CHAPTER2

PRACTICEOFPUBLICACCOUNTANCY
Questions
1.

Refer to page 29 of the textbook.

2.

Refer to pages 30 to 35 of the textbook.

3.

Refer to page 37 of the textbook.

4.

Refer to page 37 of the textbook.

5.

The following are the most sought - after services among professional
accountants.
A. Assurance Services. Examples are:
1.

Independent financial statement audit

2.

Reviews

3.

Other assurance services (e.g., CPA Web Trust, Business Performance

Measurement Service)

B. Non-Assurance Services. Examples are:

6.

1.

Agreed-upon procedures

2.

Compilation

3.

Tax

4.

Management consultancy/advisory services

5.

Accounting and data processing

6.

Other non-assurance services (e.g., Information Technology System

Services)

In an assurance engagement, a practitioner aims to provide a high or moderate

level of assurance that an assertion being made by one party for use by another
party can be relied upon while in a consulting engagement, the practitioner aims
to provide professional advice on how the limited resources of an enterprise can
be put into optimal use in order to attain the companys objectives.

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Solutions Manual Public Accountancy Profession

7.

Examples of assurance engagements on information technology are:

a) CPA Web Trust Service
b) Information System Reliability Service
Refer to page 41 of the textbook for a brief discussion of these services.

8.

Refer to page 52 of the textbook.

9.

Refer to pages 44 to 52 of the textbook.

10. Refer to page 38 of the textbook.

11. Refer to page 47 of the textbook.
12. Refer to pages 52 to 54 of the textbook.
13. Refer to page 36 of the textbook.
14. Refer to pages 56 and 57 of the textbook.
Multiple Choice Questions
1.
2.
3.
4.
5.

C
A
D
D
D

6.
7.
8.
9.
10.

C
D
D
D
C

11.
12.
13.
14.

D
C
D
C

Cases
1.

(a) The purpose of CPA reporting on internal control is to provide assurance

about whether managements assertion about internal control is fairly stated
in all material respects, based on the control criteria being followed. Thus,
for example, an examination provides the highest degree of assurance that
information produced by the system will be reliable.
(b) When involved in performing an examination on the effectiveness of
internal control a practitioner should:

Plan the engagement.

Practice of Public Accountancy

2-3

Obtain an understanding of internal control.

Evaluate the design and operating effectiveness of internal control.
Form an opinion about the fairness of managements assertion on
internal control.
(a) PSA 100, Assurance Engagements, provide guidance for an engagement
such as one on customer satisfaction. They provide guidelines on audits
and related services such as examinations and reviews.

2.

(b) Suitable criteria are those that are objective and permit reasonably
consistent measurements. In addition, the criteria must be sufficiently
complete such that no relevant factors are omitted that would affect a
conclusion about the subject matter. Finally, the criteria must measure some
characteristic of the subject matter that is relevant to a users decision.
(c)

INDEPENDENT ACCOUNTANTS REPORT

We have examined the accompanying Schedule of Customer Satisfaction
Measures for the three years ended December 31, 2013. This schedule is
the responsibility of Gonzales, Inc.s management. Our responsibility is to
express an opinion on this schedule based on our examination.
Our examination was conducted in accordance with standards on assurance
engagements adopted in the Philippines and, accordingly, included
examining, on a test basis, evidence supporting the schedule and performing
such other procedures as we considered necessary in the circumstances. We
believe that our examination provides a reasonable basis for our opinion.
In our opinion, the Schedule of Customer Satisfaction Measures referred to
above presents fairly, in all material respects, the levels of customer
satisfaction for the three years ended December 31, 2013, in conformity
with the measurement and disclosure criteria set forth in Note 1.
Santos & Lopez, LLP
March 1, 2014
NOTE TO INSTRUCTOR: If the CPAs believe that the criteria are not
understandable by users other than management a paragraph must be added
to the report restricting its use.