Our Lady of Fatima University

ACCTG 16

SET 8

1)What will an auditor who has been proposed for an audit engagement usually do prior to accepting a new client?

1. 1. Draft the financial statements of the client as a measure of goodwill.

1. 2. With the permission from the prospective client, contact the predecessor auditor to determine if there are any disagreements between the client and the audit firms.
   3. Obtain the potential  client's  permission to talk to the former auditor and review work papers.
   4. Perform a peer review on the potential client in accordance with professional standards.

2. Which of the following statements is  true with regard to the relationship among audit risk, audit evidence, and materiality?
   1. The lower the inherent risk and control risk, the lower the aggregate materiality threshold.
   2. Under conditions of high inherent and control risk, the auditor should place more emphasis on obtaining external evidence and should reduce reliance on internal evidence.
   3. Where inherent risk is high and control risk is low, the auditor may safely ignore inherent risk.
   4. Aggregate materiality thresholds should not change under conditions of changing risk levels.

3. Which of the following is most likely to be an overall response to fraud risks identified in an audit?
   1. Supervise members of the audit team less closely and rely more upon judgment.
   2. Use less predictable audit procedures.
   3. Use only certified public accountants on the engagement.
   4. Place increased emphasis on the audit of objective transactions rather than subjective transactions.

4. Which of the following represents  a procedure that the auditor may use because plausible relationships among financial statement balances are expected to exist?
   1. Attributes testing
   2. Enterprise risk assessment
   3. Inherent tests of control
   4. Analytical review

5. Which of the following statements  is incorrect regarding obtaining an understanding of the entity and its environment?
   1. Obtaining an understanding of the entity and its environment is  an  essential aspect of performing an audit in accordance with PSAs.
   2. Understanding of the entity and its environment establishes frame of reference within which the auditor plans the audit and exercises professional judgment about assessing risks of material misstatement in the financial statements and responding to those risks throughout the audit.
   3. The auditor's primary consideration is whether the understanding that has been obtained is sufficient to  assess  the risks of material misstatement in the financial statements and to design and perform further audit procedures.
   4. The depth of the overall understanding that is required by the auditor in performing the audit is at least equal to that possessed by management in managing the entity.

6. Inquiries directed towards those charged with governance may most likely
   1. Relate to their activities concerning the design, and effectiveness of the entity's internal control  and  whether management  has   satisfactorily responded to any findings from these activities.
   2. Help the auditor understand the environment in which the financial statements are prepared.
   3. Relate to changes in the  entity's marketing strategies, sales trends, or contractual arrangements with its customers.
   4. Help the auditor in evaluating the appropriateness of the selection and application of certain accounting policies.

7. The underlying reason for a code of professional conduct for any profession is
   1. That it is required by congress.
   2. The need for public confidence  in the quality of service of the profession.

1. 3. That it provides a safeguard to keep unscrupulous people out.
   4. That it allows Professional Regulation Commission to have a yardstick to measure deficient performance.

8. Professional accountants may encounter problems in identifying unethical behavior or in resolving an ethical conflict. When faced with significant ethical issues, professional accountants should do the following, except
   1. Follow the established policies of the employing organization to seek a resolution of such conflict.
   2. Review the conflict problem with the immediate superior if the organization's policies do not resolve the  ethical conflict.
   3. If the problem is not resolved with the immediate superior and the professional accountant determines to go to the next higher managerial level, the immediate superior need not be notified of the decision.
   4. Seek counseling and advice on a confidential basis with an independent advisor or the applicable professional accountancy body or regulatory body to obtain an understanding of possible courses of action.

9. While assessing the risk of material misstatement, the auditors identity risks, relate risk to what could go wrong, consider the magnitude of risks and:
   1. Assess the risk of misstatements due to noncompliance to laws and regulations.
   2. Consider the complexity of the transactions involved.
   3. Consider the likelihood that the risks could result in material misstatements.
   4. Determine materiality level.

10. Which of the following is least likely considered a financial statement audit risk factor?
    1. Management  operating  and financing decisions  are  dominated by top management.
    2. A new client with no prior audit history.
    3. Rate of change in the entity's industry is rapid.

1. 4. Profitability of the entity relative to its industry is inconsistent.

11. Which of the following is most likely to be considered a risk factor  relating  to fraudulent financial reporting?
    1. Low turnover of senior management.
    2. Extreme degree of competition within the industry.
    3. Capital structure including various operating subsidiaries.
    4. Sales goals in excess of any of the preceding three years.

