L-NU AA-23-02-01-18

LYCEUM-NORTHWESTERN UNIVERSITY
Tapuac District, Dagupan City

COLLEGE OF BUSINESS EDUCATION

FINALS EXAMINATION – ACCTG 2 | Auditing and Assurance: Specialized Industries

1st Semester, AY 2020 – 2021
Prepared by: Amie Jane R. Miranda, CPA

Name:_____________________________________ Score:____________________

Student No.: _______________ Year/Section:___________ Date of Exam: ____________

I. MULTIPLE CHOICES. Choose the best answer from the choices and encircle your answer. Strictly “NO
ERASURES”.

1. Which of the following is not acceptable?

a. An appointment of a professional accountant in a matter of national importance was
publicized.
b. A professional accountant writes a letter to another professional accountant seeking
employment or professional business.
c. A professional accountant is listed in a directory that could reasonably be regarded as a
promotional advertisement for those listed therein.
d. A professional accountant, who authored an article on professional subject, stated his name
and professional qualifications and gave the name of his organization.

2. Which of the following is acceptable?

a. A professional accountant invited a potential client to attend training courses or seminars
conducted for the assistance of staff.
b. Job specification that gives some detail as to one or more of the services provided to
clients by the professional accountant in public practice was communicated to the public
through the classified ads section of a newspaper.
c. A professional accountant in public practice indicated in his stationery that he is a tax
expert.
d. A professional accountant developed a website that contains self-laudatory statements
designed to solicit clients.

3. Professional accountant who author books or articles on professional subjects, may state
a b c d
 His or her name Yes Yes Yes Yes
 Professional qualifications Yes Yes Yes No
 Name of organization Yes Yes No No
 Information as to the
services his or her firm provide Yes No No No

4. A professional accountant may invite the following to attend training courses or seminars
conducted for the assistance of staff
a b c d
 Clients Yes Yes No No
 Staff Yes Yes Yes Yes
 Other professional accountants Yes Yes No No
 Potential clients Yes No Yes No

5. Which statement is incorrect regarding employed professional accountants?

a. Employed professional accountants owe a duty of loyalty to their employer as well as to
the profession; therefore there may be no time that the two will be in conflict.
b. A professional accountant, particularly one having authority over others, should give due
weight for the need for them to develop and hold their own judgment in accounting matters
and should deal with difference of opinion in a professional way.
c. When undertaking significant tasks for which a professional accountant has not had
sufficient specific training or experience, he or she should not mislead the employer as to
the degree of expertise or experience he or she possesses, and where appropriate, expert
advice and assistance should be sought.

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 d. A professional accountant is expected to present financial information fully, honestly and
professionally and so that it will be understood in its context.

6. Which statement is incorrect regarding relations with other professional accountants in public
practice?
a. Professional accountants in public practice should only undertake the services which they
can expect to complete with professional competence.
b. The wishes of the client should be paramount in the choice of professional advisers,
whether or not special skills are involved.
c. When a professional accountant in public practice is asked to provide services or advice,
inquiries should be made as to whether the prospective client has an existing accountant.
d. The receiving accountant may express any criticism of the professional services of the
existing accountant without giving the latter an opportunity to provide all relevant
information.

7. Communication between the receiving accountant and existing accountant is not intended
a. To protect a professional accountant in public practice from accepting an appointment in
circumstances where all the pertinent facts are not known.
b. To protect the minority proprietors of a business who may not be fully informed of the
circumstances in which the change is proposed.
c. To protect the interests of the existing accountant when the proposed change arises from,
or is an attempt to interfere with, the conscientious exercise of the existing accountant's
duty to act as an independent professional.
d. To restrict the client’s freedom to choose their professional advisers and to change to
others.

