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CHAPTER 13

:
THE CODE OF ETHICS AND REPUBLIC ACT 9298
1.

The code of professional ethics for CPA’s promulgated by the Board of Accountancy applies to
a. All CPA’s in public practice.
b. All CPA’s in government
c. All CPA’s in public practice and employed in private business.
d. All CPAs in public practice employed in private business and industry, in government and in
education.

2.

The underlying reason for a code of professional ethics.
a. That is required by legislation.
b. To provide the licensing agencies with a basis for measuring the performance of the practitioners.
c. The need for public confidence in the quality of service of the profession.
d. That it provides a safeguard against unscrupulous people.3.

3.

The CPA profession deemed it necessary to establish a code of ethics and a mechanism for its enforcement
because.
a. An ethical conduct that stresses the CPAs responsibility to clients and colleagues is a prerequisite
to success.
b. A requirement of law provides that CPAs establish a code of ethics.
c. Acceptance of responsibility to the public is a distinguishing mark of a profession.
d. The establishment of flexible ethical standards provides self-protection for CPAs.

4.

Which of the following statements is true when the CPA has been engage to perform an audit of financial
statements?
a. The CPA firm is engage and paid by the client, therefore, the has primary responsibility to be an
advance for the client.
b. The CPA firm is engaged and paid by the client, but the primary beneficiaries of the audit are
those who rely on the financial statements.
c. Should a situation arise where there is no convincing authoritative standards available, and there
is a choice of actions which could impact a client’s financial statements, the CPA is free to endorse
the choice which is in the investors’ interests.
d. The CPA firm’s paramount concern should be the interest of the client.

5.

Which of the following is not one of the characters of the profession?
a. Mastery of a particular intellectual skill acquired by training and education.
b. Adherence by its members to a common code of conduct.
c. Acceptance of a duty to society as a whole.
d. A responsibility to protect exclusively the interest of a client or employer.

6.

In order to achieve the objectives of the accountancy profession, professional accountants have to observe
a number of prerequisites or fundamentals principles. The fundamental principles include the following,
except.
a. Objectivity
b. Professional Competence and due care.
c. Technical Standards.
d. Confidence.

7.

The principle of the professional competence and due care imposes certain obligation on professional
accountants. Which of the following is not one of those obligations required by this principle?
a. To act diligently in accordance with applicable technical and professional standards.
b. To be fair, intellectually honest and free of conflict of interest.
c. To become aware and understand relevant technical, professional and business developments.
d. To obtain professional knowledge and experience to enable them to fulfill their responsibilities.

8.

Competence as a certified public accountant includes all of the following except.
a. Having the technical qualified to perform an engagement.
b. Possessing the ability to supervise and evaluate the quality of staff work.
c. Warranting the infallibility of the work performed.
d. Consulting others if additional technical information is needed.

9.

An auditor who accepts an audit engagement and does not possess the industry expertise of the business
entity should.
a. Engage financial experts familiar with nature of the business entity.
b. Obtain knowledge of matters that relate to the nature of the entity’s business.

Specific education. b. Attainment of professional Competence Yes No No Yes maintenance of professional Competence yes yes no no 11. Which of the following is the least required in attaining professional competence? a. c. 18. Period of meaningful work experience. . a. Confidentiality requires that professional accountant acquiring information in the course of performing professional services neither uses nor appear to use that information for personal advantage or for the advantage of a third party. Continuing awareness of development in the accountancy profession. When the security of the state requires. The phase of professional competence that requires a professional accountant to adopt a program design to ensure a quality control in the performance of professional services consistent with technical and professional standards is. In which of the situations given below would a CPA be in violation of the principle of confidentiality? a. Disclosing confidential information in compliance with a subpoena issued by court. d. d. d. b. b. The duty of confidentiality ceases after the end of the relationship between the professional accountant and the client or employer. c. A CPA shall not disclose confidentiality information obtained during an audit engagement in which one of the following situations? a. Using confidential information acquired as a result of professional and business relationships to their personal advantage or the advantage of third parties. 12. Responding to an inquiry or investigation conducted by the Professional Regulatory Board of Accountancy. To a successor auditor without the clients permission. d. First inform management that an unmodified opinion cannot be issued. Errors in judgment d. d. Disclosing information to defend themselves in case of litigation. Attainment of professional competence. c. Confidentiality should always be observed by a professional accountant unless specific authority has been given to disclose information or there is a legal or professional duty to disclose. The principle of confidentiality imposes an obligation on professional accountants to refrain from. a. d. The principle of confidentiality applies to. In defense of himself when sued by his client. Which of the following is incorrect regarding confidentiality? a. Disclosing confidential information in order to properly discharge the CPAs responsibilities in accordance with his professional standards. High standards of general education. a. Maintenance of professional competence. Professional accountants have an obligation to respect the confidentiality. b. c. a. With the consent of the client. 16. Disclosing confidential information to another accountant interest in purchasing the CPAs practice. 17. c. The code of ethics for professional accountants states that a CPA shall not disclose any confidential information obtained in the course of a professional engagement except with the consent of his client. All Professional accountants 15. c. 13. fraud b. c. The essence of the due care principle is that the auditor should not be guilty of. Professional competence should include a. Bias c. b. Refer a substantial portion of the audit to another CPA who will act as the principal auditor. 10. Application of professional competence. training and examination in professionally relevant subjects. c. Professional accountants in commerce and industry. b. d. 14. b. Professional accountants in public practice. Disclosing confidential information to another party even if the client authorizes the disclosure. d. b. Professional accountants in government.c. Review of professional competence. negligence.

