D

Philippine Accountancy Act of 2004 (RA9298)1. The objective of the Philippine Accountancy Act of 2004
includes: a. The standardization and regulation of accounting education b. The examination for
registration of certified public accountants c. The supervision, control, and regulation of the practice of
accountancy in the Philippines. d. All of the above.

2. Which of the following does not constitute a practice of accountancy? a. A person holding out himself
as one skilled in the knowledge and practice ofaccounting and as a qualified person to render
professional services as a CPAto more than one client. b. A person representing his/her employer before
government agencies on taxand other accounting related matters. c. A person in educational institution
teaching accounting, auditing, business law,taxation or other technically related subjects. d. A person is
appointed as marketing director of a government owned andcontrolled corporation.

3. Which of the following is not one of the qualifications of the members of the Board ofAccountancy? a.
Must be a natural-born CPA and a resident of the Philippines.b. Must be a duly Certified Public
Accountant with at least ten yearsexperience in practice of accountancy. c. Must be of good moral
character. d. Must not have been convicted of crimes involving moral turpitude

4. Which is the least function of the Board of Accountancy?

a. To prepare, adopt, issue or amend syllabi at the subjects for examinationsin consultation with the
academe. b. To prepare questions for the CPA licensure examination which shall strictlywithin the scope
of the syllabi of the subjects for examination. c. To investigate violations of the RA 9298 d. To supervise
PICPA

5. The auditing standard setting body created by the Board of Accountancy is knowns as a. Financial
Reporting Standards Council (FRSC) b. Auditing Standards and Practices Council (ASPC) c. Accountancy
Standards Council (ASC) d. Auditing and Assurance Standards Council (AASC)

6. The sector that is most represented in the AASC is the a. Commerce and Industry b. Academe c.
Government d. Public Practice
B

7. Which of the following government regulatory agencies is not represented in theAASC? a. Securities
and Exchange Commission b. Bureau of Internal Revenue c. BankoSentralngPilipinas d. Board of
Accountancy

8. The following qualifications of applicants for CPA licensure examination, except a. He/She is a Filipino
Citizen b. He/She is of good moral character c. He/She is a holder of the degree of Bachelor of Science in
Accountancy d. He/She is at least 21 years of age

9. To be qualified as having passed the CPA licensure examination a. The candidate must have a general
weighted average of at least 75%. b. The candidate must not have a grade lower than 65% in any given
subject. c. A and B d. Neither A nor B

10. Which of the following shall be issued to examinees who pass the CPA licensureexamination? a.
Certificate of accreditation b. Personal identification card c. Certificate of registration and professional
identification card d. Certificate of full compliance and PRC ID

11. The Board of Accountancy may issue certificate of registration and professional identification card to
any successful examinee a. Of unsound mind b. Convicted by a court of political offense. c. Guilty of
immoral or dishonorable conduct. d. Who has falsely represented himself/herself in his/her application
forexamination

12. The Board of Accountancy may, after the expiration of _____ years from the dateof revocation of a
certificate of registration, reinstate the validity of a revokedcertificate of registration a.2 b.3 c.4 d.5

C
13. 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.

14. 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

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

16. 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)

17. The PICPA shall renew it certificate of accreditation once every a. Two years c. Four years b. Three
years d. Five years

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

19. A body created by the Board to conduct an oversight of the quality of the auditof 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)

20. For every CPE seminars or conventions attended, participant CPAs shall get a CPE credit equivalent
to a. one credit unit per hour. c. three credit units per hour. b. two credit units per hour. d. five credit
units per hour.

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

22. 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 c. Two years b.
Three years d. One year

23. 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.

24. 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

25. 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
C

26. 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

Source: (1-26)Auditing Theory by Salosagcol, Tiu and Hermosilla

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

28. 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)

29. 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) d. Professional Regulatory Board of Accountancy (BoA)

30. 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)

31. 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)

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

33. 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)

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

35. The chairman of FRSC must be or must have been a senior accounting practitioner in a. Public
practice c. Government or education b. Commerce and industry d. Any scope of accounting practice

36. It function is to assist FRSC in establishing and improving financial reporting standards in the
Philippines as it issues implementation guidance on existing PFRS. a. Board of Accountancy c.
Professional Regulations Commission b. Education Task Force d. Philippine Interpretations Committee

37. Under PAS 1, the term "PFRS" shall be comprised of a. PAS only c. PFRS and PAS b. PFRS only d. PFRS,
PAS and Interpretations

38. The accounting body that replaced the International Accounting Standards Committee (IASC) in
2001. a. Standing Interpretations Committee (SIC) b. International Accounting Standards Board (IASB) c.
Standards Advisory Council (SAC) d. Accounting Principles Board (APB)
B

39. What is the branch of accounting that is most related with the accounting sector"Association of CPAs
in Commerce nd Industry (ACPACI)?" a. Public accounting c. Government accounting b. Private
accounting d. Accounting education

40. Who is not a present member of the Professional Regulatory Board of Accountancy(BoA)? a. Atty.
Eugene Mateo c. Dr. Rufo Mendoza b. Mr. Jose Tayag Jr. d. Dra. Gloria Zamora

41. Who is not a present member of the Financial Reporting Standards Council(FRSC)? a. David Balangue
c. Gregorio Navarro b. Judith Lopez d. Ester Ledesma

Ledesma42. Who used to be presidents of the Association of CPAs in Education (ACPAE) thatnow serve
as advisers of the said Association? a. Asser Tamayo and Jose Ireneo c. Asser Tamayo and Antonio Dayag
b. Antonio and ConradoUberita d. ConradoUberita and Jose Ireneo43

43. The Philippine Accountancy Act of 2004—shall provide and govern: a. The standardization and
regulation of accounting education. b. The examination for registration and Certified Public Accountants.
c. The supervision, control and regulation of the practice of accountancy in the Philippines. d. All of the
answers.

