Case-Style Multiple-Choice Questions: Mining & Petroleum • a.

When pipeline meter reading at refinery; inspect

Audit meter reconciliation
1. A coal mining company sells a shipment of raw coal • b. Upon loading at wellhead; review wellhead pipeline
under FOB shipping point terms. The customer takes tickets
control when the coal leaves the mine’s rail loading
facility. Which audit procedure best tests revenue • c. At point of FOB shipping; examine transport
recognition? documents
• a. Review customer invoices for shipping date and FOB • d. On customer payment; confirm bank receipts
terms
6. The audit team plans to evaluate impairment of offshore
• b. Inspect rail delivery tickets and compare to the sales rigs under IFRS 6. A key substantive procedure is to:
journal
• a. Compare carrying amounts to discounted future cash
• c. Confirm subsequent cash receipts with the bank flows

• d. Observe coal loading at year-end • b. Verify depreciation expense per the financial ledger
2. A petroleum company enters into a contract with • c. Inspect board minutes for approval of the impairment
provisional pricing: final price is set 30 days after policy
delivery based on a market index. How should revenue
be recorded initially? • d. Confirm existence of rigs at year-end

• a. At an estimated index price with a provisional contract 7. A nickel miner uses units-of-production depreciation. To
asset test depreciation expense, the auditor should:

• b. At zero until the final price is confirmed • a. Recalculate the rate using total proven reserves and
actual output
• c. When cash is received for the sale
• b. Compare straight-line and units-of-production
• d. At the contract list price without adjustment methods
3. During planning, the auditor identifies volatile copper • c. Trace machinery cost additions to purchase invoices
prices as a fraud-risk driver for a mining client. Which
audit response addresses this risk? • d. Observe physical use of mining equipment

• a. Increase sample size for provisional pricing 8. When assessing the risk of misstatement in a mining
adjustments client’s environmental provision, the auditor should:

• b. Rely on management’s internal price forecasts • a. Obtain external legal opinions on restoration
obligations
• c. Audit only high-value shipments
• b. Review board approval of exploration budgets
• d. Reduce analytical procedures on copper revenue
• c. Inspect inventory stockpile reconciliations
4. A gold miner tracks ore grade in real time using SCADA.
To test completeness of production volumes, the auditor • d. Confirm customer sales contracts
should:
9. A refinery uses derivatives to hedge fuel-price volatility.
• a. Reconcile SCADA output reports to mill throughput To test hedge accounting under IFRS 9, the auditor
records should:

• b. Interview production supervisors about system • a. Reperform effectiveness tests on the forward
design contracts

• c. Confirm reserve estimates with an external geologist • b. Reconcile pipeline throughput volumes

• d. Check environmental permits for ore disposal • c. Inspect ecological monitoring logs

5. A petroleum midstream operator transports crude oil • d. Confirm derivative valuations with a law firm
under FOB destination. When does control transfer, and
what procedure tests it? 10. A lithium mine reports sales on CIF terms. When should
revenue be recognized?
• a. Upon arrival at the customer’s port; verify bill of lading • b. Confirm upgrade scope with external consultants
and insurance certificate
• c. Reconcile production volumes post-upgrade
• b. At loading at the mine; inspect loading documents
• d. Observe installation work
• c. When goods clear customs in the customer’s country
16. When verifying downstream revenue, the auditor uses
• d. On the customer payment date external confirmations. Which party is most relevant?

11. Management explains that provisional pricing • a. Retail fuel-station managers receiving products
adjustments are immaterial. The auditor’s best
response is to: • b. Wellhead operators

• a. Perform recalculations of all provisional adjustments • c. The local environmental authority

• b. Accept management’s judgment without testing • d. An exploration geologist

• c. Test a sample of provisional pricing journal entries 17. In planning a mining audit, the team notes new
environmental regulation that increases restoration
• d. Reduce overall audit scope costs. The auditor should:

12. During a walkthrough of the revenue cycle, the auditor • a. Update the risk assessment and consider impact on
notes no segregation between pricing approval and provisions
billing. This control deficiency most likely leads to:
• b. Defer the audit until after regulation implementation
• a. Overstatement of sales revenue
• c. Accept prior-year provision levels
• b. Under-capitalization of exploration costs
• d. Increase sample size for revenue testing
• c. Misstatement of depreciation expense
18. A petroleum client maintains call-off stock at customer
• d. Errors in excise-tax calculations terminals. A critical audit point is:

13. A petroleum company sells jet fuel under call-off stock • a. Existence and ownership of stored inventory; perform
arrangements to airlines. Revenue should be a physical count with the customer
recognized when:
• b. Approval of the refinery master budget
• a. Fuel is uplifted at the airport kerb; inspect uplift
receipts • c. Compliance with DOLE safety standards

• b. Payment terms are agreed; review the contract • d. Valuation of exploration licenses

• c. Fuel enters refinery pipelines 19. To test revenue completeness for a mining entity, the
auditor should:
• d. The fuel price index is published
• a. Trace shipping logs to sales invoices
14. The audit team decides to use trend analysis for a
mining client’s cost-per-ton metric. What comparison • b. Compare planned vs. actual exploration costs
provides the strongest signal of misstatement?
• c. Recalculate units-of-production depreciation
• a. Cost per ton this year vs. the prior three-year average
• d. Inspect environmental monitoring reports
• b. Number of employees vs. production volume
20. A mining client uses a third-party lab for grade assays.
• c. Depreciation expense vs. capital additions To assure result reliability, the auditor should:

• d. Dividend declared vs. net profit • a. Inspect the lab’s accreditation and proficiency-test
results
15. A state-owned oil company’s board minutes authorize a
major refinery upgrade. Which audit procedure tests the • b. Compare lab costs to internal estimates
related capex control?
• c. Observe lab staff safety drills
• a. Trace the board resolution to budget release and
invoice payments • d. Reperform mill throughput reconciliations
21. When testing cut-off for petroleum sales around year- 26. During analytical review, the auditor notes refinery
end, the most appropriate procedure is to: throughput increased but sales revenue declined. This
may indicate:
• a. Inspect shipment tickets and delivery notes before
and after period-end • a. Unrecorded sales or mispriced transactions

• b. Reconcile refinery throughput to pipeline volumes • b. Over-application of depreciation

• c. Test environmental-provision calculations • c. Incorrect classification of provisions

• d. Confirm outstanding invoices with customers • d. Fraudulent environmental-provision manipulation

22. A mining client’s management estimate of recoverable 27. To test credit terms applied to large petroleum
reserves declined sharply. Which assertion is most at customers, the auditor should:
risk?
• a. Compare recorded credit terms to contract terms for
• a. Valuation of mining assets a sample of customers

• b. Existence of cash balances • b. Review board approval of the credit policy

• c. Completeness of liabilities • c. Observe cash-counting procedures

• d. Accuracy of tax-liability accruals • d. Recalculate exploration-expense accruals

23. To evaluate management’s estimate of 28. A new mining site has no prior-year data. To assess
decommissioning liabilities, auditors should: reasonableness of revenue forecasts, auditors could:

• a. Review assumptions on discount rate and timing of • a. Use industry benchmarks for cost per ton and apply
restoration margin assumptions

• b. Confirm with the local DOE representative • b. Accept management’s forecast unquestioned

• c. Inspect site fences and warning signs • c. Reconcile to national GDP growth

• d. Recalculate VAT on asset purchases • d. Confirm forecasts with NCIP

24. Revenue from mineral-concentrate sales includes 29. Which procedure best tests accuracy of royalty expense
freight-in costs. Under IAS 2, how should freight-in be for a coal miner?
treated?
• a. Recalculate royalties based on declared production
• a. Capitalized in inventory cost; inspect freight invoices volumes and statutory rates
and allocate
• b. Trace lease agreement to board minutes
• b. Expensed as distribution cost
• c. Compare royalty rates to prior years without
• c. Partially capitalized and partially expensed by recalculation
judgment
• d. Interview the tax manager
• d. Omitted if immaterial
30. A petroleum upstream client capitalizes exploration
25. A petroleum client’s ERP system automatically records costs under IFRS 6. An auditor concern is inappropriate
product dispatch to customers. The auditor suspects capitalization. Which test helps detect this?
system-generated errors. Which control test is most
appropriate? • a. Inspect the cost ledger, identify exploration
expenditure, and compare to evidence of unsuccessful
• a. Test the automated interface mapping between the wells
dispatch module and sales ledger
• b. Observe drilling rigs
• b. Observe refinery operations
• c. Confirm capital additions with suppliers
• c. Compare system user manuals to actual usage
• d. Review tax filings
• d. Confirm derivative instruments with counterparties
31. An oil client hedges foreign-currency exposure on • b. Recalculate units-of-production depreciation
equipment purchases. To test hedge accounting, the
auditor should: • c. Confirm derivative contracts

• a. Inspect hedge-designation documents and • d. Inspect crude storage tanks

recalculate exchange gains/losses
37. Which audit procedure best addresses the risk of
• b. Reconcile inventory counts fictitious pre-shipment debit notes in a mining client?

