Excel Professional Services, inc. Management Firm of Professional Review and Training Center (PRTC) Fang rend, 7339384/7347903 * Calamba, Laguna (049) 5453807 Foye) Bacolod City (034) 4348214 = Cebu City (032) 2537900 loc, 218 (Hisayerd Peseets Bel Sirs ity 1688) 30595072" biveo by (82) easob49 ". CPAREVIEW PRE-WEEK LECTURE Since 1977, R. M, VALDEZ/L.R.CABARLES MAY 2014 AUDITING THEORY AT. Preweek ‘THE PHILIPPINE ACCOUNTANCY ACT OF 2004 7, The “CPA Registration Number” shall be engraved in (RA 9298) what part of the CPA's seai? 1. Which of the follawing is not One of the function of the _—_a_Upper portion of the space between the bigger and Board of Accountancy as specifically provided uncer RA 92987 = a, Te determine and prescribe minimum requirements leading to the admission of candidates to tre CPA examination. , b. Ta investigate violations of the Accountancy Taw and the rules and regulations ' promulgated thereunder, smaller circle b. Lower portion of the space between the bigger and smaller Scie. ‘c. Left and right portion of the soace between the bigger and sinaller circie and in the middle of the smaller orcle. 4. Middle of the smaller circie. Te perform visitorial powers or review professcnal 8. Which sfetement is (ere) incorrect regarding CPE work of accounting Dracttionars in @ general or —_requirenfents for renewal of professional license? ranidom basis t a. The total CPE credit units -equyed for CPAs shall 4. After due process, to suspend, fevoke, or reissue be sixty (60) units for three (3) years, provided certificates of registration tor causes provided for that a minimum of fifteen (15) crecit units shall be by law by the rules and regulations promulgated earned in each year, therefore b. A registered profescional shall be permanently exempted frem CPE requirements upon reaching No person shall serve the Professional Regulatory the age of 65 years old. Board of Accountancy for more'than é & registeree professional who is working abroad 2, 3 years c. 9 years Shall d2 temporarily exempted fram compliance b. 6 years J. 12 years With CPE requirement during his/her stay abroad, t Drovided that he/she has been out of the country ‘The Accountancy Law provided that a CPA coruicate for at least one year immediately pr'or to the date may be suspended or revoked un grounds except of renewal a, Inmo'al or dishonorable conduct. 4. all of the above b. Gross negligence or incompecenice in the practice of profession. 9, The following statements relate to RA 9298 and its c Relusal to accep. an audit engagémert with a ‘government corporation. 4, Conduct discreditanie to the accounting profession. Pursuant to the PICPA rules of conduct, if @ partner in ‘a two-member partnership dies, the surviving partner may continue to practice as ao individual under the existing. firm tite which includas the deceased partner's name $ 3." For a period of time not to exceed five years. b. For a periad of time net to exceed two years. Indefinite : 2 d. Until the partnership payout to the deceased partner's estate Is terminated, Which of the following 1s required for a partnership for public accountancy practice? 2, Atleast one of the partrers rust be a CPA. ', All partners must bu PICPA members. All partners must be CPAs. + 4, Firm name must contain names of partners only 1A.CPA must earn at feasr 60 crecit units for 3 years, ‘wth 2 minimum of 15 credit units earned per year. Excess credit urits shall not be carried over fp the next three-y/ar period except 2. ered units earned for segvicing 1a professorial chair : . credit urits ‘eérmed for authoring av article of national significance i €. cgait units earned for an inyention bf sianicance ofthe profession : 4. reat units" eammea for doctoral. or masteral degrees : 7 IRRs. Which Statement(s) is (are) tree? I. Any parson who shall violate RA 9298 or any of its implementing rules. and regulations as promulgated by the Board of Accountancy subject to the approval of the PRC, shall, upon conviction, 4 be punished by a fine of not less than fifty thousand pesos (P50,000), or ty imprisonment for 2g period not exceeding two (2) years, or both. IL, Those who failed to renew professional licenses for period of four (4) cortinuous years from initiat registration, or from last renewal shall be declared. delinquent, BI. The Education Technical Council (ETC) has 6 members including the Chairman. IV. Special/temporary pe-mit may be issued by the Board of Accountancy sudject to the approvel of PRC and payment of the fees the latter has prescribed and charged thereof to a foreign CPA zzalled for consultation ar for a specific purpose which, In-the judgment of BCA is essentiat for the development of thelcountry V. The APO. shall submit its nominations with complete documentation to the Commission not later than €0 days prior to the expiry of the term (of an incumbent chairman or member. ‘2. Vand V only . I, ill, IV and V only DL 1, 1V ane V oniy 4. I), Vand V only . The following statements relate to RA 9298 and its IRRs, Which statement(s) is (are) true? 1. A meaningful experience shall be considered as satisfactory compliance if it is earned in Public Practice and shall include at least one year as audit assistant and at least two years as auditor ina a herge of the aucit engagement covering