44. Which organization(s) has/have the primary duty of effective enforcing the provisions of RA 9298? I.
Professional Regulatory Board of Accountancy II. Department of Justice III. Professional Regulation
Commission IV. Philippine Institute of Certified Public Accountants a. I and II b. II and III c. I, III and IV d. I
and II

45. A professional identification card has a validity of: a. 1 year b. 2 years c. 3 years d. 4 years
D

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

47. This is the traditional service provided by CPA firms. a. Compilation. b. Audits. c. Reviews d. Tax
services

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

49. 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

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

51. 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

B
52. 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

53. 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
c. CPE council b. Education Technical Council d. CHED

54. 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.

55. 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

56. 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

57. 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

58. Sectoral Organization have been established to promote the interests of groups of professional
accountants. Which of the following is the sectoral organization forCPAs in Public Practice? a. GACPA. b.
ACPAPP. c. ACPACI. d. ACPAE.
C

59. 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 d. A chairperson, vice-chairperson and three
members

60. Regarding practice of accountancy, which of the following certificates is issued to a successful passer
of the CPA Board Exams first, a certificate of registration or a certificate of accreditation? a. Certificate of
registration. c. Both are issued at the same time. b. Certificate of accreditation. d. Neither are issued to
CPAs.

61. S1 A registered professional who is working abroad shall be temporarily exemptedfrom compliance
with CPE requirements during his/her stay abroad, provided S2 Those who failed to renew professional
licenses for a period of three continuousyears from initial recognition, or from last renewal, shall be
declared delinquent. a. True, true b. True, false c. False, true d. False, false

62. As used in RA 9298, this term refers to the area of practice of accountancy: a. Line b. Section c.
Segment d. Sector

63. The practice of accountancy includes the following except: a. Practice in public accountancy. b.
Practice in education or the academe. c. Practice in the government. d. Practice in commerce and
industry, when the CPA is appointed as marketing of the enterprise.

64. This organization administers, implements and enforces the regulatory policies of the Philippine
Government with respect to the regulation and licensing of the various profession under its jurisdiction,
one of which is accountancy. a. BOA b. PICPA c. COA d. PRC

A
65. Who is the person that has the 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 one who is under investigation. c. The
Commissioner of the Professional Regulation Commission. d. None of them.

66. The following are grounds for suspension or removal of members of the Board of Accountancy,
except: 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.

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

68. 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.

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

70. 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.

71. 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
D

72. 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

73. Regarding anniversaries, a firm may undertake press releases or other media releases to
commemorate their anniversaries in public practice only every: a. year b. 3 years c. 4 years d. 5 years

74. This acts provides that only licensed professionals may teach licensure subjects, and provides for the
triennial renewal of the Professional Identification Card: a. RA no. 9298 b. PRC Modernization Act c. IRR
of RA 9298 d. PD 1081

75. The accreditation granted for accounting teachers is valid for: a. 1 year b. 2 years c. 3 years d. 4 years

76. It function is to assist FRSC in establishing and improving financial reporting standards in the
Philippines as it issues implementation guidance on existing PFRS. a. Board of Accountancy c.
Professional Regulations Commission b. Education Task Force d. Philippine Interpretations Committee

77. S1 A registered professional who is working abroad shall be temporarily exemptedfrom compliance
with CPE requirements during his/her stay abroad, provided S2 Those who failed to renew professional
licenses for a period of three continuous years from initial recognition, or from last renewal, shall be
declared delinquent. a. True, true b. True, false c. False, true d. False, false

78. The following are regarded by RA9298 as CPA services in public practice if offered or rendered on
afee basis and to more than one client:
Preparation and signing of audit reports.Professional assistance on accounting
procedures.Representation of clients before governmental agencies on tax and other matters regardless
of its relation to accounting

a.YES YES YES b. YES NO YES c.YES NO NO d. YES YES NO

79. Which of the following statements is correct? a. The chairman and members of the Board shall
receive compensation and allowances comparable to that being received by the chairman and members
of the existing regulatory boards under the PRC as provided for in the General Appropriations Act. b. No
person shall serve in the Board for more than nine years. c. The BOA chairmanhas the sole power to
administer oaths in connection with the administration of the accountancy law. d. The Board shall be
under administrative supervision of the PICPA.

80. This organization administers and implements and enforces the regulatory policies of the Philippine
Government with respect to the regulation and licensing of the various profession under its jurisdiction,
one of which is accountancy. a. BOA b. PICPA c. COA d. PRC

81. May a CPA give a brochure to a non-client? a. No, because this is a violation of the revised rules on
advertising. b. Yes, since this is acceptable under revised rules on advertising. c. No, unless the non-
client becomes a client within 10 days from receipt of the brochure. d. Yes, if the non-client has made an
unsolicited request.

82. Which if the following partner profile information may be posted in a firm's website? a. Name b.
Educational attainment and brief listing of services c. Postal address, telephone, fax, and email-address
d. All of these may be posted in a form's website

83. Regarding anniversaries, a firm may undertake press releases of other media releases to
commemorate their anniversaries I public practice only every: a. Year b. 3 years c. 4 years d. 5 years
C

84. The accreditation granted for accounting teacher is valid for: a. 1 year b. 2 years c. 3 years d. 4 years

85. 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 thereto."
a. National Accounting Office b. Ministry of Finance c. Commission on Audit d. Accounting Units

86. A CPA firm usualy offers non-aduit services, such as management advisory services. Its pimary
purpose is to: a. Furnish professional advice and assistance which will enable the client to improve
operation b.Keep the CPA firmcompetitive with other firms. c.Establish the firm as a consultant, thus
ensuring its future expansion and growth. d.Permit the firm's staff members to acquire expertise in
other areas of practice

87. Under this method of building a client, the external auditors charges on the basis of actual time
spent by principals/partners,supervisors ,seniors and juniors at predetermined rates agreed upon with
the client a. Per diem basis. c. flat fee or flat sum basis b. retainer basis. d. maximum fee basis

88. the following are grounds for the suspension or revocation of certificate of registration and
professional identification card, excert: a.Possession of an unsound mind b. Practice in more than one
field of accountancy c.Conviction of a criminal offense involving moral turpitude

d.Unprofessional or unethical conduct, malpractice, or violation of RA9298.