8. The existing accountant, on receipt of the communication from the proposed professional
accountant in public practice, should not
a. Reply, preferably in writing, advising whether there are any professional reasons why the
proposed professional accountant in public practice should not accept the appointment.
b. Ensure that the client has given permission to give details of this information to the
proposed professional accountant in public practice.
c. Report the fact, that the permission is not granted, to the proposed professional accountant
in public practice.
d. Disclose all information needed by the proposed professional accountant in public
practice to be able to decide whether or not to accept the appointment, if permission is
not granted.

9. Which of the following is true regarding advertising and solicitation?

a. Advertising, but not solicitation, by individual professional accountants in public practice is
permitted in the Philippines.
b. It is clearly desirable that the public should be aware of the range of services available
from a professional accountant.
c. Solicitation, but not advertising, by individual professional accountants in public practice is
permitted in the Philippines.
d. A professional accountant in public practice in the Philippines, where advertising is
prohibited, may advertise in a newspaper or magazine published in a country where
advertising is permitted.

10. Publicity by individual professional accountants in public practice is acceptable provided:

a b c d
 It has as its object the
notification to the public
or such sectors of the public as
are concerned, of matters
of fact in a manner that is
not false, misleading
or deceptive Yes Yes No Yes
 It is in good taste Yes Yes Yes Yes
 It is professionally dignified Yes Yes Yes No
 It avoids frequent repetition
of, and any undue prominence
being given to the name
of the professional accountant

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 in public practice Yes No No Yes

11. Which statement is incorrect regarding professional fees?

a. Professional fees should normally be computed on the basis of appropriate rates per hour or
per day for the time of each person engaged in performing professional services
b. The appropriate rates should be based on the fundamental premise that the organization
and conduct of the professional accountant in public practice and the services provided to
clients are well planned, controlled and managed.
c. It is for each professional accountant in public practice to determine the appropriate rates.
d. It is not proper for a professional accountant in public practice to charge a client a lower
fee than has previously been charged for similar services

12. The Rules of Conduct will ordinarily be considered to have been violated when the professional
accountant represents that specific consulting services will be performed for a stated fee and it
is apparent at the time of the representation that the
a. Actual fee would be substantially higher.
b. Actual fee would be substantially lower than the fees charged by other professional
accountants for comparable services
c. Fee was a competitive bid.
d. Professional accountant would not be independent.

13. Which of the following fee arrangements would violate the Code of Professional Conduct?
a. A fee based on the approval of a bank loan.
b. A fee based on the outcome of a bankruptcy proceeding.
c. A per hour fee that includes out-of-pocket expenses.
d. A fee based on the complexity of the engagement.

14. Which of the following actions by a professional accountant in public practice will not result in
violation of the Code of Ethics regarding commissions?
a. Accepting commission for referring a client to a third party.
b. Accepting commission for the referral of the products or services of others.
c. Receipt of referral fees by the referring accountant when no services are performed by the
referring accountant.
d. Entering into an arrangement for the purchase of the whole or part of an accounting
practice requiring payments to individuals formerly engaged in the practice or payments
to their heirs or estates.

15. Which statement is incorrect regarding activities incompatible with the practice of public
accountancy?
a. A professional accountant in public practice should not concurrently engage in any business,
occupation or activity which impairs or might impair integrity, objectivity or independence,
or the good reputation of the profession.
b. A professional accountant in public practice should not concurrently engage in any business,
occupation or activity which would be incompatible with the rendering of professional
services.
c. The rendering of two or more types of professional services concurrently does by itself
impair integrity, objectivity or independence.
d. The simultaneous engagement in another business, occupation or activity unrelated to
professional services which has the effect of not allowing the professional accountant in
public practice properly to conduct a professional practice in accordance with the
fundamental ethical principles of the accountancy profession should be regarded as
inconsistent with the practice of public accountancy.

16. Which statement is incorrect regarding clients’ monies?

a. The professional accountants in public practice should not hold clients; monies if there is
reason to believe that they were obtained from, or are to be used for, illegal activities.
b. A professional accountant in public practice should maintain one or more bank accounts for
clients’ monies.
c. Monies may only be drawn from the client account on the instructions of the client.
d. Fees due from a client may be drawn from client’s monies without the need of notifying
the client.