c. 23. “ A professional accountant rendering tax service is entitled to put forward the best position in favor of a client or an employer. c. When a professional accountant learns of a material error or omission in a tax return of a prior year. A CPA firm which observes substandard audit documentation of another firm during a quality control review should immediately inform the firm being reviewed in order to rectify the deficiency. A major stockholder of a client company seeks accounting information from the CPA after the management declined to disclose the requested information. A professional accountant’s name can be associated with the information that: a. c. competence and diligence. b. a. 25. 20. d. 19. The CPA discloses information to a successor auditor after obtaining the client’s permission. d. or of the failure to file a required tax return. Contains information without any real knowledge of whether they are true or false. c. It does not impair the accountants integrity and objectivity b. The principle of professional behavior requires a professional accountant to. c. . It is consistent with the law. d. a. Uses estimates. b. Information that a CPA obtains from a client is generally not privileged. d. Which of the following is considered a violation of rules on confidentiality? a. d. When a professional accountant performs services in a country other than the home country and differences on specific matters exist between ethical requirements of the two countries. Identify the incorrect statement. b. Which of the following statement is false? a. When Board of Accountancy conducts a review of the quality controls of another CPA firm. c. The CPA discloses information to protect his own interest in the course of legal proceedings. It is rendered with professional competence. permission of the client is not needed to examine audit documentation. Be straightforward and honest in performing professional services. 21. Disclosing confidential information in an investigation conducted by the PRC thru the Board of Accountancy. The CPA is issued a summon enforceable by a court order which orders the CP A to present confidential information. b. Contains a misleading statement. The stricter of the two ethical requirements. 24. b. Confidential client information is made available with the clients permission. a. provided: a.d. Inform the client or the employer that it is not possible to act for them in connection with that return or other related information submitted to the authorities if the client or the employer does not correct the error. Confidentiality is broken when auditor is presented with a subpoena concerning an audit client. The CPA discloses information to another CPA in compliance with a quality control review conducted by the Board of Accountancy d. b. Immediately inform the revenue authorities. An inquiry by the Professional Regulation Commission and the CPA needs the disclosure to defend himself. The CPA divulges information disclosed to him by a prospective client. Act in a manner consistent with the good reputation of the profession and refrain from any conduct which might bring discredit to the profession. Take reasonable steps to ensure that the error is not repeated in subsequent tax returns if the professional accountant concludes that a professional relationship with the client or employer can be continued. b. Promptly advise the client or employer of the error or omission and recommended that disclosure be made to the revenue authorities. the professional accountant should apply. c. The ethical requirements of the country in which services are being performed. The ethical requirements of his or her home country. 22. Be fair and should not allow prejudice or bias. Intentionally omits or obscures information c. The professional accountant assumes responsibility for the content of the tax return. the professional accountant has a responsibility to do the following except. d. Perform professional services with due care. 26. In which of the following circumstances would a CPA be bound by ethics to refrain from disclosing any confidential information obtained during the course of a professional engagement? a. conflict of interest or influence of others to override objectivity.

Independence is required whenever a professional accountant performs. 27. d. Professional behavior. Confidentiality d. d. Yes no c. No yes 36. c. a. Materiality of the amount involve\ b. Become independence in mind c. Other engagements frequently performed by professional accountants that are not assurance engagements include the following. Being an advocate of the assurance client. Comply with the generally accepted standards of fieldwork. c. a. Which fundamental principle is seriously threatened by an engagement that is compensated based on the net proceeds on loans received by the client from a commercials bank? a. 30. Of mind in appearance a. Transactions that should be reviewed b. The need for disclosing a particular transaction or event. One of the major differences between auditors and other professionals is that most professionals. The concept pf materiality would be least important to an auditor in determining. The effect of an auditor’s direct financial interest in a client. 33. Need not be concerned about independence. c. The Philippine Code of Ethics for professional accountants requires independence. intellectual honesty and a freedom from conflict of interest. Relationship between the investors and investee. a. Are not expected to act in the best interest of the public. Control over investment decisions. b. Ultimately. 31. Objectivity c. Taking an unbiased viewpoint. 37. The less strict ethical requirements. Not having a loan to or from an assurance client. Tax consultancy services. b. Professional services. except. Do not have to pass rigorous examination to be admitted in the profession. b. 32. a. The extent of audit work planned for particular account. Being honest and straight forward in all professional and business relationships. Compilation of financial or other information. Agreed-upon procedures. 29. a. d. a. b. b. while performing an audit. The primary factor that distinguishes a direct from an indirect financial interest is the. Not all engagements performed by professional accountants are assurance engagements. No no d. A state of mind that permits the provision of an opinion without being affected by influences that compromise professional judgment. public b. Yes yes b. Non-assurance services d. auditor 35. A combination of impartiality. d. 34. Integrity b. the decision as to whether the CPA is independent or not. Risk associated with such investment. Assurance services c. strives to achieve independence in appearance in order to. Maintain public confidence in the profession. Avoiding facts and circumstances that could reduce the public confidence in the professional accountant’s report. . d. a. Client c. Independence in auditing means. Do not need the confidence of the public. A CPA. d.d. will be made by the a. 28. Which of the following most accurately states how objectivity has been defined by the Code of Ethics? a. Reduce risk and liability b. c. Audit committee d. c. Not having any financial or economic relationship with the client.