Terms in this set (93)

Original

Mastery of a particular skill, acquired by training and education

Adherence to a common code of values by an administrating body

Acceptance of a duty society as a whole (usually in return for restrictions in use of a title or in granting of
a qualification).

The Philippine Accountancy Act of 2004 shall provide for and govern:

a.The supervision, control,and regulation of the practice of accountancy in the Philippines.

b.The standardization and regulation of accounting education.

c.The examination for registration of certified public accountants.

d.All of the above

The document that contains the norm and principles governing the practice of the accountancy
profession in the highest standards of ethical conduct

a.RA 9298

b.Code of Ethics for CPAs in the Philippines

c.IRR to RA 9298

d.PSA 220 on Quality Control

The following statements relate to some of the provisions of RA 9298. Which is correct?
a.Audit working papers are generally the property of the company whose financial statements were
audited.

b.After three (3) years, subject to certain conditions, the Board of Accountancy may order the
reinstatement of a CPA whose certificate of registration has been revoked.

c.The penal provision (Sec. 36) of RA 9298 applies only to the violation of any of the provisions of RA
9298 because its Implementing Rules and Regulations are unenforceable.

d.It shall be the primary duty of thePRC and the BOA to effectively enforce the provisions of RA 9298.

Which of the following organization has been recognized by the Commission on October 2, 1975 per
Accreditation No. 15, As Accredited Professional Organization?

a.Board of Accountancy (BOA)

b.Association of CPA's in Public Practice (ACPAPP)

c.Association of CPAs in Education (ACPAE)

d.Philippine Institute of CPAs (PICPA)

The area of practice of accountancy namely public accountancy, commerce and industry,
academe/education and government are called:

a.Sectors

b.Scope of practice of accountancy

c.Section

d.Segment

As used in RA 9298, this term refers to the area of practice of accountancy:

a.Segment

b.Line

c.Sector

d.Section
C

8.A Certified Public Accountant or CPA is:

a.A person who holds a valid Certificate of Registration issued by the PRC

b.A person who holds a valid professional Identification Card issued by the PRC

c.A person who holds a valid Certificate of Registration and a valid Professional Identification Card issued
by the PRC

d.A person who is engaged in the practice of public accountancy

9.A CPA is in public accounting practice when he/she:

a.Holds, or is appointed to, in an accounting professional group in government or in a government-

owned and/or controlled corporation where decision making requires professional knowledge in the
science of accounting.

b.Represents his/her clients before government agencies on tax and other matters related to
accounting.

c.Represents his/her employer before government agencies on tax and other matters related to
accounting.

d.Teaches accounting, auditing, management advisory services, accounting aspect of finance, business
law, taxation, and other technically related subjects

Which of the following statements concerning the practice of accountancy in commerce and industry is
incorrect?

a.A CPA is in the practice of accountancy in commerce and industry when he/she is involved in decision
making requiring professional knowledge in the science of accounting, as well as the accounting aspects
of finance and taxation.

b.A CPA is in the practice of accountancy in commerce and industry when he/she renders professional
services as a Certified Public Accountant to more than one client on a fee basis.

c.A CPA is in the practice of accountancy in commerceand industry when he/she represents his/her
employer before government agencies on tax and other matters related to accounting.

d.A CPA is in the practice of accountancy in commerce and industry when such employment or position
requires that the holder thereof must be a Certified Public Accountant
B

Which of the following does not constitute a practice of accountancy?

a.A person holding out himself as one skilled in the science and practice of accounting and as a qualified
person to render professional services as a CPA to more than one client.

b.A person is appointed as a marketing director of a government owned and controlled corporation.

c.A person in educational institution teaching accounting, auditing, business law, taxation or other
technically related subjects.

d.A person representing his/heremployer before government agencies on tax and other accounting
related matters

Which of the following statements concerning the practice of accountancy in the academe/education is
incorrect?

a.Members of the Integrated Bar of the Philippines are not allowed to teach business law and taxation
subjects.

b.The position of either the Dean or the Department Chairman or its equivalent that supervises the
Bachelor of Science in Accountancy program of an educational institution is deemed to be in practice of
accountancy in the academe/education.

c.CPAs are allowed to teach business law subjects.

d.The position of either the Dean or the Department Chairman or its equivalent that supervises the
Bachelor of Science in Accountancy program of an educational institutionmust be occupied only by a
duly reg-istered CPA

00:02

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Which of the following statements concerning the practice of accountancy is correct?

a.A CPA is in the practice of accountancy in the government when he/she is involved in the audit or
verification of financial transactions and accounting records of his/her clients.

b.A CPA is in public accountancy when he/she renders his/her professional services as a CPA to more
than one client on a fee basis in the design, installation, review, and revision of accounting systems and
controls.

c.A CPA is in the practice of accountancy inthe academe/education when he/she is inan educational
institution teaching any of the subjects included in the BSA curriculum.

d.A CPA is in the practice of accountancy in commerce and industry when his/her position requires civil
service eligibility as a Certified Public Accountant

Which is not permitted by RA 9298 to practice public accountancy?

a.A CPA in individual capacity.

b.A sole proprietorship.

c.A general partnership.

d.A corporation, whose stockholders are all CPAs.

Which is permitted by RA 9298 to practice public accountancy?

a.A corporation whose stockholders are all CPAs

b.A corporation whose some of stockholders are CPAs

c.Limited liability partnership

d.A non-stock corporation whose members are all CPAs

The names under which a CPA practices the profession must:

a.Indicate any specialization. b.Contain more than three name.

c.Include one fictitious name.

d.Not misleading as to form of organization.

C

17.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 BOA and approved by the PRC, that such
registration has acquired a:

a.Minimum of 3 years meaningful experience in any of the areas of practice of accountancy including
taxation.

b.Minimum of 3 years meaningful experience in any of the areas of practice of accountancy.

c.Minimum of 3 years meaningful experience in any of the areas of public practice including taxation.

d.Minimum of 3 years meaningful experience in any of the areas of public practice excluding taxation.