17. Which of the following is not likely to create a threat to independence?

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 a. The total fees generated by an assurance client represent a large proportion of a firm’s total
fees.
b. Fees due from an assurance client for professional services remain unpaid for a long time.
c. A firm obtains an assurance engagement at a significantly lower fee level than that charged
by the predecessor firm, or quoted by other firms.
d. A court or other public authority established fees.

18. A client company has not paid its 2003 audit fees. According to the Code of Professional
Conduct, for the auditor to be considered independent with respect to the 2004 audit, the 2003
audit fees must be paid before the
a. 2003 report is issued
b. 2004 report is issued
c. 2004 field work is started
d. 2005 field work is started

19. Fees calculated on a predetermined basis relating to the outcome or result of a transaction or
the result of the work preformed.
a. Contingent fees
b. Flat sum fees
c. Retainer fees
d. Per diem fees

20. Which of the following is least likely to create a threat to independence?

a. The fees generated by the assurance client represent a large proportion of the revenue of
an individual partner.
b. The firm charges a contingent fee to an assurance client.
c. Accepting gifts or hospitality, the value of which is clearly insignificant, from an assurance
client.
d. When litigation takes place, or appears likely, between the firm or a member of the
assurance team and the assurance client.

21. Which statement is incorrect regarding Professional Competence and Responsibilities Regarding
the Use of Non-Accountants?
a. Professional accountants in public practice should refrain from agreeing to perform
professional services which they are not competent to carry out.
b. If a professional accountant does not have the competence to perform a specific part of the
professional service, technical advice may be sought from experts.
c. In situations wherein a professional accountant sought technical advice from experts,
although the professional accountant is relying on the technical competence of the expert,
the knowledge of the ethical requirements cannot be automatically assumed.
d. If at any time the professional accountant is not satisfied that proper ethical behavior can
be respected or assured, the engagement should not be accepted unless the engagement
has commenced in which case the auditor is allowed to finish the engagement.

22. Professional fees should be a fair reflection of the value of the professional services performed
for the client, taking into account:
a b c d
 The skill and knowledge
required for the type of
professional services involved Yes Yes Yes Yes
 The level of training and
experience of the persons
necessarily engaged in
performing the professional
services Yes Yes Yes No
 The time necessarily occupied
by each person engaged in
performing the professional
services Yes Yes No No
 The degree of responsibility
that performing those
services entails Yes No No No

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23. The provision of services by a firm or network firm to an audit client that involve the design and
implementation of financial information technology systems that are used to generate
information forming part of a client's financial statements may most likely create
a. Self-interest threat
b. Intimidation threat
c. Self-review threat
d. Familiarity threat

24. Which of the following is least likely considered to create a threat to independence?
a. The provision of services by a firm or network firm to an audit client which involve either the
design or the implementation of financial information technology systems that are used to
generate information forming part of a client’s financial statements.
b. The provision of services in connection with the assessment, design and implementation
of internal accounting controls and risk management controls.
c. The lending of staff by a firm, or network firm, to an audit client when the individual is in a
position to influence the preparation of a client’s accounts or financial statements.
d. The provision of litigation support services to an audit client, which include the estimation of
the possible outcome and thereby affects the amounts or disclosures to be reflected in the
financial statements.

25. Legal services are defined as

a. The making of assumptions with regard to future developments, the application of certain
methodologies and techniques, and the combination of both in order to compute a certain
value, or range of values, for an asset, a liability or for a business as a whole.
b. A broad range of services, including compliance, planning, provision of formal taxation
opinions and assistance in the resolution of tax disputes.
c. May include such activities as acting as an expert witness, calculating estimated damages or
other amounts that might become receivable or payable as the result of litigation or other
legal dispute, and assistance with document management and retrieval in relation to a
dispute or litigation.
d. Any services for which the person providing the services must either be admitted to
practice before the Courts of the jurisdiction in which such services are to be provided, or
have the required legal training to practice law.