• c. Confirm environmental permits • a. Match debit notes to shipping and billing records

• d. Observe the procurement process • b. Observe credit-committee meetings

32. When auditing mining revenue recognized on spot • c. Test environmental-provision models
sales, the auditor should:
• d. Review permit applications
• a. Inspect and test the invoicing system for correct
pricing and customer details 38. A petroleum downstream operator uses cycle counts for
inventory. The auditor should:
• b. Review board strategy for market expansion
• a. Observe a cycle count and reconcile differences to
• c. Test IT password controls the ledger

• d. Confirm with DOE • b. Confirm cycle-count frequency with DOE

33. A mining company has seasonal production peaks. To • c. Trace capital projects to board minutes
plan audit timing, the auditor should:
• d. Test cut-off for exploration costs
• a. Perform interim testing during low-volume periods to
reduce cut-off risk 39. To test revenue cut-off for coal sales near period-end,
the auditor should inspect:
• b. Delay audit until high-volume periods for efficiency
• a. Delivery tickets dated just before and after year-end,
• c. Test only year-end production and matching invoices

• d. Use standard industry audit programs • b. Board minutes on production estimates

34. To test completeness of recorded petroleum sales, the • c. Depreciation-schedule changes

auditor compares:
• d. Environmental compliance certificates
• a. Tank-gauge readings to sales-ledger quantities
40. Which control activity reduces the risk of misstated oil-
• b. SCADA alarm logs to repair records sales revenue under provisional pricing?

• c. Refinery throughput to environmental spills • a. Management review and approval of final price
adjustments before posting
• d. Exploration license renewals to board minutes
• b. Automatic posting of provisional estimates without
35. Management’s reversal of a prior year’s impairment on review
a mining project requires:
• c. Periodic internal audit of environmental KPIs
• a. A fresh impairment test and documentation of
changes in assumptions • d. IT access controls on exploration logs

• b. Board approval of the reversal only 41. A petroleum client provided year-end sales rebates
retroactively. The auditor should:
• c. Confirmation with lenders
• a. Test the rebate calculation and ensure proper accrual
• d. No additional audit work if reversal is immaterial at year-end

36. An oil company holds strategic stockpiles valued at • b. Observe refinery operations
lower of cost or NRV. To test NRV, the auditor should:
• c. Confirm the rebate policy with the environmental
• a. Compare carrying amount to observable market authority
quotes
• d. Inspect board minutes only • a. Perform unannounced site visits and surprise stock
counts
42. In evaluating going-concern for a mining entity with
declining reserves, the auditor should: • b. Rely on monthly ICQ responses

• a. Review management’s cash-flow projections and • c. Confirm inventory with a central warehouse only
assess key assumptions
• d. Review monthly board reports
• b. Accept management’s statement if reserves still exist
48. A petroleum trader enters into cross-border sales with
• c. Reconcile shareholder equity to statutory filings multiple currencies. To test foreign-currency revenue,
the auditor should:
• d. Confirm reserve estimates with NCIP
• a. Recalculate revenue using spot rates at transaction
43. To obtain audit evidence on petroleum joint-venture dates and inspect rate sources
production, the auditor should:
• b. Confirm interest expense on loans
• a. Obtain and inspect third-party joint-venture partner
reports • c. Observe storage tank levels

• b. Confirm production volumes with DOE • d. Inspect derivative logs only

• c. Test refinery-throughput variance reports 49. Management uses regression analysis to forecast
production costs. The auditor should:
• d. Inspect custody-transfer pipelines
• a. Reperform the regression analysis and evaluate the
44. When assessing control risk for a mining client’s model’s fit
revenue, the auditor notes no automated pricing
checks. The appropriate response is to: • b. Accept management’s model without verification

• a. Increase substantive testing of pricing and invoicing • c. Test environmental monitoring data

• b. Reduce sample size for sales testing • d. Compare actual costs to a national index

• c. Accept controls as effective due to manual oversight 50. A mining client sells silver concentrate under FOB
pricing, but rail tickets sometimes omit FOB details. The
• d. Rely solely on analytical procedures auditor’s best response is to:
45. A petroleum company retroactively changed its • a. Inspect FOB clauses in sales contracts and test a
revenue-recognition policy. The auditor should: sample of rail tickets against contract terms
• a. Evaluate retrospective application under IFRS 15 and • b. Confirm all rail tickets with the supplier
test comparative numbers
• c. Observe rail loading only
• b. Accept the new policy without testing
• d. Accept sales revenues as recorded
• c. Confirm policy with tax authorities
Answer Key
• d. Inspect environmental impact assessments
1. b
46. Which procedure best tests that decommissioning
provisions are disclosed and measured correctly? 2. a