18.The minimum meaningful experience in public accountancy as required by RA 9298 shall include:

a.At least one year as audit assistant and at least one year as auditor in charge.

b.At least one year as audit assistant and at least two years as auditor in charge.

c.At least two years as audit assistant and at least two years as auditor in charge.

d.At least two years as audit assistant and at least one year as auditor in charge

Any position in any businessor company in the private sector which requires supervising the recording of
financial transactions, preparation of financial statements, coordinating with the external auditors for
the audit of such financial statements and other related functions shall be occupied only by a duly
registered CPA if the business or company where the above position exists has

a.An annual revenue of at least P5,000,000.00

b.A total asset of at least P10,000,000

c.A paid-up capital of at least P10,000,000.00

d.A paid-up capital of at least P5,000,000.00

Individual CPAs, Firms or Partnerships of CPAs, including partners and staff members thereof shall
register with the BOA and the PRC. If the application for registration of AB and Co., CPAs was approved
on August 30, 2005, the registration will expire on

a.Sept. 30, 2007

b.Dec. 31, 2007

c.Dec. 31, 2008

d.Aug. 30, 200721.

CPAs, firms and partnerships of CPAs engaged in the practice of public accountancy including partners
and staff members thereof, shall register with the PRC and the BOA, 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

Based on R.A. 9298, how many years can a partner who survived the death or withdrawal of other
partner(s) continue to practice under the partnership name after becoming a sole practitioner?a.1 year

b.2 years

c.3 years

d.Indefinite period of time

Which of the following is not one of the qualifications of the members of the Board of Accountancy?

a.He/She must not be a director or officer of PICPA at the time of his appointment.

b.He/She must be a natural-born citizen and a resident of the Philippines.

c.He/She must be a duly Certified Public Accountant with at least ten years of experience in practice of
public accountancy.

d.He/She must not have any direct or indirect pecuniary interest in any school, college, university, or
institution offering a BS Accountancy course or institution conducting review classes in preparation for
the licensure examination at the time of his appointment to the Board

A
Which of the following is not one of the qualifications of the members of the Board of Accountancy?

a.Must be a natural-born CPA and a resident of the Philippines.

b.Must be a duly registered Certified Public Accountant with at least ten years of experience in practice
of accountancy.

c.Must be of good moral character.

d.Must not have been convicted of crimes involving moral turpitude

No person shall serve the Professional Regulatory Board of Accountancy for morethan:

a.3 years

b.6 years

c.9 years

d.12 years

The President of the Philippines, upon the recommendation of the Commission, may suspend or remove
any member of the Board of Accountancy. Which of the following is not a valid ground for suspension or
removal of members of the Board of Accountancy?a.Neglect of duty or incompetence

b.A member of the Board manipulated the CPA licensure examination results.

c.A member of the Board has been sued of crimes involving moral turpitude.

d.A member of the Board has violated RA 9298

Which statement is correct regarding the term of office of the chairman and the members of the Board
of Accountancy (BOA)?

a.A person may serve in the Board of Accountancy for eight consecutive years.

b.No person who has served three (3) successive complete terms shall be eligible for reappointment
until the lapse of one (1) year

c.Appointment to fill up an unexpired term is to be considered a complete term.

d.No person shall serve in the Board for more than 10 years
C

Which of the following is not one of the functions of the Board of Accountancy specifically provided
under the RA 9298?

a.To monitor the conditions affecting the practice of accountancy and adopt such measures deemed
proper for the enhancement and maintenance of high professional, ethical, accounting and auditing
standards.

b.To make investigations as it deems necessary to determine whether any person has violated any
provisions of this law or any standards promulgated by the Board as part of the rules governing the
practice of accountancy

c.To delegate its power and function to determine and prepare test questions for the CPA licensure
examination.

d.To conduct an oversight into the quality of audits of financial statements through a review of the
quality control measures

Which is the least function of the Board of Accountancy?

a.To prepare, adopt, issue or amend syllabi at the subjects for examinations in consultation with the
academe.

b.To investigate violations of the RA 9298

c.To prepare questions for the CPA licensure examination which shall strictly withinthe scope of the
syllabi of the subjects for examination.

d.To supervise PICPA.

The following statements relate to the RA 9298. Which statement is true?

a.The Professional Regulation Commission has the authority to remove any member of the Board of
Accountancy for negligence, incompetence, or any other just cause.

b.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, among others.

c.Insanity is not a ground for proceeding against a CPA.

d.After three years, subject to certain conditions, the Board of Accountancy may order the
reinstatement of a CPA whose certificate of registration has been revoked.
D

Which of the following is not a function of the Board of Accountancy?

a.To supervise the registration, licensure and practice of accountancy in the Philippines

b.To prescribe and/or adopt a code of ethics for the practice of accountancy

c.To issue, suspend, revoke, or reinstate the certificate of registration for the practice of the
accountancy profession

d.To adopt an official seal of the Commission.

The person authorized to remove a member of BOA on valid grounds and after due process is:

a.The Commissioner of the PRC.

b.The Chairman of BOA, unless he is the one under investigation.

c.The President of the Philippines.

d.Congress of the Philippines

The following are the grounds for suspension or removal of members of BOA, except

a.Neglect of duty.

b.Incompetence.

c.Violation of the CPA's Code of Ethics.

d.Pending case involving moral turpitude.

