoice  refers to contro acti/ities. 11

11  12

12  SpSpececifific ic aaututhohoriri%a%atition on is is rere-u-uirire" e" ffor or nononnrrououtitine ne trtraansnsacactitionons s (h(hiie e $$enenereraa  aaututhohoriri%a%atition on isis re-uire" for routine transactions.

re-uire" for routine transactions. 1

133  RRiiss  aarriissees s ffrroo# # cchhaann$$ee. . hhooiicce e   sshhoo((s s ssttaabbiiiitt! ! 88nno o cchhaann$$ee99.. 14 14  15 15  16 16  1 1&& AA SSeee e ))1 1 nnuu##bbeer r 11'' 1

1'' AA TThhe e uunn""eerrssttaann""iinn$ $ oof f iinntteerrnnaa  ccoonnttrroo  iis s uussee" " tto o ""eetteerr##iinne e tthhee contro ris3 contro ris3  not inherent ris. not inherent ris. 1) 1)  2 2**  SSeee e nnuu##bbeer r 11&&.. 21 21  22 22 A A  23 23  24 24  25 25  2

266 AA TThhe e bbaassiis s fofor r tthhe e ccoonntrtroo  rriiss  aasssseessss##eennt t iis s ""ooccuu##eennttee" " oonn! ! ((hheen n tthhe e ccoonnttrroo  rriiss assess#ent is Less than ?i$h.

assess#ent is Less than ?i$h. 2

2&& AA hhooiicce  e  iis is innccoorrrreecct bt beeccaauusse te thhe pe prreeii##iinnaarr! a! asssseessss##eennt ot of cf coonnttrroo r riiss i is "s "oonnee before before  tests tests of contros.

of contros. hoice  is incorrect because the hoice  is incorrect because the prei#inar! assess#ent of contro ris for prei#inar! assess#ent of contro ris for aa financia state#ent assertion is nor#a!

financia state#ent assertion is nor#a! ?4,? ?4,?  uness the au"itor is abe to i"entif! uness the au"itor is abe to i"entif! contros contros  that are potentia! reiabe.

that are potentia! reiabe. 2

2''  hhooiicce e A A iis s iinnccoorrrreecct t 88sseee e ccoo####eennt t iin n nnuu##bbeer r 226699. . hhooiicce e   iis s iinnccoorrrreecct t bbeeccaauussee substanti/e tests cannot be ei#inate"

substanti/e tests cannot be ei#inate" re$ar"ess of the contro ris assess#re$ar"ess of the contro ris assess#ent. ent. hoice hoice  is incorrect because e/i"ence re$ar"in$ the operation of contros in a prior perio" #a! be is incorrect because e/i"ence re$ar"in$ the operation of contros in a prior perio" #a! be consi"ere" "urin$ the current au"it.

consi"ere" "urin$ the current au"it. 2

2))  hhooicice A e A iis is innccoorrrreect ct bbeecacauusse te teesstts os of cf coonntrtroos s aarre ue ussee" t" to /o /eerriiff! e! effffeecctti/i/eenneesss os of cf coonntrtrooss not #ana$e#ent assertions.

not #ana$e#ent assertions. hoice  is incorrect because ana!hoice  is incorrect because ana!tica proce"ures cannot betica proce"ures cannot be use" to /ai"ate contro ris an" substanti/e t

use" to /ai"ate contro ris an" substanti/e t ests are not use" to /ai"ate contro ests are not use" to /ai"ate contro ris.ris. hoice  is incorrect because the assess#ent of contro ris has area"! been perfor#e" hoice  is incorrect because the assess#ent of contro ris has area"! been perfor#e" 8see -uestion9.