• a. Inspect management’s provision model, test key 3. a

assumptions, and verify disclosure completeness
4. a
• b. Confirm provisions to external auditors of peer 5. a
companies
6. a
• c. Observe site demolition work
7. a
• d. Test pipeline meter readings
8. a
47. To address fraud risk in inventory reporting at a remote
mine site, the auditor should: 9. a
10. a 45. a

11. c 46. a

12. a 47. a

13. a 48. a

14. a 49. a

15. a 50. a

16. a

17. a Case-Style MCQs: Revenue Recognition, Audit Risk, Critical

Audit Points, Audit Procedures
18. a
1. A mining company ships iron ore under FOB shipping
19. a point. Control passes when loaded at the port. Which
audit procedure best tests revenue recognition?
20. a

21. a • a. Inspect port loading tickets and compare to sales

journal
22. a
• b. Confirm year-end ore stockpile quantities
23. a
• c. Observe smelting operations
24. a
• d. Review board minutes for shipment approval
25. a
2. A coal miner sells on CIF terms. When should revenue
26. a be recognized?
27. a
• a. Upon vessel arrival at customer’s port; verify bill of
28. a lading and insurance certificate

29. a • b. When coal leaves mine-site stockpile

30. a • c. On customer payment date

31. a • d. At contract signing

32. a 3. A petroleum refinery sells gasoline under call-off stock
to a chain of gas stations. Revenue is recognized when
33. a uplift occurs. The auditor should test this by:
34. a
• a. Inspecting uplift receipts and trace to sales ledger
35. a
• b. Reviewing refinery throughput volumes
36. a
• c. Confirming inventory balances with a third party
37. a
• d. Testing environmental-compliance filings
38. a
4. A gold mining client uses provisional pricing: final price
39. a set 60 days after delivery. How should the auditor test
that revenue recorded is accurate?
40. a

41. a • a. Recalculate provisional entries and subsequent

adjustments based on market indices
42. a
• b. Confirm cash receipts only
43. a
• c. Observe gold pouring at refineries
44. a
• d. Inspect capital expenditure budgets
5. During planning, the audit team identifies copper-price • b. Confirm pipelines’ physical integrity
volatility as a key fraud risk. Which response is most
appropriate? • c. Recalculate refinery-fuel blends

• a. Increase analytical procedures on revenue • d. Observe year-end physical inventory

fluctuations versus price indices
11. To test that environmental-restoration provision is
• b. Rely on management’s documented forecasts complete, the auditor should:

• c. Reduce sample sizes for revenue testing • a. Obtain external legal opinions and recalculate
provision using updated cost estimates
• d. Audit only non-commodity revenues
• b. Inspect tailings dam capacity only
6. A mining client’s reserve estimate dropped 40%. Which
financial-statement assertion is most at risk? • c. Confirm headcount in reclamation department

• a. Valuation of mining assets • d. Review minutes approving exploration budgets

• b. Existence of cash equivalents 12. A petroleum client hedges fuel-price risk. To test hedge
accounting, the auditor should:
• c. Completeness of trade payables
• a. Reperform hedge-effectiveness calculations under
• d. Occurrence of expenses IFRS 9

7. The auditor suspects management bias in reserve • b. Inspect pipeline-flow meter calibrations
estimation. A critical audit point is testing:
• c. Observe dock loading procedures
• a. Geological reports and key assumptions in
discounted cash-flow models • d. Confirm tax-benefit entries

• b. Depreciation schedules for machinery 13. A mining client uses SCADA for mill throughput. To test
revenue completeness, the auditor should:
• c. VAT filings for spare parts
• a. Reconcile SCADA output reports to invoiced
• d. Board remuneration disclosures tonnages

8. To test completeness of mineral-sales revenue, the • b. Interview mill operators only

auditor should:
• c. Confirm ore grades with the geology team
• a. Trace port dispatch logs to recorded invoices
• d. Review safety-drill records
• b. Recompute unit-of-production depreciation
14. Analytical review shows coal sales revenue up 15%
• c. Confirm environmental provisions while volume dropped 5%. This may indicate:

• d. Inspect drilling-rig logs • a. Mispriced invoices or fictitious sales

9. A control deficiency is noted: the same person sets • b. Under-applied depreciation

mineral prices and issues invoices. This exposes the
audit to risk of: • c. Lower environmental provision