Which of the following statements about the composition of the Board of Accountancy is incorrect?
a.The Board shall be composed of a chairman and six members.

b.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 from a list of five nominees for each
position submitted by Accredited Professional Organization or PICPA.

c.The Board shall elect a chairman from among its members to serve for a term of one year.
d.If the APO fails to submit its nominees within 60 days prior to the expiry of the term of an incumbent
chairman or member, the Commission in consultation with the Board shall submit to the president a list
of three nominees for each vacant position

Who has the power to suspend or remove any member of the Board of Accountancy?

a.The Chairman of the FRSC

b.The Chairman of the PRC

c.The Chairman of the AASC

d.The President of the Philippines

This standard setting body shall have a chairman who had been or presently a senior accounting
practitioner in any of the scope of accounting practice.

a.PICPA

b.ACPAPP

c.FRSC

d.AASC

This standard setting body shall have a chairman who had been or presently a senior accounting
practitioner in public accountancy.

a.BOA

b.AASC

c.FRSC

d.ACPAE

The Chairman and the members of the FRSC and AASC shall have a term of

a.1 year
b.3 years

c.5 years

d.6 years

The following statements relate to the term of office of the Chairman and members of the Board of
Accountancy (BOA). Which is false?

a.The Chairman and members of the BOA shall hold office for a term of three (3) years.

b.Any vacancy occurring within the term of a member shall be filled up for the unexpired portion of the
term only.

c.Appointment to fill up an unexpired term is not to be considered as a complete term.

d.No person who has served two successive complete terms as chairman or member shall be eligible for
reappointment until the lapse of two (2) years

The Board of Accountancy shall elect a vice-chairman from among its members for a term of

a.Two (2) years

b.One (1) year

c.Three (3) years

d.Five (5) years

According to Section 9(A) of the IRR, the Commission upon the recommendation of the Board shall
create an accounting standard setting body to be known as the

a.Accounting Standards Board

b.Accounting Standards Council

c.Financial Reporting Standards Council

d.Financial Reporting Standards Board

C
The Financial Reporting Standards Council shall be composed of

a.8 members

b.14 members

c.15 members

d.17 members

According to Section 9(A) of the IRR, the Commission upon the recommendation of the Board, shall
create an auditing standard setting body to be known as the

a.Auditing and Assurance Standards Council (AASC)

b.Auditing Standards Board

c.Auditing Standards Council

d.Auditing Standards and Practices Council (ASPC

The Auditing and Assurance Standards Council (AASC) shall be composed of

a.8 members

b.14 members

c.15 members

d.17 members

Which of the following does not have representation in the Financial Reporting Standards Council
(FRSC)?

a.Board of Investments (BOI)

b.Philippine Institute of CPAs(PICPA)

c.Bureau of Internal Revenue (BIR)

d.Board of Accountancy (BOA

B

The following are represented both to the Financial Reporting Standards Council (FRSC) and Auditing
and Assurance Standards Council (AASC), except:

a.Bangko Sentral ng Pilipinas

b.Bureau of Internal Revenue

c.Securities and Exchange Commission

d.Board of Accountancy

Which of the following functions to promulgate auditing standards?

a.National Accredited Professional Organization

b.Financial Reporting Standards Council

c.Auditing and Assurance Standards Council

d.ACPAPP

The auditing standard setting body created by the Board of Accountancy is known as

a.Accounting Standards Council (ASC)

b.Financial Reporting Standards Council (FRSC)

c.Auditing Standards and Practices Council (ASPC)

d.Auditing and Assurance Standards Council (AASC)

Which of the following statements about Accounting Standard Setting Council is false?

a.The accounting standard setting body is to be known as Financial Reporting Standards Council (FRSC).

b.The Accounting standard setting body shall be composed of a chairman and fourteen members.

c.The public accounting practice is the sector that is most represented in the accounting standard setting
council.

d.The chairman and members of the standard setting council shall be appointed by the Commission
uponthe recommendation of the Board in coordination with APO
C

The sector that is most represented in the AASC is the:

a.Commerce and Industry

b.Academe

c.Public Practice

d.Government

Which of the following statements is correct about AASC?

a.The AASC shall be composed of a chairman and six members.

b.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 5 nominees for each position
submitted by APO.

c.The chairman and members of the AASC shall have a term of three years renewable for another term.

d.The AASC shall elect a Vice-Chairman from among its members for a term of one year

Which of the following statements about Accounting Standard Setting Council is false?

a.The accounting standard setting body is to be known as Financial Reporting Standards Council (FRSC).

b.The Accounting standard setting body shall be composed of a chairman and fourteen members.

c.The chairman and members of the standard setting council shallbe appointed by the Commission upon
the recommendation of the Board in coordination with APO.

d.The public accounting practice is the sector that is most represented in the accounting standard
setting council.

Educational Technical Council (ETC) differs from accounting and auditing standard setting councils in that

a.The chairman and members of ETC are appointed by the Commission.

b.The chairman of ETC must have been or presently a senior accounting practitioner in
Academe/Education.

c.ETC is composed of 15 members with a chairman.

d.The chairman and members of ETC have a three year term renewable for another term

Which of the following is not one of the functions of ETC?a.Determine a minimum standard curriculum
for the study of accountancy to be implemented in all schools offering BS Accountancy.

b.Establish teaching standards, including the qualifications of the members of the faculty of schools and
colleges of accountancy.

c.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.

d.Recommend to the BOA 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
observed the quality control measures or who have not complied with the standards of quality
prescribed for the practice of public accountancy

Which of the following is not a requisite in applying for the CPA licensure examinations?

a.Good moral character

b.Natural-born citizen of the Philippines

c.Holder of the degree of Bachelor of Science in Accountancy

d.Has not been convicted of any criminal offense involving moral turpitude

An applicant for the CPA licensure examination should be

I.A Filipino citizen

II.Of good moral character

III.A holder of the degree of Bachelor of Science in Accountancy

a.I and II only

b.I and III only

c.II and III only

d.I, II, and III

The following documents shall be submitted by applicants for the CPA licensure examination, except

a.Certificate of Live Birth in National Statistics Office (NSO) security paper.

b.Marriage contract in NSO security paper for married male applicants.

c.NBI clearance.

d.Transcript of records with indication therein of date of graduation and Special Order number unless it
is not required

A candidate who obtains the rating of seventy-five percent (75%) and above in at least a majority of the
subjects shall receive a conditional credit for the subjects passed. He/she shall take an examination in
the remaining subjects within

a.One (1) year from the preceding examination.

b.Two (2) years from the preceding examination.

c.Three (3) years from the preceding examination.

d.Five (5) years from the preceding examination

Which of the following statements is correct?

