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1. The following are qualifications of the members of the Board of Accountancy, except:
A. Natural-born citizen and residence of the Philippines.
B. Duly registered CPA with at least 10 years of work experience in any scope of practice of
C. Good moral character not convicted of crimes involving moral turpitude.
D. No direct or material indirect, pecuniary interest in any school, college, university or
institution conferring the BS Accountancy degree or providing CPA Review classes.
2. The Board shall be under the administrative supervision of the:
A. PICPA B. PRC C. SEC D. Philippine President
3. The following are among the powers and functions of the Board of Accountancy, except:
A. To prescribe and adopt the rules and regulations necessary for implementing RA9298.
B. To prescribe and/or adopt a Code of Ethics for the practice of accountancy.
C. To ensure, in coordination with the DepEd that all higher educational instruction and
offering of accountancy comply with prescribed policies, standards and requirements of the
D. To conduct an oversight into the quality of audits of financial statements.
4. Who is the person that has authority to suspend or remove a member of the BOA, on valid
grounds and after due process?
A. The President of the Republic of the Philippines.
B. The Chairman of the Professional Regulatory Board of Accountancy, unless he is the one
who is under investigation.
C. The Commissioner of the Professional Regulation Commission.
D. None of the above.
5. The following are grounds for suspension or removal of members of the Board of Accountancy,
A. Neglect of duty or incompetence
B. Violation or tolerance of any violation of RA9298 and its IRR, or the Code of Ethics and
technical and professional standards of practice for CPAs.
C. Pending case on a crime involving moral turpitude.
D. Manipulation or rigging of the CPA licensure examination results.
6. The following statements relate to the Philippine Institute of Certified Public Accountants
(PICPA). Which one is incorrect?
A. A director can only represent a sector in a region if he/she has been a member in good
standing in such sector in the region for at least two years at the time of his/her nomination.
B. There shall only be fourteen national directors, unless there is a valid reason to have
additional representation.
C. The national directors shall be apportioned according to sectors in the four geographic
sectors based on the ratio of latest available number of members in good standing from
those areas.
D. It shall have a full-time career Executive Director who shall implement the policies
promulgated by the PICPA Board of Directors and shall have direct supervision over the
PICPA Secretariat.
7. PICPA shall renew its certificate of accreditation once:
A. Every 3 years. B. Annually C. Every 6 years D. None of these.
8. The PICPA certificate of accreditation shall be cancelled or suspended by the PRC upon the
recommendation by the BOA after due hearing under any of the following grounds or causes,
A. It has ceased to possess any of the qualifications for accreditation.
B. It no longer servers the best interest of CPAs
C. Two years have passed and it has not yet enlisted into active membership the majority of
CPAs in the practice of accountancy.
D. It has committed acts inimical to its members and to the profession.
9. The interests of professional accountants in each sector of practice are addressed by several
organizations. Which of the following is the sectoral organization for professional accountants in
10. According to the IRR, this council is tasked to assist the BOA in continuously upgrading
accountancy education in the Philippines to make the Filipino CPAs globally competitive.
11. The ETC shall be composed of:
A. Six representatives.
B. Six representatives with a Chairman.
C. Seven representatives with a Chairman and a vice-chairman.
D. Eight representatives with a Chairman, a vice-chairman, and a secretary.
12. RA9298 created a CPE Council for the purpose of implementing the CPE program for CPAs. CPE
A. Continuing Practice Evaluation C. Certified Practical Examinations
B. Continuing Physical Education D. Continuing Professional Education
13. The total CPE credit units for registered CPAs shall be:
A. 60 credit units for 3 years, provided that a minimum of 15 credit units shall be earned in
each year.
B. 45 credit units for three years, provided that a minimum of 15 credit units shall be earned in
each year.
C. 60 credit units for three years, provided that a minimum of 20 credit units shall be earned in
each year.
D. Minimum of 15 credit units earned in each year.
14. A registered professional shall be permanently exempted from CPE requirements upon reaching
the age of:
A. 60 years old B. 65 years old C. 70 years old D. 75 years old
15. The PRC CPE Council shall be composed of:
A. A chairperson and three members.
B. A chairperson, vice-chairperson and two members.
C. A chairperson and two members.
D. A chairperson, vice-chairperson and three members.
16. Should the need arises, the PRC CPE Council may delegate to the PICPA the processing of the
applications, keeping of all records for CPE Providers, and their respective programs and credit
units earned by each CPA who avail of the CPE programs and related functions. For this purpose,
the PICPA may create a counterpart CPE Council to be known as:
A. Counterpart CPE Council C. PICPA CPE Committee
B. Support CPE Council D. PICPA CPE Council
17. A study, appraisal, or review by the Board or its duly authorized representatives, of the quality
of audit of financial statements through a review of the quality control measures instituted by
an Individual CPA, Firm, or Partnership of CPAs engaged in the practice of public accountancy to
ascertain his/her/its compliance with prescribed professional, ethical and technical standards of
public practice.