8see -uestion9. 3

3**  TTeesstts s oof f ccoonnttrroos s ((ii  nnoot t bbe e ppeerrffoorr##ee" " ssiinncce e tthheerre e aarre e ##iissssiinn$ $ ccoonnttrrooss.. 3

311 AA hhooiiccees s     aann" "   aarre e ssuubbssttaannttii//e e tteessttss.. 32

32 A A  3

333  hhooiicce e   iis s ee//ii""eenncce e oobbttaaiinnee" " ""uurriinn$ $ tthhe e ppeerrffoorr##aanncce e oof f ssuubbssttaannttii//e e tteessttss.. 34

34  3

355  SSeee e ccoo####eennt t ffoor r hhooiicce e   iin n nnuu##bbeer r 22)).. 36

36  3& 3&  3

3''  AAs s tthhe e aacccceeppttaabbe e ee//ee  oof f ""eetteeccttiioon n rriiss "ecreases "ecreases  the au"itor reies on #ore strin$ent the au"itor reies on #ore strin$ent substanti/e testin$. substanti/e testin$. 3) 3)  4* 4* A A  12 12

&'AP(E"

&'AP(E" 10 10 : : Su6stanti+e Su6stanti+e (esting (esting and and ocumentationocumentation 101

101 : : (rue (rue or or )alse)alse 1

1 FFAALLSSEE 2

2 FAFALSLSEE AuAu"i"it et e/i/i"e"encnce ie incncuu"e"es os onn! ! ththe ie infnforor#a#atition on ususe" e" b! b! ththe e auau"i"itotor ar as a s a babasisis fs for or hihis os opipininionon.. 3

3 TTRRUUEE 4

4 TTRRUUEE 5

5 FFAALLSSEE AAccccoouunnttiinn$ $ rreeccoorr""ss  oon n tthheeiir r oo((nn  ""oo not not  constitute sufficient appropriate au"it e/i"ence. constitute sufficient appropriate au"it e/i"ence. 6

6 FFAALLSSEE TThhe e hhii$$hheer r tthhe e --uuaaiitt! ! oof f aauu""iit t ee//ii""eennccee  tthhee ess ess  e/i"ence is re-uire". e/i"ence is re-uire". &

& FFAALLSSEE >b>bttaaiinninin$ $ aauu""iit et e//ii""eennce ce rreeaattinin$ $ tto a o a ppaarrtticicuuaar ar asssseerrttiion on iiss not not  a substitute for obtainin$ a substitute for obtainin$ au"it e/i"ence re$ar"in$ another assertion.

au"it e/i"ence re$ar"in$ another assertion. ' ' TTRRUUEE ) ) TTRRUUEE 1 1** TTRRUUEE 1

111 FFAALLSSEE TThhiis s ssttaattee##eennt t rreeffeerrs s ttoo substanti/e tests substanti/e tests .. 1

122 TTRRUUEE 13

13 FAFALSLSEE nn-u-uirir! i! is cs cononsisi"e"erere" a" as is insnsufuffificicienent ut unnesess cs cororroroboboraratete" b" b! e! e/i/i"e"encnce fe froro# o# othther er auau"i"itt proce"ures.

proce"ures. 1

144 FFAALLSSEE TThhe e hhii$$hheer r tthhe e aasssseessss##eennt t oof f rriiss  tthhee moremore reiabe is the au"it e/i"ence sou$ht b! thereiabe is the au"it e/i"ence sou$ht b! the au"itor fro# substanti/e proce"ures.

au"itor fro# substanti/e proce"ures. 1

155 TTRRUUEE 16

16 FAFALLSESE SuSubsbstatantnti/i/e e teteststs s aare re nene/e/er r eeii#i#inanatete" " in in an an auau"i"it t enen$a$a$e$e#e#entnt.. 1&

1& FAFALSLSEE AuAu"i"it obt ob7e7ectcti/i/es ees eststababiish bsh broroa" $a" $enenerera $a $oaoass (h (hiie aue au"i"it prt prococe"e"urures ses spepecicif! tf! the "he "etetaiaiee"" (or to be perfor#e".