It refers to the avoidance of facts and circumstances that are so significant that a reasonable. Not independent and therefore.c. and informed third party. Tax consultancy services d. If requested to perform a review engagement for a non-public entity in which an accountant has an immaterial deirct financial interest. For assurance engagements provided to non-audit clients. c. In public practice should be independent in fact and in appearance at all times. Which of the following statements is not correct about independence requirements? a. c. b. objectivity or professional skepticism had been compromised. Fact d. may not be associated with the financial statements. and other advisory services. where the distribution of the assurance reports limited only to specified users. when the assurance report is expressly restricted for use by identified users. A b c d The members of the assurance team yes yes yes yes The firms yes yes no no Network firms yes no no yes 45. The network firms are required to be independent of the client. Not independent and therefore. Total. For assurance engagements provided to clients that are not audit clients. professional accountants. Not independent and therefore . the accountant is a. a. 46. may issue a review report. b. d. the members of the assurance team and the firm are required to be independent of the client. c. For assurance engagement provided to audit client. c. In public practice should be independent in fact and in appearance when providing auditing tax. Independence in fact b. For assurance engagements provided to clients that are not audit clients. b. For assurance engagements provided to non-audit clients. Examination of financial forecast c. In public practice should be independent in fact and in appearance when providing auditing and other assurance services. b. Which of the following professional are services does not require independence? a. a. Independence in mind. having knowledge of all the relevant information . when the report is not expressly restricted for use by identified users. would reasonably conclude a firm’s or a member of the assurance team’s integrity. For assurance engagements provided to clients that are not audit clients. Direct reporting engagements. 43. Inherent Independence 39. Management consulting Examination of prospective financial information. b. including safeguards applied. For assurance engagements provided to an audit client. 38. Independence in appearance c. When CPAs are able to maintain their actual independence . Should be independent in fact and in appearance at all times. the following should be independent of the clients. Conduct b. 40. where the distribution of the assurance report is limited only to specified users. a. may not issue a review report. the firm and network firms are required to be independent of the client. the members of the assurance team. it is referred to as independence in a. According to the Code Of Professional Ethics. the members of the assurance team are required to be independent of the client. Independent and therefore may issue a review report. For assurance engagements provided to non-audit clients. Assertion-based engagements . 41. d. the firm should independent of the client. d. Appearance c. For non-assurance engagements. when the assurance report is expressly restricted for use by identified users d. d. Which of the following should be independent of the financial statement audit client? A b c The members of the assurance team yes yes The firms yes yes Network firms yes no no d yes no yes yes no 44. d. 42.

a professional accountant becomes too sympathetic to the interest of others. officers or employees of an assurance client. or was an employee in a position to exert direct and significant influence over the subject matter if the assurance engagement. For which of the following professional services must CPAs be independent? a. 50. Acceptance would require the CPA firm to make management decisions for an audit client. This occurs when any product or judgment of a previous engagement needs to be re-evaluating in reaching conclusions on the assurance engagement. This occurs when a firm. c. Self-review threat d. compliance with fundamental principles is potentially affected by self-interest. d. Preparation of tax returns. Starts when the engagement letter is prepared and ends when assurance report issued. Contingent fees relating to assurance engagements b. Self-interest threat c. According to the Philippine Code of Ethics. or may be perceived to promote. self-review. A loan or guarantee to or from an assurance client or any of its directors or officers. c. Familiarity threat c. d. because of a close relationship. Which of the following would least likely create “self-interest threat “? . This occurs as a result of the financial or other interest of a professional accountant or of an immediate or close family member. Starts when the engagement letters prepared and ends when the fieldwork is completed. The proposed engagement is not accounting related. Advocacy threat d. familiarity threat. c. Audits of financial statements. Management advisory services b. Which of the following best describes “advocacy threat”? a. Self-review threat d. c. 49. advocacy. A CPA firm should decline an offer to perform consulting services engagement if: a. c. The member of the assurance e team and the firm should be independent of the assurance client during the period of the assurance engagement. This occurs when. advocacy threat b. d. Starts when the assurance begins to perform assurance services and ends when the assurance report is issued. 53. or a member of the assurance team. familiarity and intimidation threats. Self-interest threat c. 52.47. Which of the following circumstances would least likely create self-interest threat? a. d. Self-review threat d. 48. Recommendations made by the CPA firm are to be subject to review by the client. familiarity threat 54. b. b. compromised. promotes. Self-interest threat 55. Having close personal relationship between a member of the assurance team and the assurance client. actual or perceived. For this purpose. All three of the above. from the directors. a. advocacy threat b. This occurs when a firm on a member of the assurance team could benefit from financial interest in an assurance client. Self-interest threat c. Any of the above is true. This threat occurs when a member of the assurance team may be deterred from acting objectively and exercising professional skepticism by threats. a. a. an assurance clients position or opinion to the point that objectivity may . This occurs when a member of assurance team was previously a director or officer of the assurance client. familiarity threat. Intimidation threat b. d. advocacy threat b. officers or employees. its directors. or may be perceived to be. 51. a. A direct financial interest or material indirect financial interest in an interest client. This occurs when any product or judgment of a previous assurance engagement or non-assurance engagement needs to be revaluated in reaching conclusions on the assurance engagement or when a member of the assurance team was previously a director or officer of the assurance client. a. Starts when the assurance team begins to perform assurance services and ends when the fieldwork is completed. 56. b. the period of the engagement.

a. familiarity threat. advocacy threat b. Self-interest threat c. 61. Self-interest threat c. a. A member of the assurance team having an immediate family member or close family member who is a director or officer of the assurance team. Self-interest threat c. Advocacy threat d. advocacy threat b. Threat of replacement over disagreement in the application of an accounting principle. Which of the following is an example of an intimidation threat that may affect the independence of the professional accountant? a. A former officer of a client is now a member of the assurance team. c. familiarity threat 66. Having a close business relationships with an assurance client. Undue dependence on total fees from an assurance client Concern about the possibility of losing the engagement. d. intimidation threat b. When the total fees generated by an assurance client represent a large proportion of a firm’s total fees. Self-interest threat d. c. Dealing in or being a promoter of share or other securities in an audit client. Performing services for an assurance client that directly affect the subject matter of the assurance engagement. d. an employee of the assurance client in apposition to exert direct and significant influence over the subject matter of the assurance engagement. as an employee of the assurance client . b. Which of the following would most likely create a self-review threat? a. Acting for an audit client in the resolution of a dispute or litigation would most likely create. 57. Financial interest in a client b. intimidation threat 64. Preparation of original data used to generate financial statements or preparation of other records that are the subject matter of the assurance engagement. intimidation threat b. A former partner joins the assurance client. Which of the following circumstances would least likely create familiarity threat? a. a. a. Self-review threat d. d. Litigation involving professional accountant and client c. 58. A member of the assurance team having an immediate family member or close family member or close family who is a director or officer of the assurance client. The preparation of accounting records or financial statements for an audit client will most likely create. b. familiarity threat b. c. familiarity threat. Preparation of original data used to generate financial statements or preparation of other records that are the subject matter of the assurance engagement. Examples of circumstances that may create self-review threat do not include.a. A former director or officer of the assurance client joins the assurance team. d. the dependence on that client or client group and concern about the possibility of losing the direct will most likely create: a. is in apposition to exert direct and significant influence over the subject matter of the assurance engagement. The provision of services by a firm or network firm to an audit client that involve the design and implementation of financial information technology system that are used to generate information forming part of a client’s financial statements may most likely create. 59. Potential employment with an assurance client. self-interest threat 63. Accepting gifts or undue hospitality from an assurance client would most likely create. 62. b. b. A member of the assurance team being or having recently been. Using the same senior personnel on an assurance engagement over a long period of time would most likely create a. intimidation threat b. Self-review threat d. d. Intimidation threats c. A former partner of the firm being a director. officer of the assurance client or an employee in a position to exert direct and significant influence over the subject matter of the assurance engagement. A member of the assurance team having an immediate family member of close family member who. Self-interest threat c. familiarity threat . Self0review threat d. Pressure to reduce inappropriately the extent of work performed in order to reduce fees. Familiarity threat c. c. a. 65. 60. Intimidation threat d.