a.Any candidate who fails in two (2) complete CPA board examinations will no longer be allowed to take
another set of examinations.

b.Any candidate who fails in two (2) complete CPA board examinations shall be disqualified from taking
another set of examinations unless he/she submits evidence to the satisfaction of the Board that he/she
enrolled in and completed at least twenty-four (24) units of subjects given in the licensure examination.

c.The examination in which the candidate was conditioned and the removal examination oh the subject
in which he/she failed shall be counted as two (2) complete examinations.

d.The refresher course should be completed within two (2) years from the preceding examination
D

Which of the following shall be issued to examinees who passed the CPA licensure examination?

a.Certificate of accreditation

b.Personal identification card

c.Certificate of full compliance and PRC ID.

d.Certificate of registration and professional identification card

To be qualified as having passed the CPA licensure examination:

a.The candidate must have a general weighted average of at least 75%.

b.The candidate must not have a grade lower than 65% in any given subject.

c.A and B

d.Neither A nor B

Any candidate who fails in 2 complete CPA Board Examinations shall be disqualified from taking another
set of examination unless he or she submits evidence to the satisfaction of the Board that

a.He/She enrolled in and completed at least 24 units of subjects given in the licensure examination.

b.He/She enrolled the subjects given in the CPA Board Examination in the regular course offering.

c.He/She is ready to take another set of examination.

d.He/She enrolled in an educational institution offering or conducting review classes in preparation for
CPA Board Examination

The following statements relate to CPA examination ratings. Which of the following is incorrect?

a.To pass the examination, candidates should obtain a general weighted average of 75% and above, with
no rating in any subject less than 65%.

b.Conditioned candidates shall take an examination in the remaining subjects within two years from the
preceding examination.
c.Candidates who obtain a rating of 75% and above in at least four subjects shall receive a conditional
credit for the subjects passed.

d.Candidates who failed in four complete examinations shall no longer be allowed to take the
examinations the fifth time

The following statements relate to the rating in the CPA licensure examination. Identify the incorrect
statement.

a.A candidate must have a general weighted average of at least 75% with no grades lower than 65% in
any given subject in order to pass the CPA licensure examination.

b.In the event a candidate obtains a rating of 75% and above in at least a majority of the subjects,
he/she shall receive a conditional credit for the subject passed.

c.A candidate who receives a conditional credit shall take an examination on the remaining subjects
within two years from the preceding examination.

d.A candidate who gets a conditional credit and takes an examination on the remaining subjects must
get an average of at least 75% on the subjects reexamined and at least 65% in each of the subjects
reexamined.

The following are grounds for the suspension or revocation of certificate of registration and professional
identification card, except:

a.Unprofessional or unethical conduct.

b.Practice in more than one field of accountancy.

c.Possession of unsound mind.

d.Conviction of a criminal offense involving moral turpitude.

The following are grounds for refusal to issue a certificate of registration and professional identification
card to any successful examinee except:

a.Guilty of immoral and dishonorable conduct.

b.Conviction for a political offense.

c.Unsound mind.
d.Conviction of a criminal offense involving moral turpitude

A CPA whose certificate has been revoked:

a.Has committed a crime involving moral turpitude.

b.Is required to take the CPA Board Licensure examinations before reinstatement.

c.May be reinstated by the BOA after the expiration of 2 years from the date of revocation.

d.Can no longer be reinstated as a CPA

The Board of Accountancy may issue certificate of registration and professional identification card to any
successful examinee:

a.Of unsound mind

b.Convicted by a court of political offense.

c.Guilty of immoral or dishonorable conduct.

d.Who has falsely represented himself/herself in his/her application for examination.

The Board of Accountancy may, after the expiration of ____ years from the date of revocation of a
certificate of registration, reinstate the validity of a revoked certificate of registration.

a. 2

b. 3

c. 4

d.5

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 public practice.

a.Quality review
b.Peer review

c.Compliance audit

d.External audit

A body created by the BOA to conduct an oversight of the quality of audit of financial statements by
reviewing the firms quality control is known as:

a.Quality Review Committee (QRC)

b.Financial Reporting Standards Council (FRSC)

c.Auditing and Assurance Service Council (AASC)

d.Educational Training Committee (ETC)

Which of the following is one of the functions of the QRC?a.To promulgate accounting and auditing
standards that will be generally accepted in the Philippines.

b.To evaluate periodically the performance of educational institutions offering accountancy education.

c.To prescribe and or/ adopt a Code of Ethics for the practice of accountancy.

d.To conduct a review on applicants for registration to practice public accountancy and render a report
which shall be attached to the application for registration

All CPAs who are considered in the practice of accountancy shall abide by the requirements, rules and
regulations on continuing professional education. For this purpose, it is required that all registered CPAs
must complete a number of CPE units equivalent to

a.60 credit units in three years

b.45 credit units in three years

c.30 credit units in three years

d.15 credit units in three years

A
For every CPE seminars or conventions attended, participant CPAs shall get a CPE credit equivalent to

a.One credit unit per hour.

b.Two credit units per hour.

c.Three credit units per hour.

d.Five credit units per hour

Unless otherwise exempted, registered CPAs in the practice of accountancy who have not completed
the CPE requirements shall

a.Be dropped from the roster of CPAs.

b.Not be allowed to renew their professional licenses.

c.Present evidence to the satisfaction of the Board that they have the necessary knowledge, skills and
experience to discharge their professional responsibility.

d.Submit a letter addressed to the Board indicating the reasons for not complying with the CPE
requirements

Which of the following statements is correct about the PRC CPE Council?

a.The Council shall be composed of six members and a chairperson.

b.The members of the Board shall choose a chairperson from among themselves.

c.The members of the Council shall be appointed by the Commission upon recommendation of theBoard
in coordination with APO.

d.The chairperson and members of the Council shall have a term of three years renewable for another
term

How many CPE credit units must be accumulated by a registered accounting professional within the 3-
year period?