(or to be perfor#e". 1'

1' FAFALSLSEE AnAnaa!t!ticica a prprococe"e"urures aes are re rere-u-uirire" e" as as a pa paannnninin$ p$ prorocece"u"ure re anan" a c" a co#o#ppetetioion pn prorocece"u"urere b butut not as a substanti/e test.

not as a substanti/e test. 1

1)) TTRRUUEE 2*

2* FAFALLSESE TeTeststs os of "f "etetaaiis cs caan bn be ue usse" e" fofor /r /ererifif!i!in$ n$ e0e0isistetencnce e anan" " /a/auuatatioion.n. 21

21 FAFALSLSEE CoCorrinin$ $ papapepers rs "o "o nonot st serer/e /e as as a a susubsbstititutute te fofor r ththe e ccieientnt’s ’s fifinanancnciaia r rececoror"s"s.. 2

222 TTRRUUEE 2

233 FFAALLSSEE CCoorriinn$ $ ppaappeerrs s sshhoouu"" notnot be ept in the cient’s pre#ises.be ept in the cient’s pre#ises. 24

24 FAFALSLSEE CoCorrinin$ p$ papaperers (s (hihich ch cocontntaiain in infnforor#a#atition on rereaatitin$ n$ prpri#i#ararii! t! to tho the ae au"u"it oit of a sf a sinin$$e pe pererioio"" are no(n as current fies.

are no(n as current fies. 2

255 FFAALLSSEE TThhee primaryprimary purpose of in"e0in$ is to purpose of in"e0in$ is to increase efficienc! increase efficienc!  in the rechecin$ an" re/ie( of in the rechecin$ an" re/ie( of (or perfor#e".

(or perfor#e". 1*2

1*2 1

1 A A  &orrection:&orrection: hoice A hoice A shou" rea"B shou" rea"B DThe infor#ation DThe infor#ation obtaine" b! obtaine" b! thethe au"itor au"itor ... ...  2

2  3 3  4

4  SSoo##e e aauu""iit t pprrooccee""uurrees s aa""""rreesss s tt((o o oor r ##oorre e aauu""iit t oobb77eeccttii//eess.. 5

5  SSeee e nnoottees s iin n 11**1 1 nnuu##bbeer r && 6 6  & &  ' '  )

)  TThhe e --uueessttiioon n ""ee##aann""s s ffoor r ee00aa##ppees s ooff assets assets  (hich are  (hich are inspecte". inspecte". hoice A is hoice A is inco#pete.inco#pete. hoice  incu"es cancee" checs an" saes "ocu#ents

hoice  incu"es cancee" checs an" saes "ocu#ents 8both of (hich are not assets9.8both of (hich are not assets9. hoice  incu"es cancee" checs 8a$ain not an asset9.

hoice  incu"es cancee" checs 8a$ain not an asset9. 1* 1*  11 11  12 12  13 13  13 13

14 14  15 15  1

166  SSaa##ppiinn$ $ aaffffeecctts s tthhe e ssuuffffiicciieenncc! ! oof f aauu""iit t ee//ii""eennccee.. 1&

1&  1' 1' A A  1

1)) AA TThhe "e "iiffffiicucut! t! aann" " ee00ppeennsse ie inn//oo//ee" i" in n tetesstitinn$ a $ a ppaarrtiticucuaar ir itete# i# is ns noot a t a //aaii" b" baassiis fs foor ar ann au"itor to "eci"e to o#it a test.

au"itor to "eci"e to o#it a test. 2

2**  TThhe e hhii$$hheer r tthhe e aauu""iittoorr’’s s aasssseessss##eenntts s oof f iinnhheerreennt t aann" " ccoonnttrroo  rriissss  tthhee #ore #ore  reiabe an" reiabe an" ree/ant is the au"it e/i"ence sou$ht b! the au"itor.

ree/ant is the au"it e/i"ence sou$ht b! the au"itor. 21

21  2

222  hhooiicce e   iis s iinnccoorrrreecct t bbeeccaauusse e ssuubbssttaannttii//e e tteesstts s aarree in/erse! reate" in/erse! reate"  to the au"itor’s reiance to the au"itor’s reiance on interna contros. on interna contros. 23 23  24 24  25 25  26 26 A A  2& 2&  2' 2' A A  2) 2)  3

