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Semi-Final Examination: Auditing Assurance in Specialized Industries

The document is a semi-final exam for auditing assurance in specialized industries. It contains multiple choice questions and true/false questions about audit evidence, the distribution of net surplus for cooperatives under Philippine law, using reserve funds to cover losses, and examples of apex cooperative organizations. Key details assessed include appropriate allocation of surplus under the Cooperative Code of 2008, using reserve funds to cover losses as allowed by law, and the name of a sectoral apex organization of cooperatives.

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Nikky Bless Leonar
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800 views3 pages

Semi-Final Examination: Auditing Assurance in Specialized Industries

The document is a semi-final exam for auditing assurance in specialized industries. It contains multiple choice questions and true/false questions about audit evidence, the distribution of net surplus for cooperatives under Philippine law, using reserve funds to cover losses, and examples of apex cooperative organizations. Key details assessed include appropriate allocation of surplus under the Cooperative Code of 2008, using reserve funds to cover losses as allowed by law, and the name of a sectoral apex organization of cooperatives.

Uploaded by

Nikky Bless Leonar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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AUDITING ASSURANCE IN SPECIALIZED INDUSTRIES

SEMI-FINAL EXAMINATION
I. True or False: (1 point each item Nos. 1-5)

1. Nature of Audit Evidence -Audit evidence is a fundamental concept in auditing by which the
auditor achieves the objective of reasonable assurance that none of management’s assertions
is materially misstated. FALSE

2. Sufficiency is the measure of the quantity of audit evidence that must be obtained. It is
affected by the risk of material misstatements (the greater the risk, the more audit evidence
required) and also by the reliability of audit evidence. The sufficiency and appropriateness of
audit evidence are interrelated. TRUE

3. Appropriateness is the measure of the quality of audit evidence – that is both reliable and
relevant in providing support for, or detecting misstatements in, financial statement
assertions. TRUE

4. Relevance of evidence is the appropriateness (pertinence of evidence to the audit objective


being tested). TRUE

5. Reliability is the quality of information when it is free from material error and bias and can
be depended upon by users to represent faithfully that which it either purports to represent or
could reasonably be expected to represent. TRUE

6. The Distribution of Net Surplus of a Cooperative is as follows:


Reserve Fund 10%
Optional Fund (Land and Building Fund) 7%
Community Development Fund 3%
Educational and Training Fund – Local 5%
Educational and Training Fund- National 5%
Interest on Share Capital (70% of 70%)
Patronage Refund (30% of 70%)

Is the allocation for the following items in conformity with Article 86 of the Philippine
Cooperative Code of 2008? Answer Yes or No. Briefly support your answer (5 points)
1. Reserve Fund - Yes. According to Article 86, the cooperative's reserve fund shall
receive at least 10% of the net surplus.

2. Optional Fund - Yes. The net surplus for an optional fund, a land and building fund,
and any other required fund shall not exceed 7%.

3. ETF- Local - Yes. The amount allocated to the education and training fund cannot
exceed 10% of the net surplus. ETF has a combined allocation of 10% at both the local
and national levels.
4. ETF- National - Yes. The amount allotted to the education and training fund cannot
exceed 10% of the net surplus. ETF has a combined allocation of 10% at both the local
and national levels.

5. Interest on Share Capital – Yes. The amount allocated for patronage refund must not
be less than 30% of the net surplus after subtracting statutory reserves based on the
equity principle, and the rate of patronage refund must not be more than twice the rate
of interest on share capital.

6. Patronage Refund - Yes, the rate of interest on share capital is more than half of the
patronage refund amount.

7. The Cooperative in Item 6 has the following data:


Share Capital P 10,442,989
Reserve Fund 1,511,586

Can the General Assembly approve to decrease the allocation for Reserve fund to 5%?
Yes or No? Briefly support your answer. (5 points)
No. The amount allocated to the reserve fund must be at least 10% of the net
surplus, according to Article 86 of Republic Act 9520. The cooperative cannot allocate
less than that rate.

8. A cooperative incurred a Net Loss of P100,000.00 in year 2021. The Reserve Fund has a
balance of P200,000.00 in year 2020.

Can the General Assembly approve that the Net Loss will be charged to the Reserve
Fund? Yes or No? Support your answer. (5 points)
Yes. The reserve fund shall be used for the cooperative's stability and to cover
net losses in its activities, according to Article 86 of the Philippine Cooperative Code of
2008. It is possible to use it to cover the cooperative's net losses.

Give an example of an apex organization of cooperatives in the Philippines. State the


complete name. (2 points )
Sectoral Apex Organization (SAO) of Consumers, Logistics (CMPL)
Cooperatives Cluster, Marketing, and Producers.

II. MULTIPLE CHOICE. Encircle the letter of your choice

1. It refers to those matters that, in the auditor’s professional judgment, were of most
significant in the audit of the financial statements of the current period.
a) Emphasis of a matter
b) Other matter
c) Key audit matters
d) What’s the matter
2. Which of the following assertions is least likely considered by the auditor in an audit
of shareholder’s Equity?
a) Completeness
b) Existence
c) Presentation and Disclosure
d) Rights and Obligations

3. An auditor performs procedures to identify and assess risks of


material misstatements in order to design appropriate responses to assessed risk.
a. Performance Risk
b. Agency Risk
c. Risk assessment
d. Control risk

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