A. CPA review C. Quality review
B. Peer review D. Professional review
18. Agatha and Company, a large international CPA firm, is to have an external peer review. The
peer review will most likely be performed by:
A. Employees and partners of Agatha and Company who are not associated with the particular
audits being reviewed.
B. Audit review staff of the Securities and Exchange Commission.
C. Agents of the National Bureau of Investigation.
D. Employees and partners of another CPA firm.
19. This committee is created to conduct an oversight into the quality of audits of financial
statements through a review of the quality control measures instituted by Individual CPAs,
Firms, or Partnerships.
A. Quality Review Council C. Quality Review Committee
B. Quality Control Committee D. Engagement Quality Control Review
20. the Quality Review Committee (QRC ) shall be composed of:
A. Seven members with a chairman C. Five members with a chairman
B. Six members with a chairman D. Four members with a chairman
21. The chairman and members of the QRC shall have a term of:
A. 2 years, renewable C. 3 years, renewable
B. 2 years, not renewable D. 3 years, not renewable
22. The Constitution of the Philippines requires this Office to “keep the general accounts of the
Government and for such period as may be provided by law, preserve the vouchers pertaining
A. National Accounting Office C. Commission on Audit
B. Ministry of Finance D. Accounting Units
23. The following are the duties of the Commission on Audit (COA), except:
A. Define the scope of its audit and examination.
B. Promulgate the accounting rules and regulations.
C. Keep the general accounts of the government.
D. Assume fiscal responsibility for the Government and its instrumentalities.
24. Auditors of the Commission on Audit perform the role of
A. Internal auditors. C. Management accountants.
B. Independent auditors. D. Financial consultants.
25. The Chairman and Commissioners of the Commission on Audit shall be
A. All Certified Public Accountants.
B. All lawyers.
C. One or two lawyers and one or two CPAs for a total of three.
D. Two lawyers and one CPA.
26. Who appoints the members of the COA?
A. The Commissioner of the Professional Regulation Commission.
B. The Chairman of the Professional Regulatory Board of Accountancy.
C. The President, with the concurrence of the Commission on Appointments.
D. The Chairman of the Auditing and Assurance Standards Council.
27. Which of the following is a correct qualification of the Chairman and Two Commissioners of the
A. A naturalized citizen of the Philippines.
B. At least 40 years of age upon appointment.
C. CPAs with no less than 5 years of auditing experience or members of the Philippine bar who
have been engaged in law practice for at least 5 years.
D. Must not have been candidates for any elective position preceding appointment.
28. How long will each member of the COA serve their respective terms?
A. Three years, with no reappointment.
B. Three years, subject to reappointment.
C. Five years, with no reappointment.
D. Seven years, with no reappointment.
29. Which of the following statements is incorrect?
A. Most entities make use of IT systems for financial reporting and operational purposes.
B. There will always be manual elements to the systems that a client uses.
C. Manual controls may be less reliable than an automated control because they can be more
easily bypassed, ignored, or overridden and they are also more prone to simple errors and
D. Consistency of application of a manual control element can be assumed.
30. Which of the following statements is incorrect?
A. The hardware component refers to the electronic devices or equipment used to accomplish
each IT function (input, processing, storage, and output).
B. The software component refers solely to the computer programs that perform the functions
of controlling and coordinating the use of hardware components.
C. Application or user software performs specific data processing tasks such as payroll, billing,
or inventory processing.
D. The basic components of a computer information system include both the hardware
components and the software components.
31. Which of the following statements best describes a fundamental control weakness often
associated with computer systems?
A. Computer equipment is more subject to systems error than manual processing is subject to
human error.
B. Computer equipment processes and records similar transactions are less effective than
manual control procedures.
C. Functions that would normally be separated in a manual system are combined in a
computer system.
D. Control procedures for detection of invalid and unusual transactions are less effective than
manual control procedures.
32. Which of the following statements most likely represents a disadvantage for an entity that keeps
microcomputer-prepared data files rather than manually prepared files?