3**  hhooiiccees s AA    aann" "  ( (aarrrraannt tt thhe e uusse e oof f ppoossiittii//e e ccoonnffiirr##aattiioon n rree--uueessttss.. 31 31 A A  32 32  33 33  3

344  A A ccoopp! ! oof f tthhee e0ternae0terna au"itor’s au"it pro$ra# shou" be incu"e" in the (orin$ papers.au"itor’s au"it pro$ra# shou" be incu"e" in the (orin$ papers. 35 35  36 36 A A  3& 3&  3' 3'  3) 3)  4* 4* 

&'AP(E" 11 % Basic Audit Sampling &oncepts &'AP(E" 11 % Basic Audit Sampling &oncepts 111 :

111 : (rue or (rue or )alse)alse 1

1 FFAALLSSEE 2

2 TTRURUEE TeTeststs ps pererfofor#r#ee" o" on 1n 1**** o of tf the he itite#e#s (s (itithihin a n a popopupuaatition on "o"oes es nonot ct cononststititutute se saa#p#piinn$.$. 3 3 TTRRUUEE 4 4 TTRRUUEE 5 5 TTRRUUEE 6 6 TTRRUUEE & & TTRRUUEE ' ' TTRRUUEE ) ) TTRRUUEE 1 1** TTRRUUEE 1

111 FFAALLSSEE ThThe e aarr$$eer tr thhe te tooeerraabbe ee errrroror t thhe se s##aaeer tr thhe se saa##ppe se sii%%ee 1

122 FFAALLSSEE nn tests of contros tests of contros  the toerabe the toerabe "e/iation rate"e/iation rate is the #a0i#u#is the #a0i#u#... 1

133 TTRRUUEE 1

144 TTRRUUEE 1

155 FFAALLSSEE TThhiis s ssttaattee##eennt t rreeffeerrs s ttoo ran"o# seection ran"o# seection .. 16

16 FAFALSLSEE StStraratitifificacatition #on #a! ba! be ae apppproroprpriaiate tte to ao assssisist in tt in the ehe efffficicieient ant an" n" efeffefectcti/i/e "ee "eisis$n o$n of thf the sae sa#p#pee.. 1

1&& FFAALLSSEE ThThe e rriiss  oof f oo//eerrrreeiaianncce e aann" " tthhe e rrisis  oof f iinnccororrreecctt acceptance acceptance ...

14 14

1 1'' TTRRUUEE 1 1)) TTRRUUEE 2 2** TTRRUUEE 21

21 FAFALLSESE :o:onnsstatatitiststicicaa  sasa#p#pinin$ $ "o"oes es nnot ot ususe e sstatatitiststicica a fofor#r#uuaas.s. 2

222 FFAALLSSEE SaSa##ppiinn$ $ ffoorr /ariabes /ariabes  is $enera! use" in substanti/e testin$. is $enera! use" in substanti/e testin$. 2

233 TTRRUUEE 2

244 TTRRUUEE 25

25 TRTRUEUE f f ththe e popopupuaatition on is is e0e0pepectcte" e" to to be be ererrororrfrfreeee t thihis s (a(arrrranants ts a a rere"u"uctctioion n ofof b but ut nonott ei#ination of the sa#pe si%e.

ei#ination of the sa#pe si%e. 2

266 FFAALLSSEE 112

112 : : Multiple Multiple &.oice&.oice 1 1  2 2  3 3  4

4 AA SSeeeeccttiinn$ $ ssppeecciiffiic c iittee##s s iinn//oo//e e sseeeeccttiinn$$ hi$h /aue or 3e! ite#s hi$h /aue or 3e! ite#s .. 5 5 A A  6 6  & &  ' '  ) ) A A  1* 1*  1

111 AA ;;iissssttaattee##eenntts s rreeffeer r tto o eerrrroorrs s ffoouunn" " ""uurriinn$ $ ssuubbssttaannttii//e e tteessttiinn$$.. 12