the assurance engagement. Immaterial indirect financial interest impairs the CPA’s independence. Educational. Downgrade the nature of engagement to one that does not require independence. 71. c. Created within the client’s system and procedures c. Discussing independence issues with audit committee or others charged with governance. Involving an additional professional accountant to review the work done or otherwise advise as necessary. Created by the profession. Issuance of unmodified opinion with explanatory paragraph d. d. or withdrawal from . the professional accountant should. Leadership of the firm that stresses the importance of compliance with the fundamental principles.67. training and experience requirements for entry into the profession. d. b. Created in the work environment d. Documented internal policies and procedures requiring compliance with the fundamental principles. 73. Involving another firm to perform or re-perform part of the assurance engagement. Assign more experienced staff to the assurance engagement. b. Continuing professional development requirements. c. Firm-wide safeguards in the work environment may include. 74. or when a firm chooses not to eliminate the activities or interest creating the threat . Professional standards. b. d. b. Material indirect financial interest impairs the CPA’s independence. Which of the following safeguards could address the threat created by a material direct financial interest in an assurance client? A b c d Disposal of financial interest in total yes yes no yes Disposal of sufficient amount of financial interest to make It immaterial yes yes yes no Removing its member of the assurance team from The assurance client. Which of the following statements about CPA’s financial interest in a client is incorrect? a. 72. legislation or regulation does not include a. b. Issuance of qualified opinion or disclaimer of opinion. When threats to independence that are other than those clearly insignificant are identified. c. Policies and procedures to emphasize the assurance client’s commitment to fair financial reporting. Which of the following is not one of the safeguards in the work environment? a. b. a. Material direct financial interest impairs the CPA’s independence. The creation of a corporate governance structure that provides appropriate oversight and communication regarding the firm’s services. b. Continuing professional education requirements. c. Using different partners and teams with separate reporting lines for the provision of nonassurance services to an assurance client. 68. a. Rotation of senior personnel c. The rotation of senior accounting personnel can be regarded as a safeguard a. Safeguards fall into two broad categories created by the profession. 69. Apply appropriate safeguards to eliminate threats to independence or to reduce them to an acceptable level. Created within the business community. d. Documented policies regarding identification of threats to compliance with the fundamental principles. When the safeguards available are insufficient to eliminate the threats to independence or to reduce them to an acceptable level. c. Issuance of an adverse opinion b. the only course of action available will be the a. 75. 70. Yes no no yes . Having appropriate body independent of management appoint the external auditor. Corporate governance regulations. Safeguards within the clients systems and procedure may include: a. d. Continue the assurance engagement but with heightened level of professional skepticism. d. Refusal to perform. Immaterial direct financial interest impairs the CPA’s independence. c.

An auditor’s independence is considered impaired if the auditor has : a. An immaterial. Dispose of a sufficient amount of it so that the remaining interest is no longer material. 78. Either a or b d. Sibling c. Close business relationship can be regarded as an indirect financial interest and therefore would impair the professional accountan’s independence unless. provided the loan is immaterial to both the firm and the assurance client. If a member of the assurance team. Dispose of a sufficient amount of the indirect financial interest so that the remaining interest is no longer material prior to the individual becoming a member of the assurance team. Loans from an assurance client that is a financial institution will not impair the independence of the professional accountant if: A The loan is immaterial The loan was obtained under normal Lending procedures. non-dependent child d. c. a. d. The client engages the services of the professional accountant to audit the current year’s financial statements. Sibling c. collateralized by the automobile. a. A loan to an assurance client that is not a bank or similar institution. spouse 80. a. or a guarantee thereof by . 83. an assurance client that is bank or a similar institution. professional fees for prior year’s engagements must be paid before: a. b. Deposits made by. d. If a firm. or a material indirect financial interest. c. non-dependent child d. Dispose of the financial interest b. the selfinterest threat created would be so significant no safeguards could reduce the threat to an acceptable level. provided the loan is immaterial to both the firm and assurance client. to a member of the assurance team. or their immediate family member has a direct financial interest. or a network firm. The audit report on the current year’s financial statements is issued. c. The action appropriate to permit the firm to perform the engagement would be to. Neither a nor b. closely held business investment with the client that is material to the auditor’s net worth. 77. firm or a member of the assurance team with an assurance client that is a bank.000 balance on a credit card issued by a client. except: a. provided the deposit or account is held under normal a commercial terms. A loan from. a. to the firm. Parents b. An automobile loan from a client bank. The following loans and guarantees would not create a threat to independence . Dispose of the direct financial interest prior to the individual becoming a member of the assurance team. An outstanding P5. Dispose of the indirect financial interest in total prior to the individual becoming a member of the assurance team. in the assurance client. A joint.76. The professional accountant formulates an opnion on the current year’s financial statements. Which of the following safeguards would not be appropriate? a. or a guarantee thereof by. Hence. b. The relationship is insignificant c. b. . c. has a material direct financial interest in an audit client of the firm. Immediate family members include. d. an assurance client that is a bank or a similar institution. Close family members do not include. Bothe a and b d. Parent b. or broker accounts of a. terms and requirements b yes c yes d no no yes no no yes 82. Limit the participation of the member of the assurance team. Neither a or b 79. The amount is immaterial b. broker or similar institution. 84. the self-interest threat created would be so significant. the professional accountant should apply appropriate safeguards in order to eliminate the threat or reduce it to an acceptable level. b. indirect financial interest in a client. c. A self-interest threat may be created if fees due from an assurance client for professional services remain unpaid for a long time. Consequently. A loan form. spouse 81.