26. Which of the following threats to independence can be eliminated or reduced to an acceptable
level?
a. Acting for an audit client in the resolution of a dispute or litigation in such circumstances
when the amounts involved are material in relation to the financial statements of the audit
client.
b. When a firm is asked to act in an advocacy role for an audit client in the resolution of a
dispute or litigation in circumstances when the amounts involved are not material to the
financial statements of the audit client.
c. The appointment of a partner or an employee of the firm or network firm as General
Counsel for legal affairs to an audit client.
d. Both a and c.

27. The recruitment of senior management for an assurance client, such as those in a position to
affect the subject of the assurance engagement may least likely create
a. Self-interest threat
b. Intimidation threat
c. Advocacy threat
d. Familiarity threat

28. Certain corporate finance services may create advocacy or self-review threats; however,
safeguards may be available to reduce these threats to an acceptable level. Examples of such
services include the following, except
a. Committing the assurance client to the terms of a transaction or consummating a
transaction on behalf of the client.
b. Assisting a client in developing corporate strategies.
c. Assisting in identifying or introducing a client to possible sources of capital that meet the
client specifications or criteria.
d. Providing structuring advice and assisting a client in analyzing the accounting effects of
proposed transactions.

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29. The firm, or a network firm, may provide an audit client that is not a listed entity with
accounting and bookkeeping services, including payroll services, of a routine or mechanical
nature, provided any self-review threat created is reduced to an acceptable level. Examples of
such services least likely include:
a. Recording transactions for which the audit client has determined or approved the
appropriate account classification.
b. Posting coded transactions to the audit client’s general ledger.
c. Preparing financial statements based on information in the trial balance.
d. Determining and posting journal entries without obtaining the approval of the audit
client.

30. The safeguards necessary to reduce the threat, created by providing accounting and
bookkeeping services to an audit client that is not a listed entity, to an acceptable level might
include the following, except
a. Making arrangements so such services are not performed by a member of the assurance
team.
b. Implementing policies and procedures to prohibit the individual providing such services
from making any managerial decisions on behalf of the audit client.
c. Requiring the source data for the accounting entries to be originated by the assurance
team.
d. Obtaining audit client approval for any proposed journal entries or other changes affecting
the financial statements.

31. The provision of accounting and bookkeeping services of a routine or mechanical nature to
divisions or subsidiaries of listed audit clients would not be seen as impairing independence with
respect to the audit client provided that the following conditions are met, except
a. The services do not involve the exercise of judgment.
b. The divisions or subsidiaries for which the service is provided are collectively immaterial to
the audit client.
c. The services provided are collectively immaterial to the division or subsidiary.
d. The fees to the firm, or network firm, from such services are collectively significant.

32. The provision of accounting and bookkeeping services to audit clients in emergency or other
unusual situations, when it is impractical for the audit client to make other arrangements, would
not be considered to pose an unacceptable threat to independence provided:
a. The firm, or network firm, does not assume any managerial role or make any managerial
decisions.
b. The audit client accepts responsibility for the results of the work.
c. Personnel providing the services are not members of the assurance team.
d. All of the above.

33. If the valuation services involves the valuation of matters material to the financial statements
and the valuation involves a significant degree of subjectivity, the self-review threat created
(choose the incorrect one)
a. Could not be reduced to an acceptable level by the application of any safeguard.
b. Could be reduced to an acceptable level by the application of safeguards.
c. Such valuation services should not be provided.
d. The assurance team should withdraw from the audit engagement, if the team opted to
perform the valuation services.