• a. Revenue overstatement • d. Reduced exploration expense

• b. Inventory misclassification 15. To verify a bulk-coal shipment recorded on December

31, the auditor should:
• c. Incorrect royalty expense
• a. Inspect shipment documents and vessel departure
• d. Asset impairment understatement logs dated December 30–January 2

10. Which substantive procedure best addresses cut-off • b. Reconcile fuel-consumption rates
risk for year-end oil sales under FOB destination?
• c. Observe year-end tailings inspection
• a. Inspect delivery notes and shipping documents dated
before and after period-end • d. Confirm pipeline maintenance reports
16. A critical audit point for call-off stock is proving customer • a. Test a sample of adjustments and review trending to
ownership. The auditor should: prior periods

• a. Jointly count stored fuel with customer and inspect • b. Accept the assertion without testing
title documentation
• c. Reduce all revenue substantive testing
• b. Review customer credit applications
• d. Perform only analytical procedures
• c. Reconcile refinery-production schedules
22. To address fraud risk in recorded ore shipments, the
• d. Inspect flaring-records auditor should:

17. Which test of controls addresses the risk of • a. Perform surprise site inspections and compare
misstatement in mining-revenue pricing? physical shipments to recorded sales

• a. Observe management’s review and approval of price- • b. Rely on monthly ICQ responses
list changes
• c. Confirm tailings dam stability
• b. Test reconciliation of environmental-monitoring data
• d. Review employee turnover reports
• c. Confirm licence renewals with the regulator
23. A petroleum client retroactively issues year-end
• d. Inspect IT-security logs rebates. The auditor should:

18. A petroleum company sells branded fuel under • a. Test rebate calculations and ensure accrual at
marketing-fee arrangements. Revenue recognition is period-end
complex. The auditor’s critical procedure is to:
• b. Confirm rebates only after cash payment
• a. Inspect sales contracts and trace performance
obligations to recognition timing • c. Inspect refinery-upgrade invoices

• b. Compare marketing fees to prior-year expense • d. Review exploration licenses

• c. Confirm pipeline pump calibrations 24. In auditing a mining-contract joint venture, the auditor
obtains partner statements. This addresses which
• d. Review environmental permits assertion?

19. For a CIF sale of copper concentrate, the auditor • a. Completeness of revenue from joint-venture sales
should:
• b. Valuation of equipment
• a. Inspect paid freight-and-insurance invoices and trace
to revenue cut-off • c. Occurrence of environmental incidents

• b. Recompute units-of-production charge-out rates • d. Classification of exploration costs

• c. Observe port-side sampling 25. To test that revenue from gold concentrate is not
overstated, the auditor should:
• d. Confirm equity investments
• a. Reconcile assay-lab certificates to invoiced grades
20. A petroleum client switched from FOB to CIF mid-year. and quantities
The auditor should update:
• b. Observe smelter operations
• a. The revenue-recognition cutoff procedures and
sample selection • c. Confirm water-use permits

• b. Depreciation-method tests • d. Review board-approval memos

• c. Environmental provision models 26. A key audit risk is management override in high-value
shipping transactions. The auditor should:
• d. Board-remuneration disclosures
• a. Examine manual journal entries around cut-off and
21. Management argues that provisional pricing inspect supporting documents
adjustments are immaterial. The auditor should still:
• b. Rely solely on IT-generated reports
• c. Confirm vessel-charter contracts 32. In assessing going concern, the auditor notes delayed
receivables due to provisional pricing. The auditor
• d. Observe staff training logs should:

27. Which procedure best tests the accuracy of royalty • a. Review cash-flow projections under alternative price
expense tied to revenue? scenarios

• a. Recalculate royalties based on recorded shipments • b. Accept management’s going-concern memo

and statutory rates
• c. Confirm deposit guarantees
• b. Trace royalty policy to board minutes
• d. Inspect pipeline surveys
• c. Confirm royalty payments after year-end
33. Which test addresses the risk that a CIF copper
• d. Inspect exploration permits shipment was never insured?