A. Random error associated with processing similar transactions in different ways is usually
B. It is usually more difficult to compare recorded accountability with physical count of assets.
C. Attention is focused on the accuracy of the programming process rather than errors in
individual transactions.
D. It is usually easier for the unauthorized persons to access and alter the files.
33. The following statements are from PAPS 1008. Which is incorrect?
A. Generally, the number of persons involved in the processing of information is significantly
B. Many conventional controls based on segregation of duties may not exist, or in the absence
of access and other controls, may be less effective.
C. Programs which provide ability to obtain access to and alter data are most often stored at
different locations as the data.
D. Transaction and masterfile data are often concentrated either in one computer installation
(centrally) or in a number of installations distributed throughout the entity.
34. The accumulation of source documents and records that allows the organization to trace
accounting entries back to their initiation is the
A. Audit trail C. Out-sourcing code
B. Substantation record D. Initialization procedure
35. Some control procedures relate to all computer activities (general IT controls) and some relate
to specific tasks (application controls). General IT controls include:
A. Controls designed to ascertain that all data submitted to the computer department for
processing have been properly authorized.
B. Controls that relate to the correction and resubmission of data that was initially incorrect.
C. Controls for documenting and approving programs and changes to programs.
D. Controls designed to assure the accuracy of the processing results.
36. The purpose of this category of controls is to establish specific control procedures over the
application systems in order to provide reasonable assurance that all transactions are
authorized and recorded, and are processed completely, accurately and on a timely basis.
A. General IT controls C. IT Input controls
B. IT Application controls D. IT Processing controls
37. The two groupings of information systems control activities are general IT controls and IT
application controls. General IT controls include controls:
A. Designed to assure that only authorized users receive output from processing.
B. For developing, modifying, and maintaining computer programs.
C. That relate to the corrections and resubmission of faulty data.
D. Designed to ensure that all data submitted for processing have been properly authorized.
38. Auditors usually evaluate the effectiveness of:
A. Hardware controls first C. Sales cycle controls first
B. General controls before application controls D. Applications control first
39. Preventing someone with sufficient technical skill from circumventing security procedures and
making changes to production programs is best accomplished by
A. Reviewing reports of jobs completed.
B. Comparing production programs with independently controlled copies.
C. Running test data periodically.
D. Providing suitable segregation of duties.
40. Which of the following is a general IT control that would most likely assist an entity whose
system analysts left the entity in the middle of a major project?
A. Grandfather-father-son record retention C. Systems and documentation
B. Input and output validation routines D. Check digit verification
41. Control which are built in by the manufacturer to detect equipment failure are called
A. Input controls C. Hardware controls
B. Manufacturer’s control D. Fail/safe control
42. Hardware controls usually are those built into the equipment by the manufacturer. One such
control, an echo check, is best describe as
A. A component that signals the control unit that an operation has been performed.
B. Two units that provide read-after-write and dual-read capabilities.
C. Double writing of the CPU and peripheral unit from communicating with the CPU at the
same time.
D. None of these statements describe an echo check.
43. Adequate control over access to data processing is required to:
A. Deter improper use or manipulation of data files and programs.
B. Ensure that only console operators have access to program documentation.
C. Minimize the need for back-up data files.
D. Ensure that hardware controls are operating effectively and as designed by the computer
44. An auditor would most likely be concerned with which of the controls in a distributed data
processing system?
A. Hardware controls C. Systems documentation controls
B. Access controls D. Systems documentation controls
45. When an on-line, real-time (OLRT) electronic data processing system is in use, internal control
can be strengthened by:
A. Providing for the separation of duties between keypunching and error listing operations.
B. Attaching plastic file protection rings to reels of magnetic tape before new data can be
entered on the file.
C. Preparing batch totals to provide assurance that files updates are made for the entire input.
D. Making a validity check of an identification number before a user can obtain access to the
computer files.
46. To obtain evidence that user identification and password controls are functioning as designed,
an auditor would most likely:
A. Attempt to sign-on to the system using invalid user identifications and passwords.
B. Write a computer program that simulates the logic of the client’s access control software.
C. Extract a random sample of processed transactions and ensure that the transactions were
appropriately authorized.
D. Examine statements signed by employees stating that they have not divulged their user
identifications and password to any other person.
47. The use of a header label in conjunction with magnetic tape is most likely to prevent errors by:
A. Computer operator C. Computer programmer
B. Key entry operator D. Maintenance technician
48. The possibility of erasing a large amount of information stored on magnetic tape most likely
would be reduced by the use of
A. File protection rings. C. Completeness tests.
B. Check digits. D. Conversion verification.
49. Which of the following controls most likely would assure that an entity can reconstruct its
financial records?