34. The following would not generally create a significant threat to independence, except
a. When a firm, or a network firm, performs a valuation service for an audit client for the
purposes of making a filing or return to a tax authority.
b. The firm provides formal taxation opinions and assistance in the resolution of tax disputes to
an audit client.
c. The firm renders internal services involving an extension of the procedures required to
conduct an audit in accordance with Philippine Standards on Auditing to an audit client.
d. When the firm, or a network firm, provides assistance in the performance of a client’s
internal audit activities or undertakes the outsourcing of some of the activities.

35. Which statement is incorrect regarding long association of senior personnel with audit clients
that are listed entities?
a. Using the same lead engagement partner on an audit over a prolonged period may create a
familiarity threat.

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 b. The lead engagement partner should be rotated after a pre-defined period, normally no
more than seven (7) years.
c. A partner rotating after a pre-defined period should not resume the lead engagement
partner role until a further period of time, normally two years, has elapsed.
d. When audit client becomes a listed entity the length of time the lead engagement partner
has served the audit client in that capacity should be considered in determining when the
partner should rotated.

36. The partner may continue to serve as the lead engagement partner before rotating off the
engagement for how many years after audit client becomes a listed entity?
a. One year
b. Three years
c. Two years
d. Four years

37. While the lead engagement partner should be rotated after such a pre-defined period, some
degree of flexibility over timing of rotation may be necessary in certain circumstances.
Examples of such circumstances include:
a. Situations when the lead engagement partner’s continuity is especially important to the
audit client, for example, when there will be major changes to the audit client’s structure
that would otherwise coincide with the rotation of the lead engagement partner.
b. Situations when, due to the size of the firm, rotation is not possible or does not constitute
an appropriate safeguard.
c. Both a and b.
d. Neither a nor b.

38. The following activities would generally create self-interest or self-review threats that are so
significant that only avoidance of the activity or refusal to perform the assurance engagement
would reduce the threats to an acceptable level, except
a. Authorizing, executing or consummating a transaction, or otherwise exercising authority on
behalf of the assurance client, or having the authority to do so.
b. Determining which recommendation of the firm should be implemented.
c. Reporting, in a management role, to those charged with governance.
d. Providing technical assistance and advice on accounting principles for audit clients.

39. If firm, or network firm, personnel providing such assistance make management decisions, the
self-review threat created could not be reduced to an acceptable level by any safeguards.
Examples of such managerial decisions include the following, except
a. Determining or changing journal entries, or the classifications for accounts or transactions or
other accounting records without obtaining the approval of the audit clients
b. Authorizing or approving transactions.
c. Preparing source documents or originating data (including decisions on evaluation
assumptions), or making changes to such documents or data.
d. Assisting an audit client in resolving account reconciliation problems.

40. These following services are considered to be a normal part of the audit process and do not,
under circumstances, threaten independence, except
a. Analyzing and accumulating information for regulatory reporting.
b. Assisting in the preparation of consolidated financial statements.
c. Drafting disclosure items.
d. Having custody of an assurance client’s assets.

41. If the firm is involved in the preparation of accounting records or financial statements and those
financial statements are subsequently the subject matter of an audit engagement of the firm,
this will most likely create
a. Self-interest threat
b. Intimidation threat
c. Self-review threat
d. Familiarity threat

42. An inadvertent violation of the rules on family and personal relationships would not impair the
independence of a firm or a member of the assurance team when:
a. The firm has established policies and procedures that require all professionals to report
promptly to the firm any breaches resulting from changes in the employment status of their

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 immediate or close family members or other personal relationships that create threats to
independence.
b. Either the responsibilities of the assurance team are re-structured so that the professional
does not deal with matters that are within the responsibility of the person with whom he or
she is related or has a personal relationship, or, if this is not possible, the firm promptly
removes the professional from the assurance engagement.
c. Additional care is given to reviewing the work of the professional.
d. All of the above.