28. For substantial year-end sales recorded under multiple • a. Inspect insurance-certificate endorsements and
currencies, the auditor should: match to CIF contract terms

• a. Recalculate revenue using spot rates at transaction • b. Confirm premiums with the insurer only
dates and verify rate sources
• c. Review oil spill response plans
• b. Confirm cash-flow forecasts
• d. Observe coal-stockpile measurements
• c. Inspect storage tank levels
34. A critical audit point is revenue from by-products (e.g.,
• d. Observe currency-hedge entries sulfur from gas processing). The auditor should:

29. Management uses regression to forecast sales. The • a. Verify revenue allocation between main and by-
auditor should: products based on agreed split ratios

• a. Reperform the regression and evaluate the model’s • b. Observe sulfur-pile sampling
assumptions and fit
• c. Confirm joint-venture agreements
• b. Accept the forecast as is
• d. Review IFRIC interpretations
• c. Compare to International Energy Agency guidance
35. For mining revenue recognized at the mine gate, the
• d. Review safety-incident logs auditor tests:

30. A control point for revenue is the automated interface • a. Weighbridge reconciliations to sales invoices
between dispatch and invoicing. The auditor should:
• b. Depreciation-schedule consistency
• a. Test the interface mappings and exception-report
handling • c. VAT reconciliations

• b. Observe refinery transfers • d. Tax-mapping in ERP

• c. Confirm pipeline maintenance 36. To confirm revenue cut-off for pipeline deliveries, the
auditor should:
• d. Review ICD-10 codes
• a. Inspect pipeline meter-reading logs straddling year-
31. To test for fictitious sales in a remote mine, the auditor end
should:
• b. Observe refinery flare-stack operations
• a. Match a sample of dispatch dockets to independent
truck-scale tickets • c. Confirm third-party engineering reports

• b. Observe board-audit committee meetings • d. Review decommissioning-provision memos

• c. Confirm vendor-invoices only 37. A key audit risk is misclassification of shipping-cost

reimbursements as revenue. The auditor should:
• d. Review staff-roster movements
• a. Inspect contracts and trace reimbursements to cost-
recovery accounts
• b. Confirm shipping rates with carriers 43. A critical audit point is completeness of oil-product sales
at retail outlets. Which procedure is best?
• c. Review board minutes on shipping policy
• a. Perform revenue-analytics by outlet against fuel-
• d. Observe cargo-hold conditions delivery records

38. In auditing petroleum sales, the auditor obtains • b. Confirm station manager headcounts
confirmations from major customers. This primarily tests
which assertion? • c. Observe station safety signage

• a. Existence and occurrence of recorded revenue • d. Inspect upstream exploration logs

• b. Valuation of exploration assets 44. To test completeness of gas-pipeline sales, the auditor
should:
• c. Completeness of trade payables
• a. Reconcile SCADA-captured flow-data to invoiced
• d. Classification of financial instruments volumes

39. A mining client’s ERP automatically posts quality-bonus • b. Review pipeline-patrol reports
revenue. The auditor should:
• c. Confirm compressor maintenance logs
• a. Test the bonus-calculation logic and review IT
change controls • d. Observe board-subcommittee meetings

• b. Observe tailings water quality 45. A mining client changed revenue-recognition cutoff in
mid-year. The auditor should:
• c. Confirm quality-grade thresholds with regulators
• a. Evaluate and test retrospective application under
• d. Inspect exploration licenses IFRS 15, including comparatives

40. To test cut-off for provisional-priced nickel shipments, • b. Accept the change for the current year only
the auditor should:
• c. Confirm with tax authorities
• a. Select shipments near year-end and trace final
pricing adjustments after period-end • d. Review exploration expense trends

• b. Confirm vessel-charter rates 46. An oil-trading client records provisional-priced swaps.

The auditor should:
• c. Review environmental impact assessments
• a. Recalculate swap adjustments and test for timely
• d. Inspect board-approval letters reversal of provisional entries

41. Which audit procedure best addresses fraudulent • b. Confirm spot deliveries
override of revenue controls?
• c. Observe trading-floor operations
• a. Reconcile high-value sales journal entries to source
documents and inspect approval stamps • d. Review shipping-documents

• b. Observe safety drills 47. A material risk is overstatement of revenue by shipping

non-owned ore. The auditor should:
• c. Confirm tax-deductible allowances
• a. Confirm ore ownership documents and reconcile to
• d. Review HR-policies dispatch

42. In evaluating revenue recognition policies, the auditor • b. Inspect exploration permits
should compare client practice to:
• c. Review finance-committee minutes
• a. IFRS 15 performance-obligation guidance
• d. Observe site safety logs
• b. IAS 2 inventory write-down rules
48. Which control mitigates revenue fraud in rapid-turnover
• c. IFRS 6 capitalization criteria mineral sales?