Considered an act discreditable to the profession. Two years b. . Independence of an auditor in relation to the enterprise may be impaired under the following cases. c. c. The commencement of the current year’s audit engagement. Having a loan to or from the enterprise or any officer. Distribution or marketing arrangements under which the firm acts as a distributor or marketer of the assurance client’s products or services. Reporting in a management role. underwriter. A percentage of audited net income. Determining which recommendation of the firm should be implemented. 90. director. an auditor may take into account each of the following. A member of the assurance team participates in the assurance engagement while knowing or having reason to believe. director. d. b. Engaged to render management advisory services to the enterprise. Five years d. Value of the service to the client. c. Never restricted in public accounting practice. officer or employee. 88. c. b. d. b. Having a material financial interest in a joint venture with the assurance client or a controlling owner. 93. d. c. Being an honorary board member of an audit client. Which of the following will not normally impair the auditor’s independence ? a. or principal stockholder thereof with certain exceptions. officer. Connection with the enterprise as a promoter. except a. Twelve years. or other individual who performs senior managerial functions for that client. an officer or an employee of the assurance client in a position to exert direct and significant influence over the subject matter of the assurance engagement. Which of the following would least likely be considered a violation of the independence rules? a. 89. 85. d. A partner or an employee of the firm receives a token gift from an assurance client. or may. join the assurance client sometime in the future. 86. Contingent fee pricing of public accounting services is: a. Always strictly prohibited in public accounting practice. 92. Three years c. to those changed with governance. Attainment of specific findings. An immediate family member of a member of the assurance team is a director. d. voting trustee. b. provided the transaction is in the normal course of business and on an arm’s length basis. Prohibited for clients for whom assurance services are provided. Providing legal services to an assurance client in legal dispute. d. Arrangements to combine one or more services or products of the firm with one or more services or products of the assurance client and to market the package with reference to both parties. Providing tax consultancy services to an audit client. a. 91. A partner or employee of the firm serves as an officer or as a director on the board of an assurance client. b. Per diem rates plus expenses. Which of the following activities would least likely impair the professional accountant’s independence? a. c. b. Examples of close business relationships that may create self-interest and intimidation threat likely include. or the assurance client acts as the distributor or marketer of the products or services of the firm. Receiving a gift from an assurance client. b. a. Providing bookkeeping services to an audit client that is listed in the stock exchange. that he or she is to. In determining estimates of fees. Serving as an officer or director of an auditor client. director. An engagement partner who is rotated in the audit of financial statements of listed entity can only participate on the audit engagement for the same client after a period of. Skills required to perform the service. The purchase of goods and services from an assurance client by the firm (or from an audit client by a network firm) or a member of the assurance team. Degree of responsibility assumed by undertaking the engagement c. a. d. b. 87. The CPA should not undertake an engagement if his fee is to be based upon. Having a direct or material indirect financial interest in the enterprise. except the a.d.

The approach to a potential client for the purpose of offering professional services is called. advertising 100. Yes no b. 96. or network firm. b. The standardization and regulation of accounting education b. To enable successor auditor to perform a more efficient audit. accounting . Indecent proposal c. Fees are a. c. a. 95. Computed as a percentage of the amount tat the company can save from its tax return. No no d. a person holding out himself as one skilled in the knowledge.A successor auditor is required to communicate with the previous auditor. d. Information which will help the successor auditor determine whether there are issues about management integrity. A fee which is based upon the nature of the engagement rather than upon the actual time spent on the engagement. .The objective of the Philippine Accountancy Act 2004 includes: a. Self-review threat d. No yes c. Philippine Accountancy Act of 2004 102. The provision of legal services by a firm. A fee based on whether or not the audit report leads to the approval of client’s application for loan. A fee that will be established as a result of a bankruptcy proceedings. d. control. c. a successor auditor 101. advertising 99. The supervision. science and practice of accounting and as a qualified person render professional services as a CPA to more than one client. This would situation most likely create. b. Based on judicial or other government agency proceedings. To save successor auditor time and money in gathering data. A management consultant c. or who is consulted in order to meet the needs of the client is called: a. encroachment b. Solicitation d. Dependent on the approval of a bank loan.c. To learn about client by examining predecessor’s working papers. to an entity that is an audit client may create Advocacy threat self-review threat a. familiarity threat 98. d.Which of the following does not constitute a practice of accountancy> a. 103. The examination for registration of certified public accountants. Self-interest threat c. a. an officer or an employee of the assurance client in a position to exert direct and significant influence over the subject matter of the assurance engagement has been a member of the assurance team or partner of the firm. a. and regulation of the practice of accountancy in the Philippines. The communication to the public of facts about a professional accountant which are not designed for the deliberate promotion of that promotional accountant is called. Computed as a percentage of the client’s net income. intimidation threat b. Advertising c. The primary concern in this communication is a. d. A fixed amount The complexity of the service rendered 94. b. A receiving accountant d. Yes yes 97. not to be regarded as contingent if these are. All of the above. consulting or similar appointments. In which of the following situations would a public accounting firm have violated the Code of Ethics in determining its fee? a. A director. taxation. solicitation b. c. an expert b. A fee based on the degree of responsibility that the service entails.A professional accountant in public practice to whom the existing accountant or the client of existing accountant has referred audit. d. Publicity d. c.