12. Which of the following is correct concerning requirements about    auditor's communications about fraud?
    1. Fraud that involves senior management should be reported directly to the audit committee regardless of the amounts involved.
    2. All fraud with a material effect on the financial statements should be reported directly by the auditor to the SEC
    3. Fraud with a material effect on the financial statements should ordinarily be disclosed by the auditor through the use of an emphasis of a matter paragraph added to the audit report.
    4. The auditor has no responsibility to disclose fraud outside the entity  under any circumstances.

13. Which of the following factors most likely would heighten an auditor's concern  about the risk of fraudulent financial reporting?
    1. Large amounts of liquid assets that are easily convertible into cash.
    2. Low growth and profitability as compared to other entity's in the same industry.
    3. Financial management's participation in the initial selection of accounting principles.
    4. An overly complex organizational structure involving unusual lines of authority.

14. Which of the following is most likely to be an overall response to fraud risks identified in an audit?
    1. Only use certified public accountants on the engagement.

1. 2. Place increased emphasis on the audit of objective transactions rather than subjective transactions.
   3. Supervise members of the audit team less closely and rely more upon judgment.
   4. Use less predictable audit procedures.

1. 1. A    principal    purpose    of    a    letter of representation from management is to
      1. Remind management of its primary responsibility             for         financial statements.
      2. Serve as an introduction to company personnel and an authorization  to examine the records.
      3. Discharge the auditor from legal liability for his examination.
      4. Confirm in  writing  management's approval of limitations on the scope  of the audit.

16. Should the auditor uncover circumstances during the audit that may  cause  suspicions of management fraud, the auditor must
    1. Withdraw from engagement.
    2. Issue an adverse opinion.
    3. Issue a disclaimer.
    4. Evaluate their implications and consider the need to modify audit evidence.

17. In connection with the element of professional development, a CPA  firm's system of quality control should ordinarily provide that all personnel
    1. Possess judgment, motivation, and adequate experience.
    2. Seek assistance from persons having appropriate level of knowledge, judgment, and authority.
    3. Demonstrate compliance with  peer review directives.
    4. Have the knowledge required to enable them   to           fulfill responsibilities assigne

18. The implementation of quality control procedures that are applicable to the individual audit engagement is the responsibility of the
    1. CPA firm.
    2. Engagement quality control reviewer.

1. 3. Expert        contracted         by      the      firm       in connection with the audit engagement.
   4. Engagement team.

19. It involves a study or evaluation of  the quality of audit of financial statements through a review of quality control measures established by on CPA firms and individual CPAs in public practice to ensure compliance with accounting and auditing standards and practices
    1. External audit
    2. Compliance audit
    3. Peer review
    4. Quality review

20. Which of the following risks is entirely a quality criterion based on professional judgment?
    1. Inherent risk
    2. Control risk
    3. Detection risk
    4. Audit risk

21. Inherent risk is not a characteristic of the
    1. Major types of transactions.
    2. Client’s business.
    3. Substantive procedures.
    4. Effectiveness of the client’s accountants.

22. Misstatements must be compared to some measurement base before a decision can be made about the materiality of the failure to follow GAAP. A commonly accepted measurement base would be
    1. Net income.
    2. Total assets.
    3. Working capital.
    4. All of the above.

23. The primary deliverable of an engagement to perform  based on procedures prescribed by the intended user of the report is/are:
    1. The Review Report
    2. Report of Factual Findings
    3. Management Letter
    4. The financial statements

24. Fraudulent financial reporting is often called:
    1. Theft of assets
    2. Employee fraud
    3. Management fraud
    4. Defalcation

25. The ordinary examination of financial statements is not primarily designed to disclose defalcations and other irregularities although their discovery may result. Normal audit procedures are more likely to detect a fraud arising from
    1. Theft of inventories.
    2. Collusion on the part of several employees.
    3. Failure to record cash receipts  for services rendered.
    4. Forgeries on company checks.

26. Working papers prepared by a CPA in connection with an audit engagement are owned by the CPA, subject to certain limitations. The rationale for this rule is to
    1. Protect the working papers from, being subpoenaed.
    2. Provide the CPA with evidence and documentation which may be helpful in the event of a lawsuit.
    3. Provide the basis for excluding admission of the working papers as  evidence because of the privileged communication rule.
    4. Establish a continuity of relationship with the client whereby indiscriminate replacement of CPAs is discouraged.