a.15 credit units

b.45 credit units

c.60 credit units

d.90 credit units

The objective of the Philippine Accountancy Act of 2004 includes:

a. The standardization and regulation of accounting education

b. The examination for registration of certified public accountants

c. The supervision, control, and regulation of the practice of accountancy in the Philippines.

d. All of the above

Under this method of building a client, the external auditors charges on the basis of actual time spent by
principals/partners,supervisors ,seniors and juniors at predetermined rates agreed upon with the client

a. Per diem basis. c. flat fee or flat sum basis

b. retainer basis. d. maximum fee basis

A CPA firm usualy offers non-aduit services, such as management advisory services. Its pimary purpose is
to:

a. Furnish professional advice and assistance which will enable the client to improve operation

b.Keep the CPA firmcompetitive with other firms.

c.Establish the firm as a consultant, thus ensuring its future expansion and growth.

d.Permit the firm's staff members to acquire expertise in other areas of practice

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 thereto."

a. National Accounting Office

b. Ministry of Finance

c. Commission on Audit

d. Accounting Units
C

The accreditation granted for accounting teacher is valid for:

a. 1 year

b. 2 years

c. 3 years

d. 4 years

Regarding anniversaries, a firm may undertake press releases of other media releases to commemorate
their anniversaries I public practice only every:

a. Year

b. 3 years

c. 4 years

d. 5 years

This organization administers and implements and enforces the regulatory policies of the Philippine
Government with respect to the regulation and licensing of the various profession under its jurisdiction,
one of which is accountancy.

a. BOA

b. PICPA

c. COA

d. PRC

...

Which of the following statements is correct?

a. The chairman and members of the Board shall receive compensation and allowances comparable to
that being received by the chairman and members of the existing regulatory boards under the PRC as
provided for in the General Appropriations Act.

b. No person shall serve in the Board for more than nine years.

c. The BOA chairman has the sole power to administer oaths in connection with the administration of
the accountancy law.

d. The Board shall be under administrative supervision of the PICPA

It function is to assist FRSC in establishing and improving financial reporting standards in the Philippines
as it issues implementation guidance on existing PFRS.

a. Board of Accountancy

c. Professional Regulations Commission

b. Education Task Force

d. Philippine Interpretations Committee

The practice of accountancy includes the following except: a. Practice in public accountancy.

b. Practice in education or the academe.

c. Practice in the government.

d. Practice in commerce and industry, when the CPA is appointed as marketing

S1 A registered professional who is working abroad shall be temporarily exemptedfrom compliance with
CPE requirements during his/her stay abroad, provided

S2 Those who failed to renew professional licenses for a period of three continuous years from initial
recognition, or from last renewal, shall be declared delinquent.

a. True, true

b. True, false

c. False, true
d. False, false

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

d. A chairperson, vice-chairperson and three members

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

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

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

c. CPE council

b. Education Technical Council

d. CHED

A professional identification card has a validity of:

a. 1 year

b. 2 years

c. 3 years

d. 4 years
Terms in this set (22)

Original

Which of the following procedures would least likely result in the discovery of possible illegal acts?

A. Reading the minutes of the board of directors' meetings.

B. Making inquiries of the client's management.

C. Performing tests of details of transactions.

D. Reviewing an internal control questionnaire.

D. Reviewing an internal control questionnaire.

Jones, CPA is auditing the financial statements of XYZ Retailing, Inc. What assurance does Jones provide
that direct-effect illegal acts that are material to XYZ's financial statements and illegal acts that have a
material but indirect effect on the financial statements will be detected?

Direct Effect-Illegal Acts // Indirect Effect-Illegal Acts

A. Reasonable // None

B. Reasonable // Reasonable

C. Limited // None

D. Limited // Reasonable

A. Reasonable // None

In specific information that implies the existence of possible illegal acts that could have a material but
indirect effect on the financial statements comes to an auditor's attention, the auditor should next

A. Apply audit procedures specifically directed to ascertaining whether an illegal act has occurred.
B. Seek the advice of an informed expert qualified to practice law as to possible contingent liabilities.

C. Report the matter to an appropriate level of management at least one level above those involved.

D. Discuss the evidence with the client's audit committee, or others with equivalent authority and
responsibility.

A. Apply audit procedures specifically directed to ascertaining whether an illegal act has occurred.

During the audit of a new client, the auditor determined that management had given illegal bribes to
municipal officials during the year under audit and several prior years. The auditor notified the client's
board of directors, but the board decided to take no action because the amounts involved were
immaterial to the financial statements. Under these circumstances, the auditor should

A. Add an explanatory paragraph emphasizing that certain matters, while not affecting the unqualified
opinion, require disclosure.

B. Report the illegal bribes to the municipal official at least one level above those persons who received
the bribes.

C. Consider withdrawing from the audit engagement and disassociating from future relationships with
the client.

D. Issue an "expert for" qualified opinion or an adverse opinion with a separate paragraph that explains
the circumstances.

C. Consider withdrawing from the audit engagement and disassociating from future relationships with
the client.

Which of the following is least likely to be required on an audit?

A. Evaluate the business rationale for significant, unusual transactions.

B. Make a legal determination of whether fraud has occurred.

C. Review accounting estimates for biases.

D. Test appropriateness of journal entries and adjustment.

B. Make a legal determination of whether fraud has occurred.

Which of the following is most likely to be an overall response to fraud risks identified in an audit?

A. Only use certified public accountants on the engagement.

B. Place increased emphasis on the audit of objective transactions rather than subjective transactions.

C. Supervise members of the audit team less closely and reply more upon judgment.

D. Use less predictable audit procedures.

D. Use less predictable audit procedures.

Which of the following is least likely to be included in an auditor's inquiry of management while
obtaining information to identify the risks of material misstatement due to fraud?

A. Are financial reporting operations controlled by and limited to one location?

B. Does it have knowledge of fraud or suspect fraud?

C. Does it have programs to mitigate fraud risks?

D. Has it reported to the audit committee the nature of the company's internal control?

A. Are financial reporting operations controlled by and limited to one location?

Individuals who commit fraud are ordinarily able to rationalize the act and also have an

Incentive // Opportunity

A. Yes//Yes

B. Yes//No

C. No//Yes

D. No//No

A. Yes//Yes

What is an auditor's responsibility who discovers senior management is involved in what is financially
immaterial fraud?