He/she must not have any direct or indirect pecuniary interest in any school. d. the commission in consultation with the Board shall submit to the president a list of three nominees for each vacant position. A person is appointed as a marketing director of a government owned and controlled corporation. may suspend or remove any member of the Board of Accountancy.The following statements relates to the Board of Accountancy. 105.Which of the following is not one of the qualifications of the members of the Board of accountancy? a.Which of the following is not a function of the Board of Accountancy? a. b. He/she must be a duly Certified Public Accountant with at least ten years of experience in practice of public accountancy. d. Appointment to fill up an unexpected term is to be considered a complete term.Which of the following is not one of the qualifications of the members of the Board of Accountancy? a. Commission PICPA President of the Phils. President of the Phils PICPA commission c. auditing. 106. The board consists of a Chairman and six members. President of the Philippines Commission PICPA. b. A person in educational institution teaching accounting. c. Which statement is correct? a. Must be a natural –born CPA and resident of the Philippines. If the APO fails to submit its nominees within 60days prior to expiry of the team of an incumbent chairman or member. He/she must not be a director or officer of PICPA at the time of his appointment. The board shall be composed of a chairman and six members. A person may serve in the Board of Accountancy for eight consecutive years. 110.The president of the Philippines. . d. d. To issue. upon the recommendation of the commission. c. To supervise the registration. c. revoke or reinstate the certificate of registration for the practice of the accountancy profession. b. college. LIST A LIST B LIST C a. d. No person shall serve in the Board for more than 10 years.Which of the following statements about the composition of the Board of Accountancy is incorrect? a. c. c. Which of the following is not a valid ground for suspension or removal of members of the board of Accountancy? a. or institution offering a BS Accountancy course or institution conducting review classes in the preparation for the licensure examination at the time of his appointment to the Board. A member of the Board of Accountancy manipulated the CPA licensure examination results. The Professional Regulation Commission may recover from the Board and members whose certificate to practice has been removed or suspended. The Board shall elect a chairman from among its members to serve for a term of one year.b. c. b.The Professional Regulatory Board of Accountancy shall be composed of the chairman and (6) members to be appointed by the (LISTA A) from a list of three recommences for each position and ranked by the (list B) from a list of five (5) nominees for each position submitted by (LIST C). b. A member of the Board has been sued of crimes involving moral turpitude. university. The members of the Board shall be appointed by the President of the Philippines from a list of three recommendees for each position and ranked by the Commission. licensure and practice of accountancy in the Philippines. No person who has served three (3) successive complete terms shall be eligible for reappointment until the lapse of one (1) year. Must be a duly Certified Public Accountant with at least ten years of experience in practice of accountancy. 107. b. The chairman and members are appointed by the President of the Philippines upon recommendation of PICPA. He/she must be a natural-born citizen and a resident of the Philippines. business law. Neglect of duty or incompetence. b. 108. b. 104. taxation or other technically related subjects. d. c. Majority of the board members shall as much as possible be in public practice. A member of the Board has violated RA 9298. d. 109. from a list of five nominees for each positions submitted by accredited Professional Organization or PICPA. Must be of good moral character.Which statement is correct regarding the term of office of the chairman and the members of the Board of Accountancy (BOA)? a. A person representing his/her employer before government agencies on tax and other accounting related matters. 111. Must not have been convicted of crimes involving moral turpitude. suspend. Commission Commission PICPA d.

120. 118. To supervise PICPA 113. Commerce and industry b. The accounting standards setting body is to be known as Financial Reporting Standards Council (FRSC) b. c. Board of Accountancy. 112. To prescribe and/or adopt a code of ethics for the practice of accountancy To adopt an official seal of the commission. To prepare question for the CPA licensure examination which shall strictly within the scope of the syllabi of the subjects for examination? c. Accounting Standards Council (ASC) d. d. Banko Sentral Ng Pilipinas d. The chairman and members of the standard setting council shall be appointed by the commission upon the recommendation of the Board in coordination with APO.Which of the following statements is correct about AASC? a. 116. Auditing and Assurance Standards Council (AASC) 115. d. To conduct an oversight into the quality of audits of financial statements trough a review of the quality control measures. c. The chairman and members of ETC have a three year term renewable for another term. adopt. The chairman and members of the AASC shall be appointed by the President of the Philippines from a list of three recommendees ranked by the Commission from the list of % nominees for each position submitted by APO.c. To monitor the conditions affecting the practice of accountancy and adopt such measures deemed proper for the enhancement and maintenance of high professional. d. To investigate violation of the RA 9298 d. d. Securities and exchange Commission b. To make investigation as it deems necessary to determine whether any person has violated any provisions of this law or any standards promulgated by the Bard as part of the rules governing the practice of accountancy. 114. a. The Accounting standards setting body shall be composed of a chairman and fourteen members. To prepare. ethical. c. ETC is composed of 15 members with chairman.Educational Technical Council (ETC) differs from accounting and auditing standards setting council in that a.Which is least function of the Board of Accountancy? a. b. Academe c. Government d.Which of the following government regulatory agencies is not represented in the AASC? a. d. Financial Reporting Standards Council (FRSC) b.The auditing standards setting body created by the PRC is known as a. b.Which of the following is not one of the functions of ETC? .Which of the following is not one of the functions of the Board of Accountancy specifically provided under the RA 9298? a.The sector that is most represented in the AASC is the. c.Which of the following statements about Accounting Standards Setting Council is false? a. Auditing Standards and Practices Council (ASPC) c. b. The chairman and members of ETC are appointed by the Commission. Public practice 117. accounting and auditing standards. The public accounting practice is the sector that is most represented in the accounting standard setting council. The chairman of ETC must have been or presently a senior accounting practitioner in Academe/education. b. issue or amend syllabi at the subjects for examinations in consultation with the academe. Bureau of internal revenue c. The AASC shall elect a Vice Chairman from among its members for a term of one year. 119. To delegate its power and function to determine and prepare test questions for the CPA licensure examination. The AASC shall be composed of a chairman and six members. The chairman and members of the AASC shall have a term of three years renewable for another term.