43. A director, 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. This situation least likely create
a. Self-interest threat
b. Intimidation threat
c. Advocacy threat
d. Familiarity threat

44. If a member of the assurance team, partner or former partner of the firm has joined the
assurance client, the significance of the self-interest, familiarity or intimidation threats created is
least likely affected by
a. The position the individual has taken at the assurance client.
b. The amount of any involvement the individual will have with the assurance team.
c. The length of time that the individual was a member of the assurance team or firm.
d. The former position of the individual within the assurance team or firm.

45. A former officer, director or employee of the assurance client serves as a member of the
assurance team. This situation will least likely create
a. Self-interest threat
b. Intimidation threat
c. Self-review threat
d. Familiarity threat

46. Which of the following will least likely impair independence?

a. An immediate family member of a member of the assurance team is a director, 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.
b. A member of the assurance team participates in the assurance engagement while knowing,
or having reason to believe, that he or she is to, or may, join the assurance client some time
in the future.
c. A partner or employee of the firm serves as an officer or as a director on the board of an
assurance client.
d. A partner or employee of the firm or a network firm serves as Company Secretary for an
audit client, the duties and functions undertaken are limited to those of a routine and
formal administrative nature as such as the preparation of minutes and maintenance of
statutory returns.

47. Using the same senior personnel on an assurance engagement over a long period of time may
create a familiarity threat. The significance of the threat will least likely depend upon
a. The length of time that the individual has been a member of the assurance team.
b. The role of the individual on the assurance team.
c. The structure of the client.
d. The nature of the assurance engagement.

48. Examples of close business relationships that may create self-interest and intimidation threat
least likely include
a. Having a material financial interest in a joint venture with the assurance client or a
controlling owner, director, officer or other individual who performs senior managerial
functions for that client.
b. 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.
c. Distribution or marketing arrangements under which the firm acts as a distributor or
marketer of the assurance client’s products or services, or the assurance client acts as the
distributor or marketer of the products or services of the firm.

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 d. 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, provided the transaction is
in the normal course of business and on an arm’s length basis.

49. Family and personal relationships between a member of the assurance team and a director, an
officer or certain employees, depending on their role, of the assurance client, least likely create
a. Self-interest threat
b. Intimidation threat
c. Self-review threat
d. Familiarity threat

50. Who is not permitted by RA 9298 to practice public accountancy?

a. A corporation, whose stockholders are all CPAs.
b. A general partnership.
c. A limited liability partnership.
d. A sole proprietorship.

51. If the application or registration to practice public accountancy of Tiu and Co. CPAs, was
approved on April 30, 2006, the registration shall expire on

a. September 30, 2008.

b. September 30, 2009.
c. April 30, 2009.
d. December 31, 2008.

52. A certificate of accreditation shall be issued to CPA’s in public practice only upon showing, in
accordance with rules and regulations promulgated by the Board and approved by the PRC, that
such registration has acquired a minimum of ___years meaningful experience in any of the areas
of public practice including taxation.
a. 2 b. 3 c. 4 d. 5

53. Which of the following organization has been recognized by the Commission on October 2, 1975
per Accreditation No. 15, a Accredited Professional Organization?
a. Board of Accountancy (BOA)
b. Philippine Institute of CPAs (PICPA)
c. Association of CPA’s in public practice (ACPAPP)
d. Association of CPAs in Education (ACPAE)

54. The PICPA shall renew it certificate of accreditation once every

a. Two years
b. Four years
c. Three years
d. Five years

55. It involves a study or appraisal by the Board or its duly authorized representatives of the quality
of audit of financial statements through an evaluation of the quality control measures instituted
by the CPA firm to ascertain compliance with ethical and technical standards of the public
practice.
a. Quality review
b. Compliance audit
c. Peer review
d. External audit

56. A body created by the Board to conduct an oversight of the quality of the audit of financial
statements by reviewing the firms quality control is known as:
a. Quality Review Committee (QRC)
b. Educational Training Committee (ETC)
c. Financial Reporting Standards Council (FRSC)
d. Auditing and Assurance Service Council (AASC)

57. For every CPE seminars or conventions attended, participant CPAs shall get a CPE credit
equivalent to
a. One credit unit per hour.
b. three credit units per hour.