27. The auditor's responsibility for failure to detect fraud arises
    1. Whenever the amounts involved are material.
    2. When such failure clearly results from noncompliance to generally accepted auditing standards.
    3. Only when such failure clearly  results from negligence so gross as to sustain an inference of fraud on the part of the auditor.
    4. Only when the examination was specifically designed to detect fraud.

28. The factor that distinguishes constructive fraud from actual fraud is
    1. Materiality.
    2. Quality of internal control.
    3. Type of error or irregularity.
    4. Intent.

29. If a CPA recklessly abandons  standards  of due care and diligence while performing an audit, he or she may be held liable to

unknown third parties for:

1. 1. Gross negligence.
   2. Fraudulent misconduct.
   3. Gross misconduct.
   4. Contributory negligence.

30. Of the following statements, which best distinguishes ordinary negligence from gross negligence?
    1. The more material the undetected error the greater the likelihood of ordinary negligence.
    2. Gross negligence is most probable when the auditor fails to detect errors that occurred under conditions of strong internal control.
    3. Failure to detect material errors, whether internal control is strong or  weak, suggests gross negligence.
    4. Failure to exercise reasonable care denotes ordinary negligence, whereas failure to exercise minimal care indicates gross negligence.

31. An auditor who believes that a material irregularity may exist should initially
    1. Consult legal counsel.
    2. Discuss the matter with those believed to be involved in the perpetration of the material irregularity.
    3. Discuss the matter with a  higher level of management.
    4. Withdraw from the engagement.

32. Which of the following statements is correct concerning the auditor's responsibility with respect to illegal acts?
    1. An auditor must design tests to detect both direct-effect and indirect-effect illegal acts.
    2. An auditor must design tests to detect both immaterial and material direct- effect illegal acts.
    3. An auditor must design tests to obtain reasonable assurance of detecting material direct-effect illegal acts.
    4. An auditor must design tests to detect both material direct-effect and material indirect-effect illegal acts.

33. If specific information comes to an auditor's attention that implies the existence of possible illegal acts that could have a

material, but indirect effect on-the financial statements, the auditor should next

1. 1. Report the matter to an appropriate level of management at least one level above those involved.
   2. Apply audit procedures specifically directed to ascertaining whether an illegal act has occurred.
   3. Seek the advice of an informed expert qualified to practice law as to possible contingent liabilities.
   4. Discuss the evidence with the  client's audit committee, or others with equivalent authority.

34. When planning the audit, if the auditor has no reason to believe that illegal acts exist, the auditor should
    1. Include audit procedures which have a strong probability of detecting  illegal acts.
    2. Make inquiries of management regarding their policies and regarding their knowledge of violations, and then rely on normal audit procedures to detect errors, irregularities, and illegalities.
    3. Still include some audit  procedures designed specifically to uncover illegalities.
    4. Ignore the topic.

35. When the auditor knows that an illegal act has occurred, the auditor must
    1. Issue an adverse opinion.
    2. Withdraw from the engagement.
    3. Report it to the proper government authorities.
    4. Consider the effects on the financial statements, including the adequacy of disclosure.

36. Assurance services differ from consulting services in that they

1. Focus on providing advice.
2. Involve monitoring of one party by another.
   1. I only.
   2. II only.
   3. Both I and II.
   4. Neither I nor II.

37. For     assurance      engagements     which     are

neither audits nor reviews of historical financial information, the following standard applies:

1. 1. PSAs
   2. PSAEs
   3. PSREs
   4. PSRSs

38. Unlike      consulting        services,        in     assurance services:
    1. There       is      confirmation         that       financial statement assertions are accurate.
    2. Misstated account balances are generally corrected by an independent audit.
    3. Ineffective internal controls may exist.
    4. Competing interests may exist between management and the users of statements.

39. The attest function:
    1. Is an essential part of every engagement performed by a CPA.
    2. Includes the preparation of a written report of the CPA's conclusion.
    3. Requires a complete review of all transactions during the period under examination.
    4. Requires a review of a sample of transactions during the period under examination.

40. Which of the following is an assurance service?
    1. Performance measurement
    2. Systems design and installation
    3. Tax planning
    4. Personal financial planning

41. Non-assurance engagements include all of the following services, except:
    1. Agreed-upon procedures engagements.
    2. Compilations           of       financial         or       other information.
    3. Management and tax consulting.
    4. Examination of prospective financial information.