c. expiry date.Which of the following shall be issued to examinees who pass the CPA licensure examination? a. shall be issued to every registrant renewable every a. He/she is at least 21 years of age. Monitor the progress of the program on the study of accountancy and undertaking measures for the attainment of a high quality accountancy education in the country. He/she is Filipino Citizen. May he reinstated by the Professional Regulation Commission after two years if he has acted in an exemplary manner. a. 123. He/she enrolled in and completed at least 24 units of subjects given in the licensure examination. Certificate of full compliance and PRC ID. No person shall be appointed as a member of the Board of Accountancy unless he has been in the practice of Accountancy for at least 10 years.A Professional Identification Card bearing the registration number date of issuance. 129. or any other just cause. 3 125. c. a. Determine a minimum standard curriculum for the study of accountancy to be implemented in all schools offering BS Accountancy. Had been convicted by a court of a criminal offense involving moral turpitude. incompetence.The following are qualifications of applicants for CPA licensure examination except. d. c. d. Both A and B d. d. May he reinstate as a CPA by the Board of Accountancy after two years if he has acted in an exemplary manner. The candidate must have a general weighted average of at least 75%.Which of the following is one of the reasons for not issuing a certificate of registration to a successful examinee? The individual: a. a. b. Three years . Insanity is not a ground for proceeding against a CPA. Personal identification card. the Board of Accountancy may order the restatement of a CPA whose certificate of registration has been revoked. Two years b. He/she is holder of the degree of Bachelor of Science in Accountancy d.a. b. 122. d. Had been guilty of immoral and dishonorable conduct. 2 d. Recommended to the Board the revocation of the certificate of registration and the professional identification card of an individual CPA or CPA firm including any of their members who have not complied with the standards of quality prescribed for the practice of public accountancy. including the qualification of the members of the faculty of schools and colleges of accountancy. 121. d. He/she enrolled the subject given in the CPA board Examination in the regular course offering. b. Establish teaching standards. 127. 128. Is automatically reinstated as a CPA by the PRC after two years if he has acted in an exemplary manner c. subject to certain conditions. The candidate must not have a grade lower than 65% in any given subject.Any candidate who fails in 2 complete CPA Board examination shall be disqualified from taking another set of examination unless he or she submits evidence to the satisfaction of the Board that.The board of accountancy shall submit to the PRC the ratings obtained by each candidate within ______days after the examination unless extended for just a cause. He/she is of good moral character c. All of given choices. The Professional Regulation commission has the authority to remove any member of the Board of Accountancy for negligence.The following statements relate to the RA9298. duly signed by the chairperson of the Commission. 10 b. 5 c. Can no longer be reinstated b. c. among others. After three years. Certificate of registration and professional identification card. Which statement is true? a. b. c. d. He/she is ready to take another set of examination. Certificate of accreditation b.A CPA whose certificate of registration has been revoked. Is of unsold mind b. Neither A or B 124.To be qualified as having passed the CPA licensure examination a. b. a. c. He/she enrolled in an educational institution offering or conducting review classes in preparation for CPA Board Examination. 126.

The publication of the roster in the official gazette or in any major news paper of public circulation shall be deemed compliance with the requirements of RA 9298.Who is not permitted under RA9298 to practice public accountancy? a.c. Vicencio and Co.000 or by imprisonment for a period not exceeding two years or both. that such registrant has acquired how many years of meaningful experience in any areas of public practice? a. a. A roster showing the names and place of business of all registered CPAs shall be prepared and updated by the Board. he or she must indicate the Certificate of Registration social Security Professional Tax Number number receipt number a. 2 b. Binhi . Who has falsely represented himself/herself in his/her application for examination? 132. Identify the incorrect statement. Which firm name and related facts indicated a violation of the Philippines Accountancy Act of 2004? a. Yes yes yes b. Yes no yes c. Guilty of immoral or dishonorable conduct. d.The following statements relate to roster of CPAs. four 137. c.Any person who shall violate any of the provisions of the Accountancy Act or any of its implementing rules and regulations promulgated by the Board of Accountancy subject to the approval of the PRC. Yes no no 131. Vicencio has ten other partners who are all CPAs) . and Bigo. a. be punished by. Of unsound mind b. A corporation. d. Lethal injection b. A general partnership c. shall upon conviction. Hermosilla. Imprisonment for a period not exceeding two years. 135. b. Bigo is continuing the firm as a sole practitioner ) d. three d. 4 d. Bitay. Copies of the roster shall be made available to any party as may be deemed necessary. A fine of not less than P50. One b. The Board. may delegate the preparation of this roster to the APO.P.RA 9298.As. 3 c. c. A fine of not more than p50. a. CPA. 136. 5 133. upon approval of the Commission . 134. two c. whose stockholders are all CPAs b. a.000 c. Four years Five years.The Board of Accountancy may issue certificate of registration and professional identification card to any successful examinee.Below are names of four CPA firms and pertinent facts relating to them.. CPAs (the name of R. A sole proprietorship. J. Unless otherwise indicated. No yes no d. a third partner is omitted from the firm). after the expiration of _____ years from the date revocation of a certificate of registration. and partners and there are no other partners. CPAs (J.A certificate of accreditation shall be issued to certified public accountants in public practice only upon showing. the individuals named are C. d. A limited liability partnership. 130. Tui and Ramos.The Board of Accountancy may. requires that whenever a CPA signs a document in connection with the practice of his/her profession. d. binti and bigti CPAs (bigti died about 5 years ago: Binhi and Binti are continuing the firm) b. reinstate the validity of a revoked certificate of registration. d. CPAs ( Bitay died about three years ago. Convicted by a court of political offense. c. in accordance with rules and regulations promulgated by the Board and approved by the Commission.