12  13 13 A A  1

144 AA SSaa##ppinin$ $ rriiss  iis s iinn//eerrssee! ! rreeaatete" " tto o ssaa##ppe e ssii%%ee. . ::ootte e aasso o tthhaat t ssaa##ppiinn$ $ rrisis  cacan n bbee ei#inate" b! 1** testin$. ei#inate" b! 1** testin$. 15 15 A A  16 16  1

1&& AA hhooicice  e  is is iinnccororrreecct bt beeccaauusse te thhe -e -uueessttiioon in is ts taaiinn$ a$ abbouout tt teesstts os of cf coonnttrrooss n noot st suubbssttaanntiti//ee tests.

tests. hoice  is incorrect because tests of hoice  is incorrect because tests of contros an" substanti/e tests ha/e bcontros an" substanti/e tests ha/e beeneen co#bine" in this state#ent.

co#bine" in this state#ent. hoice  refers to the ieihoo" hoice  refers to the ieihoo" of assessin$ contro ris tooof assessin$ contro ris too o(. o(. 1' 1'  1) 1) A A  2* 2*  21 21  2

222  TThhe e iinntteerr//aa  iis s ccoo##ppuuttee" " aass popuation si%e "i/i"e" b! sa#pe si%e popuation si%e "i/i"e" b! sa#pe si%e .. 2

233  TThhe e ""iissaa""//aannttaa$$e e ccaan n bbe e rreeccttiiffiiee" " bb! ! tthhe e uusse e oof f rraann""oo# # ssttaarrttss.. 24 24  25 25  26 26  2& 2&  2

2''  TThhiis s rraatte e iis s ""ee//eeooppee" " iin n ii$$hht t oof f ththe e aauu""iitotorr’’s s uunn""eerrsstatann""iinn$ $ of of tthhe e eenntitit! t! aann" " iittss en/iron#ent.

en/iron#ent. 2

2)) AA TThhiis rs raatte ie is "s "ee//eeooppee" b" baassee" o" on tn thhe e aauu""iittoorr’’s ps prrooffeessssiioonnaa 7 7uu""$$##eenntt.. 3* 3*  31 31  32 32  3

333  RReeffeer r tto o ++SSA A 5533**  AAppppeenn""ii00 34 34  35 35  15 15

36 36  3& 3& A A  3

3'' AA 44==11*** * G G 44  ssaa##ppe e ""ee//iaiattiion on rraate te H H 22  aao(o(aanncce e ffor or ssaa##ppiinn$ $ rrisis  G G 66  uuppppeer r ""ee//iiaattioionn rate /ersus toerabe "e/iation rate of 5

rate /ersus toerabe "e/iation rate of 5 3) 3)  4* 4*  41 41  42 42  43 43  4

444  TTooeerraabbe e ##iissssttaattee##eennt t iis s iinn//eerrssee! ! rreeaattee" " tto o ssaa##ppe e ssii%%ee 45

45  46 46  4& 4& A A  4

4''  ::ootte te thhaat tt thhe se saa##ppe "e "ee//iiaattiion on rraatte 8e 8iin n tetesstts os of cf coonntrtrooss9 n9 neeee" " nnoot bt be e pprroo77eectctee""I oI onn! t! thhee sa#pe #isstate#ent 8in substanti/e tests9 nee" to be pro7ecte" to the popuation. sa#pe #isstate#ent 8in substanti/e tests9 nee" to be pro7ecte" to the popuation. 4) 4)  5* 5* A A  51 51  52 52  53 53  &'AP(E"

&'AP(E" 12 12 : : &ompleting &ompleting t.e t.e AuditAudit 121

121 : : (rue (rue or or )ales)ales 1

1 TTRRUUEE 2

2 TTRRUUEE 3

3 FFAALLSSEE A A pprroo//iissiioon n iis s nnoot t uunncceerrttaaiin n aas s tto o ee00iisstteennccee.. 4

4 TTRRUUEE 5

5 FAFALLSESE :o:ot t aa  susubsbse-e-ueuent nt e/e/enents ts nenee" e" a"a"7u7ustst#e#entntI I soso#e #e rere-u-uirire e "i"iscscoosusure re onon!!.. 6