42. Unlike         consulting           services,           assurance services:
    1. Make recommendation to management.
    2. Report on how to use information.
    3. Are two-party contracts.
    4. Report on the quality of information.

43. Identify the correct statement.
    1. Accounting services do not provide attestation.
    2. Management consulting services provide attestation in all cases.
    3. An audit provides limited assurance by attesting to the fairness of the client's assertions.
    4. A review provides positive assurance by attesting the reliability of the client's assertions.

44. An attestation engagement is one in which a CPA is engaged to:
    1. Assemble prospective  financial statements based on the assumptions of the entity's management without expressing any Testify as an expert witness in accounting, auditing or tax matters, given certain stipulated facts.
    2. assurance.
    3. Issue a written communication expressing a conclusion about the reliability of a written assertion that is the responsibility of another party.
    4. Provide tax advice or prepare a tax return based on financial information the  CPA has not audited or reviewed.

45. Assurance     engagements     encompass     the following types of services, except:
    1. Audit of historical financial statements.
    2. Review engagements.
    3. Management consulting.
    4. Attestation services.

46. Criteria that are embodied in laws or regulations, or issued by authorized or recognized bodies of experts that follow a transparent due process are called:
    1. Suitable criteria
    2. General criteria
    3. Established criteria
    4. Specifically developed criteria

47. Which of the following is not a characteristic of suitable criteria?
    1. Completeness
    2. Neutrality
    3. Relevance
    4. Comparability

48. The  criteria  to  be  used  for  a  particular

engagement can either be established or specifically developed. Established criteria are those

1. 1. Designed for the purpose of the engagement.
   2. Embodied in laws or regulations or issued by authorized or recognized bodies of experts that follow a transparent due process.
   3. Made available to the intended users.
   4. Not made available to  the  intended users.

1. 1. A  practitioner  should  accept  an assurance engagement only if
      1. The practitioner's conclusion is to be contained in a written report.
      2. The subject matter is the responsibility of either the intended users or the practitioner.
      3. The subject matter is in the form of financial information.
      4. The criteria to be used are not available to the intended users.

50. Assurance engagement risk is the risk
    1. Of expressing  an  inappropriate conclusion when the subject matter information is not materially misstated.
    2. That the practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated.
    3. Of  expressing  an  inappropriate conclusion when the subject matter information is either materially misstated or not materially misstated.
    4. Through loss from litigation, adverse publicity, or other events arising in connection with a subject  matter reported on.

51. The following are components of assurance engagement risk, except
    1. Detection risk
    2. Business risk
    3. Inherent risk
    4. Control risk

52. The predominant type of attestation service performed by CPAs is:
    1. Audit.
    2. Review.
    3. Compilation.

1. 4. Management consulting.

53. Which of the following is incorrect regarding a compilation engagement?
    1. The CPA uses his auditing expertise to collect, classify and summarize financial information.
    2. The CPA should exercise due care.
    3. The engagement ordinarily entails reducing detailed data to a manageable and understandable form.
    4. The procedures performed do not enable the accountant to express any form of assurance.

54. The type of assurance that is provided by the CPA on a compilation report is:
    1. Limited assurance.
    2. No assurance.
    3. Low assurance.
    4. Negative assurance.

1. 1. A  report  on  factual   findings   is   the end product of the auditor when performing:
      1. Audit.
      2. Review.
      3. Agreed-upon procedures.
      4. Compilation.

56. What assurance is provided by the auditor in an agreed-upon procedures engagement?
    1. No assurance.
    2. Low.
    3. Moderate.
    4. Reasonable.

57. The term "accountant" has been used by Auditing and Assurance Standards Council to refer to a CPA in public practice who is engaged to:
    1. Audit financial statements.
    2. Review financial statements.
    3. Apply agreed-upon procedures.
    4. Compile financial statements.

58. Which of the following best describes relationships among auditing, attest and assurance services?
    1. Attest is a type of auditing service.
    2. Assurance is a type of attest service.
    3. Auditing is a type of assurance service.
    4. Auditing and attest  services  represent two distinctly different types of services.

59. Which of the following is the single feature that most clearly distinguishes auditing, attestation, and assurance:
    1. CPA's approach to the service.
    2. Type of service.
    3. Scope of services.
    4. Training         necessary         to       perform        the service.

60. For assurance engagements regarding historical financial information, reasonable assurance engagements are called:
    1. Review engagements.
    2. Audit engagements.
    3. Compilation engagements.
    4. Agreed-upon procedures engagements.