full audit functions of significant clients, H. Individual CPAs, Firms or Partnerships of CPAs, Incluging partners and staff members thereof shail Fegitter with the BOA and the PAC. * Ifthe application fcr eagistration of AB ard Co., CPAE Was approve? on August 30, 2605; its registration will expire on September 30, 2007. UI. According to RA 9298 and its IRRS, a Professional Identifieaton Card bearing the registration number, date of issuance, expiry date, duly signed bby the ‘chairzerson of the PRC, snall likewise 9 issued to every registrant renewable every "sree WV, Practice In Education shall constitute in 2 person when he or she i involved in teaching of accounting, , auditing, management sdvisory Services, Accounting aspect of finance, BusiNess lav ‘taxation and other technically reiated subjects, a Elland ivony cI, {hard Iv only ©. I) Hyand tony, 1,11, and IV CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS IN THE PHILIPPINUS (2008) 1. Which statement 1s incorrect regarding the Revised’ Code of Exhics for Professicnal Accountants! m the Philippines? 7 1a. Professional accountants refer to persons Who are Certifies Public Accountants (CPA) and who held a valid certificate issued by the Board of Accountancy. b. Where a loca) ‘aw is in conflict with 2 provision of the IFAC Code, the ISAC Code requirement prevails. + 2 & The Revised Code of Ethics for Professional Accountants in the Philippines 1s mandalory fer all CPA's and is applicable to professional services performed in the Philippines on or after June 30, 2008, d. Professional accountants should consiaer tne ethical requirements as the basic principles which they should foliow in performing their wors 1. Which statement 1s incorrect regarding "he Cove of Ethics for Professiona: Accountants in the Philippines? fa, The code is divided into two parts, part A and pat 8 7 b. Part A refers to general application of the code G Part B applies only to those professional accountants in. public practice d, Part C applies to professional accountants. in business fi In relation to the AICPA’s Code of ethics, the IFAC's Code of ethics a. has more outright prohibitions . has fewer outcight prohibitions has 70 outright prohibitions d. applies only to professional accourtants in business . In drder to achieve the objectives of the accountancy profession, professional accountants have to observe a number of prerequisites or fundamental principles, The fundamental prinaples include the, following, except 2. Objectivity b. Professional Competence and Due care ©. Confidentiality d, Confidence ies are potentially affected by IV, Famnilirity threat Vy Intimidation threat Fundamental prin’ 1. Seff-interesi threat Ht. Self review threat egererse 10 a 12. IN, Advocacy threat 2, 10, 1V and V b 1M, and Iv «1, and I 4. Fonly curs as a’ result of the financial and other: interests, Of 8 professional accountant or of an immediate or ciose family member 2 Self intorest threat b. Seif-review threat. ‘¢. Advocacy threat <4. Familiarity threat Gccurs wher. a professional judgment néeds to be re- evaivated by te professional accountant responsible for that judgment 2, Self-interest threat b. Self-review threat. ¢. Advocacy threat d. Familiarity threat Occu's when 2, professiona eccountant promotes a ansitwn or opinion to the point that subsequent Objectivity may be cempromised 2 Soll-interest threat c. AdVocacy threat D. Seif-review threat. Famulianty threat Occurs when, by virtue ot a close relationship, a profes ‘ona: accountant becomes too sympathetic to 8. : a interest threat _¢. Advocacy thréat b. Self-review threat d. Familiarity threat Intirnidation threat 4 2. is pot a threat to Independence b. Occurs when & professioal accountant may be deterred ,from acting objectively and exercising Brofessional, skepticism by threats, actual or perceived « 7 c. Occurs when, by virtue of a close relationship, a professional accountant becomes too sympathetic to the client's interests, 4. -Occurs when a frofessional accountant promotes a Besition or opinion to te, noint that Subsequent + objectivity may be compromised ° ‘omples of ‘circumstances rest threat include 2. Contingent fees relating zo assurance engagements B.A financial interest in a client or jointly holdia a financeal interest with a cient, A loan’ ts or from an assurance client or any of its dv'ectors or officers 4 d. All of the above. that may treate seit Which of the féllowing feast likely create "self-interest threat” 2, Undue dependence on total fees from a client. b. Concer “about the possiblity of ldging the < engagement. ©. Having a close business relationship.with a client. @ Feng pressured to reduce’ inappropriately the extent of work erformed in order to reduce the fees $ : Examples of circumstances that may create self-review Anreat l2agt likely include 3, Having prepare the original data.used to generate records that are the subject’ matter of the engegpment b. Amember of the assurance team being, or having recently beenaan employee of the assurance client Ina position: to exere direct and_ significant influence over the subject matter of the assurance engagement. z c. Porforming services fer ar assurance cltent that coirectiy affect the subject matter of the assurance engagement 4. Potential employment with a client. A Dunne+14, Examples of circumstances that may crate self-review threat least likely include i SA member of the assurance team being or having Fecently been'a director of officer of that clien®: . The discovery of significant error during a re- Gvaluation of the work of the - professional ccountant in public practice. a Reporting on the operation of fiancial systems Brer being , involved in ther cesign or Implementation. 