6 FFAALLSSEE &

& TTRRUUEE '

' FFAALLSSEE TThhe e ppeerriioo" " oof f aasssseessss##eennt t iiss at east at east  12 #onths fro# the reportin$ "ate. 12 #onths fro# the reportin$ "ate. )

) TTRRUUEE 1*

1* FAFALLSESE ThThe ae au"u"ititor or in in ththis is cacase se shshouou" " isissusue a -e a -uauaiififie" e" or or ""isisccaiai#e#er or of of opipinnioion.n. 11

11 FAFALSLSEE ChChen en ototheher sr sufuffificicienent at apppproroprpriaiate te e/e/i"i"enence ce cacan bn be re reaeasosonanabb! e! e0p0pecectete" t" to eo e0i0istst s sucuchh e/i"ence is obtaine" rather than si#p! $ettin$ (ritten

e/i"ence is obtaine" rather than si#p! $ettin$ (ritten representations fro# #ana$e#ent.representations fro# #ana$e#ent. 1

122 TTRURUEE ++SSA 5A 5''* r* ree--uuirirees (s (rriitttteen #n #aannaa$$ee##eennt rt reepprreesseennttaattiioon n eettteterrss.. 1

133 TTRRUUEE 1

144 TTRRUUEE 15

15 FAFALSLSEE FFo(o(chchararts ts of of ininteternrna a cocontntroro  "o "o nonot ct cononststititutute a e a fofor# r# of of ininteternrna a coco####ununicicatatioion.n. 122

122 : : Multiple Multiple &.oice&.oice 1 1 A A  2 2  3 3 A A  4 4  5

5 AA SSuubbssee--uueennt t ee//eenntts s ththaat t ppeerrtataiin n tto o ccoonn""iittioionns s tthhaat t ""ii" " nnoot t ee00iisst t aas s oof f bbaaaannce ce sshheeeet t ""aatte e aarree nor#a! "iscose".

nor#a! "iscose". 6

6  & & A A  '

'  TThhiis s aaccccoo##ppiisshhees s nno o ppuurrppoosse e rreeaattee" " tto o ssuubbssee--uueennt t ee//eennttss..

16 16

) )  1* 1*  11 11  1

122  hhooicicees s AA   a ann" "   iinn//oo//e e iinncrcreeaassiinn$ $ ee00ppeenn""iituturrees (s (hhiich ch ccouou" " aa$$$$rraa//aate te ththe e aarreeaa""!! precarious con"ition of ?i o.

precarious con"ition of ?i o. 1

133 AA ::oonnccoo##ppiiaanncce e (i(ith th tteerr##s s oof f ""eebbt t aa$$rreeee##eenntts s nnoorr##aa! ! rraaisise e a a ""oouubbts ts aabboouut t $$ooiinn$$ concern. concern. 14 14  15 15  16 16  1& 1& A A  1' 1'  1 1))  SSeee e ccoo####eenntts s uunn""eer r 11221 1 nnuu##bbeer r 1111 2* 2*  2

211 AA TThhe e ##ininuuttees s oof f ##eeeetitinn$$s s ##uusst t aa  bbe e ##aa""e e aa//aaiiaabbe e tto o ththe e aauu""iitotorr. . ;;aateterriiaaiit! t! iis s nnoott appicabe here J a #inutes #ust be pro/i"e" to the au"itor.

appicabe here J a #inutes #ust be pro/i"e" to the au"itor. 22 22  23 23  24 24  25 25  26 26 A A  2& 2&  2' 2'  2) 2)  3

3**  ReReaatete" p" paarrtitiees ss soo##eetti#i#ees as accccoouunnt ft foor tr thheeiir tr trraannssaactctiionons is in a n a ((aa! t! thhaat st suubbsstatannce ce ""iiffffeerrss fro# the for#.

fro# the for#. 31 31  32 32 A A  33 33 A A  34 34  &'AP(E"

&'AP(E" 1- 1- : : (.e (.e Audit Audit "eport"eport 1-1 :