• d. PAS 37 provisioning standards • a. Independent review of sales contracts and pricing by

finance staff
 • b. Automatic posting of all sales without review • b. Environmental Management Bureau (EMB)

• c. Periodic inventory write-downs • c. Department of Energy (DOE)

• d. IT-password ageing • d. National Commission on Indigenous Peoples (NCIP)

49. To test year-end pipeline-gas sales at multiple custody- 2. A petroleum company must secure service contract
transfer points, the auditor should: approvals for offshore drilling. Which regulator oversees
this?
• a. Test reconciliations at each transfer meter and trace
exceptions to investigation logs • a. Energy Regulatory Commission (ERC)

• b. Confirm all pipelines with the regulator • b. Department of Environment and Natural Resources
(DENR)
• c. Observe metering-device installations
• c. Department of Energy (DOE)
• d. Review corporate strategy memos
• d. Climate Change Commission (CCC)
50. A mining client’s reverse logistics fees were
misclassified as revenue. Which procedure uncovers 3. A mining audit needs proof of Free, Prior and Informed
this? Consent for operations on ancestral land. Which body
enforces FPIC?
• a. Match logistics invoices and credit notes to revenue
postings and reclassify as expense • a. Mines and Geosciences Bureau (MGB)

• b. Confirm logistics rates with third parties • b. National Commission on Indigenous Peoples (NCIP)

• c. Observe tailings-dam inspections • c. Department of Labor and Employment (DOLE)

• d. Inspect environmental licenses • d. Department of Energy (DOE)

Answer Key 4. To verify tailings dam safety compliance, the auditor

reviews third-party HSE audit reports. Which expert is
Q# Answer Q# Answer Q# Answer Q# Answer Q# Answer most appropriate?

1 a 11 a 21 a 31 a 41 a • a. Geotechnical engineer

2 a 12 a 22 a 32 a 42 a • b. Environmental lawyer

3 a 13 a 23 a 33 a 43 a • c. Tax consultant

• d. Forensic accountant
4 a 14 a 24 a 34 a 44 a
5. A client requests guidance on carbon-emission
5 a 15 a 25 a 35 a 45 a disclosures. Which commission coordinates national
climate policy?
6 a 16 a 26 a 36 a 46 a
• a. Climate Change Commission (CCC)
7 a 17 a 27 a 37 a 47 a
• b. Energy Regulatory Commission (ERC)
8 a 18 a 28 a 38 a 48 a
• c. Environmental Management Bureau (EMB)
9 a 19 a 29 a 39 a 49 a
• d. Department of Labor and Employment (DOLE)
10 a 20 a 30 a 40 a 50 a 6. For permit renewals on mine safety, the auditor
confirms compliance with which regulator?
Regulatory Bodies & External Experts in Mining & Petroleum

1. Before starting mineral extraction, a mining client needs

• a. MGB – Mines and Geosciences Bureau
an Environmental Compliance Certificate. Which
• b. ERC – Energy Regulatory Commission
agency issues this?
• c. DOE – Department of Energy
• a. Mines and Geosciences Bureau (MGB)
• d. CCC – Climate Change Commission
7. The petroleum downstream operator must file monthly 13. A mining client seeks a certificate of geological
import-throughput reports. These go to: prospectivity. Which bureau provides technical
assessments?
• a. Department of Environment and Natural Resources
• a. Department of Energy (DOE)
• b. Energy Regulatory Commission (ERC)
• b. Mines and Geosciences Bureau (MGB)
• c. Department of Energy (DOE)
• c. Environmental Management Bureau (EMB)
• d. Mines and Geosciences Bureau
• d. Climate Change Commission (CCC)
8. To assess exploration-cost capitalization, the auditor
engages a specialist in reserve estimation. Who? 14. For compliance with the Downstream Oil Industry
Deregulation Act, a petroleum company submits data
• a. Financial valuer to:

• b. Petroleum geologist • a. Department of Energy (DOE)

• c. Tax attorney • b. Energy Regulatory Commission (ERC)

• d. Forensic auditor • c. Environmental Management Bureau (EMB)

9. A coal miner needs approval for blasting operations. • d. National Commission on Indigenous Peoples
Which agency issues mining permits?
15. To audit reforestation cost estimates in a mining
• a. Department of Energy (DOE) restoration provision, the auditor engages:

• b. Environmental Management Bureau (EMB) • a. Wildlife ecologist

• c. Mines and Geosciences Bureau (MGB) • b. Forestry or environmental reclamation specialist

• d. National Commission on Indigenous Peoples • c. Tax compliance officer

10. For testing of environmental liability estimates, which • d. Bankruptcy lawyer
expert’s report is essential?
16. The auditor must confirm that an oil depot has valid
• a. Geotechnical engineer discharge permits. Which regulator issued them?