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 c. two credit units per hour.
d. five credit units per hour.

58. A registered professional shall be permanently exempted from CPE requirements upon reaching
the age of
a. 55 years old
b. 60 years old
c. 65 years old
d. 70 years old

59. A registered CPA who I working or practicing his profession or furthering abroad shall be
temporarily exempted from compliance with CPE requirements during the period of his stay
abroad, provided that prior to the date or renewal he has been out of the country for at least
a. Four years
b. Two years
c. Three years
d. One year

60. Affixing the CPA’s seal and signature on the auditor’s report is an indication of:
a. CPA’s acceptance of responsibility for the financial statements audited.
b. Compliance by the CPA of the requisite accounting and auditing standards and rules.
c. CPA’s accreditation to practice public accountancy.
d. Fair presentation of financial statements audited.

61. Which of the following functions to promulgate auditing standards?

a. National Accredited Professional Organization
b. Financial Reporting Standards Council
c. ACPAPP
d. Auditing and Assurance Standards Council

62. CPAs, firms and partnership of CPAs engaged in the practice of public accountancy including
partners and staff members thereof, shall register with the Commission and the Board, such
registration to be renewed every
a. Three years on or before December 31
b. Three years on or before September 30
c. Two years on or before December 31
d. Two years on or before September 30

63. Emerald, CPA is applying for renewal of his professional license. He is exempted from the CPE
requirements
a. If he is at least 65 years old
b. If he is working abroad and he has been out of country for at least two years immediately
prior to the date of renewal
c. Either A or B
d. Under no circumstances

64. What is the legal basis of the Philippine Accountancy Act of 2004?
a. RA 9298
b. Senate Bill No. 2748
c. PD 692
d. House Bill No. 6678

65. It is the specific organization mandated by the law to promulgate rules and regulations affecting
the practice of Accountancy.
a. Professional Regulation Commission (PRC)
b. Professional Regulatory Board of Accountancy (BoA)
c. Philippine Institute of Certified Public Accountants (PICPA)
d. Accounting Standards Council (ASC)

66. It is the organization created by PICPA in 1981 to formalize the accounting standard-setting
function and establish generally accepted accounting principles (GAAP) in the Philippines.
a. Accounting Standard Council (ASC)
b. Association of the CPAs in Education (ACPAE)
c. Association of CPAs in Public Practice (ACPAPP)

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 d. Professional Regulatory Board of Accountancy (BoA)

67. The Accounting Standards Council (ASC) used to be composed of the nominees from all the
following organizations, except
a. Bureau of Internal Revenue (BIR)
b. Philippine Institute of Certified Public Accountants (PICPA)
c. Securities and Exchange Commission (SEC)
d. BangkoSentralngPilipinas (BSP)

68. Pursuant to the IRR of the Philippine Accountancy Act of 2004, the Accounting Standards Council
(ASC) was replaced by the
a. Auditing and Assurance Standards Council (AASC)
b. Financial Reporting Standards Council (FRSC)
c. Association of CPAs in Education (ACPAE)
d. Education Technical Council (ETC)

69. The number of members (including the chairman) in the Financial Reporting Standards Council.
a. 12
b. 14
c. 13
d. 15

70. The Financial Reporting Standards Council (FRSC) is composed of nominees from all of the
following, except
a. Commission on Audit (CoA)
b. Bureau of Internal Revenue (BIR)
c. Financial Accounting Standards Board (FASB)
d. Professional Regulatory Board of Accountancy (BoA)

71. Based on IRR, how long in years is the renewable term of the chairman and members of FRSC?
a. 2
b. 4
c. 3
d. 5

72. CPAs may practice public accountancy under the following forms of organization, except:
a. Sole proprietorship
b. Limited liability partnership
c. General partnership
d. Corporations