1-1 : ("E ("E or )A8SEor )A8SE 1

1 TTRRUUEE 2

2 FAFALLSESE ThThis is sisitutuaatition on reresusutts ts to a "o a "isisa$a$reree#e#enent (t (iith th #a#anana$e$e#e#ennt t nnot ot a a i#i#ititaatition on oon sn scocopepe.. 3

3 FFAALLSSEE 4

4 TTRRUUEE 5

5 FAFALLSESE ThThis is sisitutuaatition on (o(ouu" r" re-e-uiuire re ththe ue use se of of a -a -uuaaififieie" o" or ar a"/"/ererse se opopiininionon " "epepeen"n"inin$ o$ onn #ateriait!.

#ateriait!. 6

6 FAFALSLSEE ThThe ae au"u"ititor or is is rerespspononsisibbe ie in "n "etetecectitin$ n$ #a#ateteriria a #i#isssstatatete#e#entnts as aririsisin$ n$ frfro# o# eieithther er an an ererroror or orr frau".

frau". &

& FAFALSLSEE f f ththe e auau"i"itotor r cacan n nonot rt reeieie" " on on ththe e bebe$i$innnninin$ i$ in/n/enentotor! r! ththe e $r$rososs s prprofofit it aaso so cacan n nonot t bebe reie" upon hence resuts of operations can not be reie" upon but the baance sheet (ith reie" upon hence resuts of operations can not be reie" upon but the baance sheet (ith the correct baance of en"in$ in/entor! can be reie" upon

the correct baance of en"in$ in/entor! can be reie" upon '

' FAFALLSESE E#E#phphasasis is of of a #a #atatteter pr pararaa$r$rapaphs hs arare e aa(a(a!s !s ppaacece" b" befeforore a e a #o#o""ififieie" " opopininiionon.. ) ) TTRRUUEE 1 1** TTRRUUEE 1 111 FFAALLSSEE 1 122 TTRRUUEE 1 133 TTRRUUEE 1 144 TTRRUUEE 1& 1&

1

155 TTRRUUEE 16

16 FAFALSLSEE iiscscaai#i#er er of of opopininioion in is ns not ot apapprpropopririatate "e "ue ue to to a #a #atatereriaias s "e"epapartrturure fe froro# # ,A,AA+A+.. 1

1&& TTRRUUEE 1

1'' TTRRUUEE 1)

1) FAFALSLSEE ThThe ae au"u"ititor or shshouou" " nonot at accccepept ot or (r (itith"h"rara( ( frfro# o# enen$a$a$e$e#e#ent nt if if ththe ae au"u"ititor or is is nonott in"epen"ent in reation to the cient.

in"epen"ent in reation to the cient. 2

2** TTRRUUEE

1-2

1-2 : : M8(IP8E M8(IP8E &'9I&E&'9I&E 1 1  2 2  3 3 A A  4 4 A A  5 5  6 6  &

&  ,,AAAAS S iin n tthhe e ++hhiiiippppiinnees s aarre e nnoo((n n aas s ++SSAAss.. ' '  ) ) A A  1* 1*  11 11  12

12  Please disregardPlease disregard Cron$ hoicesCron$ hoices 13 13 A A  14 14  15 15  1

166  TThhiis s ssiittuuaattiioon n iinnccuu""ees s aan n aa""//eerrsse e ooppiinniioonn.. 1

1&&  TThheerre e iis s uunniiffoorr# # ((oorr""iinn$ $ ffoor r tthhe e aauu""iit t rreeppoorrt t 88SSeee e ++SSA A &&****==&&**1 1 aann" " &&**55==&&**6699 1' 1'  1) 1) A A  2* 2* A A  21 21 A A  22 22  23 23  24 24 A A  25 25  26 26  2& 2& A A  2' 2'  2) 2)  3* 3*  31 31 A A  32 32  33 33 A A  34 34 A A  35 35  36 36 A A  3& 3& A A  3' 3' A A  3) 3)  4* 4* A A  41 41  42 42  1' 1'