• b. Hydrologist or environmental scientist • a. MGB – Mines and Geosciences Bureau

• c. Corporate actuary • b. EMB – Environmental Management Bureau

• d. Cybersecurity consultant • c. DOE – Department of Energy

11. A petroleum audit reviews excise-tax filings. Which • d. NCIP – National Commission on Indigenous Peoples
authority sets excise regulations on fuel?
17. A coal mine’s annual report must include safety incident
• a. Department of Labor and Employment disclosures under which PSA? (Regulator implied)

• b. Department of Environment and Natural Resources • a. PSA 250 – Laws and Regulations

• c. Energy Regulatory Commission (ERC) • b. PSA 520 – Analytical Procedures

• d. Department of Finance (BIR) • c. PSA 470 – Fraud in Financial Reporting

12. To evaluate health and safety controls at a mine site, • d. PSA 240 – Auditor’s Responsibilities Relating to
the auditor consults records from which regulator? Fraud
• a. ERC – Energy Regulatory Commission 18. To validate reserve life indices, the auditor brings in a:

• b. DOLE – Department of Labor and Employment • a. Civil engineer

• c. DOE – Department of Energy • b. Mine planning or reserve estimation specialist

• d. NCIP – National Commission on Indigenous Peoples • c. Environmental lawyer

• d. Cybersecurity expert • c. Department of Energy (DOE)

19. For licensing fees collection from vertically integrated • d. Energy Regulatory Commission (ERC)
mining power generation, which regulator is relevant?
25. To audit royalty-rate compliance on mineral shipment,
• a. ERC – Energy Regulatory Commission the auditor refers to:

• b. DOE – Department of Energy • a. Payment receipts from BIR

• c. EMB – Environmental Management Bureau • b. Statutory rate schedules under MGB regulations

• d. NCIP – National Commission on Indigenous Peoples • c. Environmental provisions under EMB

20. A petroleum upstream project needs drilling permits. • d. FPIC approvals under NCIP
Which agency regulates exploration permits?
26. A petroleum tracer needs to confirm pipeline tariffs.
• a. Department of Environment and Natural Resources Which regulator sets pipeline tariffs?

• b. Department of Energy (DOE) • a. DOE – Department of Energy

• c. Energy Regulatory Commission • b. ERC – Energy Regulatory Commission

• d. Mines and Geosciences Bureau • c. EMB – Environmental Management Bureau

21. To assess hydrocarbon reserve valuations, the auditor • d. NCIP – National Commission on Indigenous Peoples
engages a:
27. For specialized audit of cyanide-leach sampling
• a. Fuel distribution specialist controls, the auditor consults which expert?

• b. Petroleum engineer or reserve auditor • a. Mineral processing metallurgist

• c. Occupational health consultant • b. Corporate valuer

• d. Corporate tax adviser • c. Environmental law specialist

22. For review of indigenous-community consultation • d. HR training consultant

records, which auditor procedure relates to NCIP?
28. A mining entity’s social-license disclosures are
• a. Inspect FPIC certificates issued by NCIP governed by which regulator?

• b. Review ECC from EMB • a. DOLE – Department of Labor and Employment

• c. Confirm licenses with MGB • b. NCIP – National Commission on Indigenous Peoples

• d. Verify energy tariffs with ERC • c. ERC – Energy Regulatory Commission

23. A mining client files quarterly environmental-monitoring • d. DOE – Department of Energy

data to:
29. To evaluate compliance with worker welfare laws at
• a. Mines and Geosciences Bureau (MGB) remote sites, the auditor checks records from:

• b. Environmental Management Bureau (EMB) • a. Department of Energy

• c. Department of Energy • b. Department of Labor and Employment (DOLE)

• d. Energy Regulatory Commission • c. Climate Change Commission

24. For greenhouse-gas reporting under national law, the • d. Energy Regulatory Commission
auditor reviews submissions to:
30. A petroleum client disputes a permit revocation. The
• a. Department of Environment and Natural Resources auditor reviews documentation from:
(DENR)
• a. Mines and Geosciences Bureau
• b. Climate Change Commission (CCC)
• b. Environmental Management Bureau
 • c. Department of Energy (DOE)

• d. National Commission on Indigenous Peoples

Answer Key

1. b

2. c

3. b

4. a

5. a

6. a

7. c

8. b

9. c

10. b

11. d

12. b

13. b

14. a

15. b

16. b

17. a

18. b

19. a

20. b

21. b

22. a

23. b

24. b

25. b

26. b

27. a

28. b

29. b

30. c