61. In some assurance engagements, the evaluation or measurement of the subject matter is performed by the responsible party, and the subject matter information is in the form of an assertion by the responsible party that is made available to intended users. These engagements are called
    1. Recurring engagements
    2. Non-assurance engagements
    3. Direct reporting engagements
    4. Assertion-based engagements

62. What type of assurance engagement is involved when the practitioner expresses a positive form of conclusion?
    1. Positive assurance engagement
    2. Limited assurance engagement
    3. Reasonable assurance engagement
    4. Absolute assurance engagement

63. What type of assurance engagement is involved when the practitioner expresses a negative form of conclusion?
    1. Negative assurance engagement
    2. Assertion-based assurance engagement
    3. Limited assurance engagement
    4. Reasonable assurance engagement

64. Assurance engagements involve:
    1. Two  separate  parties:               a professional accountant and intended users.
    2. Two  separate  parties:               a professional accountant and a responsible party.

1. 3. Three       separate                         parties: a practitioner, a responsible party and intended users.
   4. Three separate parties: a professional accountant, a responsible party, and intended users.

65. The auditor's evaluation of the likelihood of material employee fraud is normally done initially as a part of
    1. The assessment of whether to accept the audit engagement.
    2. Understanding the entity's internal control structure.
    3. The Tests of Controls.
    4. The Tests of Transactions.

66. In which circumstance is a CPA firm's independence most likely to be impaired?
    1. An individual on the audit has a close relative who is a receptionist for the client.
    2. The father of the audit senior holds a material financial interest in the client of which the senior is unaware.
    3. The spouse of a staff member on the audit has an immaterial common stock investment in the audit client.
    4. The partner in charge of the office's compensation is affected by office profitability, a portion of which arises from this audit.

67. Which of the following partners is least likely to be considered a "covered member" for purposes of rendering  assurance  service  to of Company A, a nonaudit client, performed by the head office of a national CPA firm?
    1. The partner in charge of  the  Davao office.
    2. The partner in charge of the entire CPA firm.
    3. A partner in the Cebu office of the CPA firm who maintains a small, immaterial investment in  Company A.
    4. A partner in the Davao office who worked on the Company A for a different assurance  engagement  in   previous years, but currently has  no responsibilities with respect to the engagement

68. While performing services for their clients,

professionals have always had a duty to provide a level of care which is

1. 1. Reasonable.
   2. Greater than average.
   3. Superior.
   4. Guaranteed to be free from error.

69. The principal issue to be resolved in cases involving alleged negligence is usually
    1. The amount of the damages suffered by the users of the financial statements.
    2. Whether to impose punitive damages on defendant.
    3. The level of care required to be exercised.
    4. Whether       defendant        was      involved        in fraud.

70. Privity of contract exists between the
    1. Auditor and the Securities and Exchange Commission.
    2. Auditor and client.
    3. Auditor and third parties.
    4. All of the above

1. 1. A CPA is criminally liable if he
      1. Refuses to turn over the schedules or working papers prepared by the client staff to the client.
      2. Performs an audit in a negligent manner.
      3. Intentionally allows an omission of a material fact required to be stated in a financial statement.
      4. Was not able to submit the audited financial statements on time.

72. The auditor's defense of contributory negligence is most likely to prevail when
    1. Third party injury has been minimal.
    2. The client is privately held as contrasted with a public company.
    3. Undetected errors have resulted in materially misleading financial statements.
    4. The auditor fails to detect fraud resulting from management override of the control structure.

73. An expectation of the public is that the auditor will recognize that the primary users of audit services are:
    1. The employees
    2. The investors and creditors
    3. The SEC

1. 4. The board of directors

74. The overriding objective of the International Auditing Standards that are issued by the International Auditing Practices  Committee of the IFAC is
    1. To override a country’s regulations governing the audit of financial statements.
    2. To improve the uniformity of auditing practices and related services throughout the world.
    3. To provide a uniform application of specific audit procedures that are acceptable worldwide.
    4. To replace generally accepted auditing standards.

75. Management’s assertions in the financial statements are relevant to the audit process because:
    1. They provide evidence  that  auditors have prepared financial statements in accordance with GAAP
    2. They embody the audit procedures that will be performed by the audit engagement team.
    3. They include representations of financial statements in accordance with the applicable reporting criteria
    4. They relate to regulator’s expectations about audit results.