73. This is the traditional service provided by CPA firms.

a. Compilation.
b. Audits.
c. Reviews
d. Tax services

74. Alllicensed CPAs shall obtain and use a seal of a design prescribed by the
a. Accounting Standards Council.
b. Board of Accountancy
c. Philippine Institute of CPAs.
d. PRC

75. The CPA shall be required to indicate which of the following numbers on the documents he/she
signs, uses or issues in connection with the practice of the profession:
a. CPA Certificate of Registration number.
b. Professional Identification Card.
c. Professional tax receipt.
d. All of these are required to be indicated.

76. The amount of audit fees depend largely on the:

a. Size and capitalization of the company under audit.
b. Amount of the profit for the year.
c. Availability of cash.

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 d. Volume of audit work and degree of competence and responsibility involved.

77. The practice of accountancy includes the following, except:

a. Being appointed as the marketing manager of a business enterprise.
b. Serving as edit examiner for the Commission on Audit.
c. Working as the Dean of a College that grants a degree of BS Accountancy.
d. Provision of assurance services to more than one client and on a fee basis.

78. All graduates with a Bachelor’s Degree in Accounting shall be allowed to take the CPA Licensure
Examination within two years from the effectivity of RA 9298 under the rules and regulations to
be promulgated by the BIA subject to the approval by the PRC.
a. 1 year
b. 2 years
c. 3 years
d. 4 years

79. 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.
a. Quality Review Committee
b. CPE council
c. Education Technical Council
d. CHED

80. The Education Technical Council shall be composed of

a. Six members.
b. Seven members with a chairman.
c. Seven members with a chairman and a vice-chairman.
d. Eight members with a chairman, a vice-chairman, and a secretary.

81. Unless there’s a valid reason to have additional representation, the PICPA shall have how many
national directors?
a. 12
b. 14
c. 15
d. 20

82. The PICPA national directors shall be apportioned according to four geographic sectors based on
the ratio of latest available number of members in good standing from those areas. Which of the
following is NOT a geographic sector?
a. Luzon
b. NCR
c. Mindanao
d. CAR

83. A PICPA 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 _____ years at the same time of his/her
nomination:
a. Two years
b. Three years
c. Four years
d. Five years

84. Sectoral Organization has been established to promote the interests of groups of professional
accountants. Which of the following is the sectoral organization for CPAs in Public Practice?
a. GACPA.
b. ACPAPP.
c. ACPACI.
d. ACPAE.

85. Monitoring the compliance with CPE requirements is done by the PRC CPE Council. 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

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 d. A chairperson, vice-chairperson and three members

86. The names under which a CPA practices the profession must:
a. Not be misleading as to the form of organization.
b. Contain more than three names.
c. Indicate any specialization.
d. Include one fictitious name.

87. A (n) ___________ shall do business under their respective duly registered and authorized firm
name appearing in the registration documents issued by the Department of Trade and Industry
or any other proper government office.
a. Individual CPA
b. Firm
c. Partnerships of CPAs.
d. Corporations of CPAs.

88. All licensed CPAs shall obtain and use as seal of a design prescribed by the
a. Accounting Standards Council.
b. Philippine Institute of CPAs.
c. Board of Accountancy.
d. Professional Regulation Commission.

89. Which of the following cannot be mentioned by an author in publicizing a book in accounting?
a. Name
b. Qualifications
c. Membership in professional organization
d. Services that the author’s firm provides

90. A professional accountant may invite the following to attend training courses and seminars
conducted for the assistance of staff (select the exception):
a. Clients
b. staff of the firm
c. other professional accountants
d. potential clients
ajmiranda
------END-----
Good luck and God bless

Reviewed and Checked by:

Dr. Genoveva Y. Reyes, CPA, FRIAcc

Dean, College of Business Education

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