A. Hardware controls are built into the computer by the computer manufacturer.
B. Backup diskettes if tapes of files are stored way from originals.
C. Personnel who are independent of data input perform parallel simulations.
D. System flowcharts provide accurate descriptions of input and output operations.
50. Which of the following is not an example of an application control?
A. An equipment failure causes an error message on the monitor.
B. There is a preprocessing authorization of the sales transactions.
C. There are reasonableness tests for the unit-selling price of a sale.
D. After processing, all sales transactions are reviewed by the sales department.
51. Controls which are designed to assure that the information processed by the computer is valid,
complete, and accurate are called
A. Input controls C. Output controls
B. Processing controls D. General controls
52. Totals of amounts in computer-recorded data fields, which are not usually added but are used
only for data processing control purposes, are called.
A. Records totals C. Batch totals
B. Hash totals D. Field totals
53. If a control total were to be computed on each of the following data items, which total would
best be identified as a hash total for a payroll application processed by computer?
A. Hours worked C. Net pay
B. Total debits and total credits D. Department numbers
54. The detection and correction of errors in the data should be the responsibility of
A. The data processing manager C. The IT department control group
B. The operator D. The independent public accountant
55. This refers to the worldwide network of computer networks. It is a shared public network that
enables communication with other entities and individuals around the world.
A. Internet C. Information technology
B. Electronic commerce D. Wide area network
56. Which of the following is considered a component of a local area network?
A. Program flowchart C. Transmission media
B. Loop verification D. Input routine
57. The information technology (IT) system may affect:
A. The procedures followed by the auditor in obtaining a sufficient understanding of the
accounting and internal control system.
B. The consideration of inherent risk and control risk.
C. The auditor’s design and performance of tests of control and substantive audit procedures.
D. All of these.
58. This refers to the completeness, accuracy, timeliness and authorization of information provided
for recording and processing in the entity’s financial records.
A. E-commerce assertions. C. Data integrity.
B. Data assertions. D. E-commerce attributes.
59. The understanding required by PSAs includes matters such as significance and complexity of
computer processing in each significant accounting application. Significance in this case:
A. Relates to the volume of transactions in a computer information system.
B. Relates to the level of automation in an entity’s accounting system.
C. Relates to the materiality of the FS assertions affected by the computer processing.
D. Relates to the complexity of computations being performed by a computer system.
60. An application may be considered complex in each of the following situations, except:
A. The volume of transactions is such that users would find it difficult to identify and correct
errors in processing.
B. The computer automatically generates material transactions or entries directly to another
C. The computer performs simple computations of financial information and/or does not
automatically generate material transactions or entries.
D. Transactions are exchanged electronically with other organizations (i.e., EDI systems)
without manual review for propriety or reasonableness.
61. Which of the following statements is not correct?
A. There is no distinction between the audit concepts applicable to complex IT systems
environments and those applicable to non-complex IT systems environments.
B. When computers or other aspects of IT are introduced, PSA and their interpretations, and
the basic concept of evidence accumulation remain the same.
C. Most computer-based accounting systems rely extensively on the same type of procedures
for controls that are used in non-complex systems.
D. The specific methods appropriate for implementing the basic auditing concepts do not
change, as systems become more complex.
62. Auditing by testing the input and output of an IT system instead of the computer program itself:
A. Will not detect program errors which do not show up in the output sampled.
B. Will detect all program errors, regardless of the nature of the output.
C. Will provide the auditor with the same type of evidence.
D. Will not provide the auditor with confidence in the results of the auditing procedures.
63. In some accounting systems that use a computer (use IT) for processing significant accounting
A. The auditor’s specific audit objectives need to be changed, depending upon how accounting
data are processed, whether manually or by computer.
B. The method of obtaining evidences should be strictly through computer assisted audit
techniques as it may not be cost effective to undertake manual procedures.
C. The method of obtaining evidences can either be through manual audit procedures,
computer assisted audit techniques or a combination of both.
D. There is a special need to have parallel manual audit processing of accounting data,
whenever the auditor decides to use manual audit procedures.
64. Auditing through the computer must be used when
A. Input transactions are batched and system logic is straight forward.
B. Processing primarily consists of sorting the input data and updating the master file
C. Processing is primarily online and updating is real-time.
D. Generalized audit software is not available.
65. What is the computer process called when data processing is performed concurrently with a
particular activity and the results are available soon enough to influence the particular course of
action being taken or the decision being made?