1. 1. A CPA firm is  considered  independent when it performs which of the following services for a publicly traded audit client?
      1. Serving as a member of the client’s board of directors.
      2. Accounting information system design and implementation.
      3. Tax return preparation as approved by the board of directors.
      4. Determining which accounting policies will be adopted by the client.

77. Jessie Cruz, CPA, forgot to test a client’s assessment of  goodwill  impairment  during an audit. Such an act  is  probably  an example of:
    1. Due diligence
    2. Reckless professional behavior
    3. Ordinary negligence
    4. Fraud

78. Similar to auditors in the CPA realm, internal auditors also strive to possess:
    1. Independence
    2. Competence
    3. Objectivity
    4. All of the above

1. 1. A review engagement  differs  in  scope as compared to an audit due to
      1. The subject matter of the audit.
      2. The quantity and type of evidence obtained.
      3. Ethical       requirements        with      respect       to independence.
      4. The users of the financial statements.

80. Which of the  following  statements concerning the intended user of  a professional accountant's report is incorrect?
    1. The responsible party and the intended user may both be within the same organization.
    2. The intended user should never be established by agreement between the practitioner and the responsible party or those engaging or employing the practitioner.
    3. In some  circumstances,  the  intended user may be established by law.
    4. The responsible party may also be one of the intended users.

81. The network firms are required to be independent of the client
    1. For  assurance  engagements provided to an audit client.
    2. For assurance engagements provided to clients that are not audit clients, when the report is not expressly restricted for use by identified users.
    3. For assurance engagements provided to clients that are not audit clients, when the assurance report is expressly restricted for use by identified users.
    4. All of the above

82. One difference between auditors and other professionals is that most professionals
    1. Need       not       be       concerned         about remaining independent.
    2. Do not have requirements for continuing education beyond college.
    3. Do      not     have      to     pass      a      rigorous

examination.

1. 4. Are not expected to act in public interest.

83. The Code of Professional Conduct would be violated if a member accepted a fee for services and the fee was
    1. Fixed by a public authority.
    2. Based on a price quotation submitted in competitive bidding.
    3. Based on the result of judicial proceedings.
    4. Payable after a specified finding was attaine

84. For which of the following services is a CPA professional required to be independent?
    1. Audits of historical financial statements
    2. Review services
    3. Examination          of      prospective         financial statements
    4. All of the above

85. For which of the following services is a CPA professional not required to be independent?
    1. Tax returns preparation
    2. Audits of historical financial statements
    3. Review engagement
    4. Examination of a forecast

86. It occurs when a firm or a member of the assurance team could benefit from  a financial interest in, or other self-interest conflict with, an assurance client.
    1. Self-interest threat
    2. Self-review threat
    3. Advocacy threat
    4. Familiarity threat

87. The CPA title was conceived and created, under the first accountancy law, for professional accountants engaged  in  which of the following?
    1. Accounting education
    2. Public accounting
    3. Management accounting
    4. Government accounting

88. Regarding practice of accountancy, which of the following certificates is issued to a CPA first, a certificate of registration or a certificate of accreditation?
    1. Certificate of registration
    2. Certificate of accreditation
    3. Both are issued at the same time

1. 4. Neither are issued to CPAs.

89. Examples of circumstances that may create self-interest threat include:
    1. Contingent fees relating to assurance engagements.
    2. A direct financial interest or material indirect financial interest in an assurance client.
    3. A loan or guarantee to or from an assurance client or any of its directors or officers.
    4. All of the above

90. Which of the following least likely create "self-interest threat"?
    1. Undue dependence on total fees from an assurance client.
    2. Concern about the possibility  of  losing the engagement.
    3. Having a close business relationship with an assurance client.
    4. Pressure to reduce inappropriately the extent of work performed in order to reduce fees

91. The integrated national professional organization of Certified Public Accountants accredited by the BOA and the PRC per PRC accreditation No. 15 dated October 2, 1975.
    1. Philippine Institute of Certified Public Accountants (PICPA)
    2. Auditing and Assurance Standards Council (AASC)
    3. Financial Reporting Standards Council (FRSC)
    4. Education Technical Council (ETC)

1. 1. A CPA-lawyer, acting  as  a  legal  counsel to one of his audit client, is an example of
      1. Self-interest threat
      2. Self-review threat
      3. Advocacy threat
      4. Familiarity threat

93. Intimidation threat
    1. Is not a threat to independence.
    2. Occurs when a member of the assurance team may be deterred from acting objectively and exercising professional skepticism by threats, actual or perceived, from the directors, officers or employees of an assurance client.