b. provided that prior to the date of renewal he/ she has been out of the country for at least. Be dropped from the roster of CPAs b. . such registration to be renewed every ______ on or before _____. 15 .The PICPA shall renew its certificate of accreditation once every a. five years 143. two years b.Affixing a.2018 c. b. Three years d. December 31. 70 years old. ASSOCIATION OF CPAs IN Education (ACPAE) 142. 145. one year 147. The Council shall be composed of six members and a chairperson. d. d. skills and experience to discharge their professional responsibility.Which of the following organization has been recognized by the Commission on October 2.For every CPE seminars or conventions attended. September 30 d. was approved on April #0. September 30. Two years c. CPA’s accreditation to practice public accountancy Fair presentation of financial statements audited. The members of the Board shall choose a chairperson from among themselves c. a. Submit a letter addressed to the Board indicating the reasons for not complying with the CPE requirements.If the application for registration to practice public accountancy of Vicencio and CO. Four years c. registered CPAs in the practice of accountancy who have not completed the CPE requirements shall.A registered professional shall be permanently exempted from CPE requirements upon reaching the age of. 146. April 15 b December 31 140.2016.2019 b. a. 65 years old d. One credit unit per hour c. 2018 141. two years c. Not be allowed to renew their professional licenses. May 31 a. The chairperson and members of the Council shall have a term of three years renewable for another term. 138. April 30. four years b. five years 139. Two credit units per hour d.Special/temporary permit may be issued by the Board to the following persons except. the registration shall expire on. 55 years old c. three years d. c. as Accredited Professional Organization? a. 148. firms and partnerships of CPAs engaged in the practice of public accountancy including partners and staff members thereof. three credit units per hour. Compliance by the CPA of the requisite accounting and auditing standards and rules.a. CPAs. b. Association o f CPAs in Public Practice (ACPAPP) d. the CPAs real and signature on the auditor’s report is an indication of: CPA’s acceptance of responsibility for the financial statements audited. Philippine Institute of CPAs (PICPA) c. Present evidence to the satisfaction of the Board that they have the necessary knowledge. a. d. 149.Which of the following statements is correct about the PRC CPE Council? a. September 30. c.1975 per Accreditation No. c.A registered CPA who is working or practicing his/her professional furthering abroad shall be temporarily exempted from compliance with CPE requirements during the period of his/her stay abroad. Three years d. participant CPAs shall get.Unless otherwise exempted. a.2019 d. The members of the Council shall be appointed by the Commission upon recommendation of the Board in coordination with APO. Board of Accountancy (BOA) b. a. 60 years old. 144. five credit units per hour. one year b. b.141 and 143 are based on the following information: CPAs. shall register with the Commission and the Board .

151. 17. 7.a. Working papers may substitute the client’s accounting records c. S. d. D C C 4. She is exempted from the CPE requirements. Auditing and Assurance Standards Council. Working papers are subject to confidentiality rules and they cannot be shown to third parties in any circumstances. a. 2.The following statements relate to RA 9298. D D D B D B C A 20. A foreign CPA with specialization in any branch of accountancy and his/her service is essential for the advancement of accountancy in the Philippines. 19. Either A or B d. B D D B C B A B 12. 1. Under no circumstance.Rio. 15. b. If she is at least 65 years old. A foreign CPA engaged as a professor or lecturer in the fields essential to accountancy education in the Philippines. ACPAPP d. The board mat after the expiration of 2 years from the date of revocation of Certificate of registration may reinstate the revoked certificate. ANSWER 6. c.Which of the following statements about working paper is correct? a. b. 11. C . 8. a. 3. 10. A foreign CPA who can prove that the country of which he or she is a citizen admits of the Philippines to the practice of the same professional without restriction.Which of the following functions to promulgate auditing standards? a. CPA is applying for renewal of his professional license. 13. Implementing rules and regulations shall take effect 15 days following its publication in the official gazette or in any daily newspapers of general circulation. c. 9. Working papers should not serve as a reference source for the clients accounting records. 18. All graduates with bachelor’s degree major in Accounting shall be allowed to take the CPA Licensure examination within two years from the affectivity of RA 9298 or until May 2006. A foreign CPA called for consultation or specific purpose which is essential for the development of the country and that there are no Filipino CPA’s qualified for such consultation or specific purpose. Financial Reporting Standards Council c. c. Any person who shall violate any of the provisions of RA 9298 or the IRR shall upon conviction . 150. Working papers prepared by a CPA including those prepared and submitted by the client are the personal property of the auditor and the client has no right to these working papers. b. b. KEY 5. be punished by a fine of not more than P50. Identify the incorrect statement. 152. d. A national Accredited Professional Organization. b. 153.000 or by imprisonment for a period not exceeding 2 years or both. d. 16. 14. If she is working abroad and he has been out of the country for at least two years immediately prior to the date of renewal.

A 121.D 150.B 149. 42.D 153.B 146. 72.B 130. 70. 74.D 104. 82. 44. 38.C 147. 94. A D D C D C B D A D D D A C D D A B B 101.D 112. 73. 53. 46.B 148. 84. 77.A 133. 39. 76.D 141. 57. 68. 64. 45. 24.C 139. 22. 67.C 140. 25. 29.D 135. 86.A 109. 28. 48.D 113. 33. 63.D 120. 27. 50.B 143. 87.C 124. 56.A 125. B B D D C C C C C B C D B D A B D B C C 100.D 103.A 126. 79. B C A D A B D D D A C C D A D A B C D D 81. 97.B 142. 75.C 137. 95. 26. 23. 55. 99. 62.A 145. 36. 54. 34.A 151.C . 52. 59.C 116.D 134. 92.C 114. 88. 32.A 136. B A A C D C B C A A D D B A A D B D B C 61. 31. 65. 49. 98.C 127.D 123. 40.C 110. 37. 90. 93.A 115.D 117. 60. 85. 30.D 118.D 106. 66.D 128.A 105.A 102. 71. 47. 78. 83.C 107. 96.B 41.B 108. 43.KEY ANSWER S 21. 91. 69.B 131.B 152. 80.C 122. 35. 58.D 129. 89. 51.B 144.D 111.A 119.B 132.C 138.