A. Real-time processing C. Random access processing
B. Batch processing D. Integrated data processing
66. Which of the following is not a characteristic of a batch processed computer system?
A. The collection of like transactions that are sorted and processed sequentially against a
master file.
B. Keypunching of transactions, followed by machine processing.
C. The production of numerous print outs.
D. The posting of a transaction, as it occurs, to several files, without intermediate printouts.
67. Error in data processed in a batch computer system may not be detected immediately because
A. Transaction trails in batch system are available only for a limited period of time.
B. There are time delays in processing transactions in a batch system.
C. Errors in some transactions cause rejection of other transactions in the batch.
D. Random errors are more likely in a batch system than in an on-line system.
68. Which of the following computer documentation would an auditor most likely utilize in
obtaining an understanding of an entity’s internal control structure?
A. Systems flowcharts C. Program listings
B. Record counts D. Record layouts
69. An auditor is ascertaining if there are general controls designed to provide reasonable assurance
that systems are developed or acquired, implemented, and maintained in an authorized and
efficient manner. Which of the following employees in a company’s computer department
should be responsible for designing new or improved data processing procedures?
A. Flowchart editor C. Systems analyst
B. Programmer D. Control group supervisor
70. Internal control is ineffective when computer department personnel
A. Participate in computer software acquisition decisions.
B. Design documentation for computerized systems.
C. Originate changes in master files.
D. Provide physical security for program files.
71. Which of the following activities would most likely be performed in the IT department?
A. Initiation of changes to master records.
B. Conversion of information to machine-readable form.
C. Correction of transactional errors.
D. Initiation of changes to existing application.
72. Which of the following would an auditor ordinarily consider the greatest risk regarding an
entity’s use of electronic data interchange (EDI)?
A. Authorization of EDI transactions C. Improper distribution of EDI transactions
B. Duplication of EDI transmissions D. Elimination of paper documents
73. A company using electronic data interchange (EDI) made it a practice to track to the functional
acknowledgements from trading partners and to issue warning messages if acknowledgments
did not occur within a reasonable length of time. What risk was the company attempting to
address by this practice?
A. Transactions that have not originated from a legitimate trading partner may be inserted into
the EDI network.
B. Transmission of EDI transactions to trading partners may sometimes fail.
C. There may be disagreement between parties as to whether the EDI transactions form a legal
D. EDI data may not be accurately and completely processed by the EDI software.
74. An auditor’s investigation of a company’s computer control procedures has disclosed the
following four circumstances. Indicate which circumstance constitutes a significant deficiency in
internal control structure.
A. Computer operators do not have access to the complete software support documentation.
B. Machine operators are closely supervised by programmers.
C. Programmers do not have the authorization to operate computer equipment.
D. Only one generation of backup files is stored in an off-premises location.
75. A client is concerned that a power outage or disaster could impair the computer hardware’s
ability to function as designed. The client desires off-site backup hardware facilities that are fully
configured and ready to operate within several hours. The client most likely should consider a
A. Cold site C. Warm site
B. Cool site D. Hot site
76. Which of the following procedures would an entity most likely include in its computer disaster
recovery plan (DRP)?
A. Develop an auxiliary power supply to provide uninterrupted electricity.
B. Store duplicate copies of critical files in a location away from the computer center.
C. Maintain a listing of entity passwords with the network manager.
D. Translate data for storage purposes with a cryptographic secret code.
77. Accounting control procedures within a computer system may leave no visible evidence
indicating that the procedures were performed. In such instances, the auditor should test these
accounting controls by
A. Making corroborative inquires.
B. Observing the separation of duties of personnel.
C. Reviewing transactions submitted for processing and comparing them with related output.
D. Reviewing software support documentation.
78. Tests of controls in an advanced computer system
A. Can be performed using only actual transactions since testing of simulated transactions is of
no consequence.
B. Can be performed using actual transactions or simulated transactions.
C. Is impractical since many procedures within the computer activity leave no visible evidence
of having been performed.
D. Is inadvisable because it may distort the evidence in master files.
79. When computer software or files can be accessed from OL terminals, users should be required
to enter a(n):
A. A parity check C. A self-diagnosis test
B. A personal identification code D. An echo check
80. Which of the following is a computer test made to ascertain whether a given characteristic
belongs to a group?
A. Parity check C. Echo check
B. Validity check D. Limit check