1d. Aecepting gifs or preferential tregtment from a Client, unless the /alue Is clearly Insigoificant, a . « 15. Examples of eréumstances that may clate frank frameset iney neue net arg member of the. assurance tesm yWving an Amelave remy ember or cise family member Aino so duestor ar oMecr ofthe assurance cen o. AUmenber of tre assurance. team having an frames tomy rember or cose family member whosas sn'emplojee of the essurance cvent Iai Tation to exer avect md signincant ntience Sve the “aubjecr matter” of "ihe "assurance engagement. ce. Rohmer partner of the firm belng a director, ‘ officer of tha assurance client or an employee in a position to exert direct and significent influence Over the subject matter cf ‘the assurance ‘engagement. : Promoting shares in a iisted entity when thet entity statement audit client is a financi 16; Which of the following is (are) threats to CFAS 1a PLblic Practice? : a, Qcting as an advocate on behal gf. an assurance Gient in tigation oF in resolving disbutes with third parties. . Cong association of 9 senior member of the assurance team with the assurance client, c. Threat of replacement over a disdgreément with the application of en accounting principle. @, Alef the above \ 17,,Family and personal relationships between @ member ‘of the assurance teem and a, dirécton, an officer or certain employees, deperiding’ on thelr role, of the fgsurance client, least ikeiy create a* Selfinterest threat‘. Intimidation thrett +b. Seltreview threat 4. Farniirty threat, 16. A director, an officer or an engployee of the assurance Client In. 8 positior, to exert direct and signficant influence over the subject matter of ‘the assurance engagement has been 2 member of the assurance team or partner of the firm, The situation least likely create 2. Self-interest threat c: Intimidation threat b. Self-review threat. Familiarity threat 19, A former officer, director or empleyee of the assurance ‘lient serves asa mamber of the assurance:team, This situation will least likely create a. Self-interest threat —_c, Intimidation threat b. Self-review threat d, Familiarity threat 20, The partner may continue serve, jas ihe, lead engagement partner before” rotating off the engagement for how monly .years after audit, cent Decomes a listed entity? 7 a. Cne year | € Three yeats D. Twoyears | | d, Four years 21. The |recruitment of senior management for an ‘assurance client, such a5 those in a position to affect te subject af the assurance engagement may least likely create s*9 BSrinvirest threat intimidation threat B Advocacy test. Familonty chest 22. Safeguards created by the profession, legislation or 23 24. regulation, ynclude the following, except 2. Educational, training and experience requirements for entéy into the profession ¥. Continuing education requirements . Legislation governing, the. independence “requirements of the firm. Polices anid procedures that emphasize the assurance client's commitment to fair financial reporting . Safeguards In the work environment, include the foliquing, except ‘a. Professional standards and monitoring end ‘disciplinary processes. b. The assurance client has competent employees to ‘make managerial decision. . Internal procedures thai ensure objective choices in commissioning non-assurence engagements a. Acorporate governance structure, such as an audit Committee, thet provides appropriate oversight ‘and communications regarding a firm’s services. Safeguards in the work environment, include the following except ‘a. Fitm leadership that stresses the iinportence of independence and the expectation that members, ff assurance teams will act in the public interest. b. Externai review cf the quality control system. . Policies and procedures ta implement and monitor the firm's quality control of assurance engagements, d. Policies and procedures that will enable the Identification of interests or relationships between ‘ne firm or members of ihe assurance team and assurance clients. DEFINITION 1 Fees calculated on a predetermined basis relating to the ‘outcome or result of a transaction or the result of the "work performed '2. Contingent fee c. Flat sum fees b. Retainer fees d. Pec diem fees Close family include the following, except a. Parent c. . Non-dependent child Sibling 4d. Spouse! « “Assurance team include aebo oc g@ professionals Yes Yes Yes’ Yes in, the - asturance engagement ‘+ All others within a firm who Yes Yes No No can directly Influence the . outcome ‘of the assurance etigagement For tne purposes of an Yes No No Yes abdit client, . all those within a network firm who can directly influence the outcome of the aucit engagement Financial interest means a. Any ban acrount which is banking of clients’ monies b. Any monies received by a professional accountant: in public practice to be held or paid out on the ise3 solely for the