A. Report the fraud to the audit committee.

B. Report the fraud to the Public Company Accounting Oversight Board.

C. Report the fraud to a level of management at least one below those involved in the fraud.

D. Determine that the amounts involved are immaterial, and if so, there is no reporting responsibility.

A. Report the fraud to the audit committee.

Which of the following is most likely to be considered a risk factor relating to fraudulent financial
reporting?
A. Domination of management by top executives.

B. Large amounts of cash processed.

C. Negative cash flows from operations.

D. Small high dollar inventory items.

C. Negative cash flows from operations.

Which of the following is most likely to be presumed to represent a fraud risk on an audit?

A. Capitalization of repairs and maintenance expense into the property, plant and equipment asset
account.

B. Improper interest expense accrual.

C. Introduction of significant new products.

D. Improper revenue recognition.

D. Improper revenue recognition.

Which of the following is not required in SAS No. 99, "Consideration of Fraud in a Financial Statement
Audit"?

A. Conduct a continuing assessment of the risks of material misstatement due to fraud throughout the
audit.

B. Conduct a discussion by the audit team of the risks of material misstatement due to fraud.
C. Conduct the audit with professional skepticism, which includes an attitude that assumes balances are
incorrect until verified by the auditor.

D. Inquiries of the audit committee as to their views about the risks of fraud and their knowledge of any
fraud or suspected fraud.

C. Conduct the audit with professional skepticism, which includes an attitude that assumes balances are
incorrect until verified by the auditor.

Which of the following need not be documented in relation to the auditor's consideration of fraud?

A. Nature of communications about fraud made to management.

B. Procedures performed to obtained information to identify and assess risks of material misstatement
due to fraud.

C. Specific risks of material misstatement due to fraud that were identified.

D. The assessed level of the risk of management override of controls.

D. The assessed level of the risk of management override of controls.

When the risk of material misstatement due to fraud is considered high in a particular area, which of the
following is a likely response?

A. Perform tests on an interim basis throughout the period.

B. Obtain more reliable evidence by expanding tests to include all transactions.

C. Obtain additional corroborative information.

D. Design tests of controls to substantiate weaknesses.

C. Obtain additional corroborative information.

The primary difference between an audit of the income statement is that the audit of the income
statement addresses the verification of

1. Transactions

2. Authorizations

3. Costs

4. Cutoff

1. Transactions

Auditing standards define a confirmation as "the process of obtaining and evaluating a direct
communication from a third party in response to a request for information about a particular item
affecting financial statement assertions." Two assertions for which confirmation of accounts receivable
balances provides primary evidence are

1. Completeness and valuation

2. Valuation and rights and oblications

3. Rights and obligations and existence

4. Existence and completeness

3. Rights and obligations and existence

Tests designed to detect credit sales made before the end of the year have been recorded in the
subsequent year provide assurance about management's assertion of

1. Classification and Understandability

2. Rights and Obligations

3. Cutoff

4. Existence

3. Cutoff
The objective in an auditor's review of credit ratings of a client's customers is to obtain evidence related
to management's assertion about

1. Completeness

2. Existence

3. Valuation and allocation

4. Rights & obligations

5. Occurrence

3. Valuation and allocation

When auditing merchandise inventory at year-end, the auditor performs audit procedures to obtain
evidence that no goods held on consignment are included in the client's ending inventory balance. This
audit procedure provides assurance about which management assertion?

1. Completeness

2. Existence

3. Valuation and allocation

4. Rights and obligations

5. Occurrence

4. Rights and obligations

When an auditor reviews additions to the equipment (fixed asset) account to make sure that repair and
maintenance expenses are not understated, she wants to obtain evidence as to management's assertion
regarding

1. Completeness

2. Existence

3. Valuation and allocation

4. Rights and obligations

5. Occurrence

2. Existence

An auditor observes the mailing of monthly statements to a client's customers and reviews evidence of
follow-up on errors reported by the customers. This test of controls most likely is performed to support
management's financial statement assertions of

Classification and Understandability // Existence or Occurrence

1. Yes // Yes

2. Yes // No

3. No // Yes

4. No // No

3. No // Yes

The auditor's inventory observation test counts are traced to the client's inventory listing to test for
which of the following financial statement assertions?

1. Completeness

2. Rights & obligations

3. Valuation or allocation

4. Classification & understand-ability

1. Completeness
erms in this set (36)

Original

Responsibility of Client's mgt

fair presentation of the fs in accordance with the applicable FRS

Responsibility of the Auditor

design the audit to provide Reasonable Assurance of detecting material misstatements in the FS

Types of Misstatement(EFN)

a. error

b. fraud

c. Noncompliance w/ Laws and Regu

Error

unintentional misstatements in the FS

including the omission of an amount or disclosure;

a. mathematical or clerical mistakes in the underlying records and acctg data.

b. incorrect accounting estimate arising from oversight or misinterpretation of facts

c. mistake int he application of acctg policies

Fraud

intentional act by 1 or more indvls among mgt involving the use of deception as to obtain an unjust or
illegal advantage

Persons involved in fraud

a. charged with governance (mgt)

b. employees

c. third parties

Fraud concerned byAuditor

fraudulent acts that cause a material misstatement in the FS

Types of Fraud

a. Fraudulent Financial reporting

b. misappropriation of assets or employee fund

Fraud. Fin. Reporting( management fraud)

intentional misstatements/ omissions of amounts or disclo. in the FS to deceive FS users

Example of FFR (MMRI)

a. manipulation, falsification or alteration of records or documents

b. misrepresentation in or intentional omission of the effect of transactions from records or documents

c. recording of transactions without substance

d. intentional misapplication of acctg policies

Misappropriation of Assets/employee fund

involves theft of an entity assets committed by the Entity's employees

accompanied by false or misleading records or docu in order to conceal the fact that the assets are
missing.
Examples of MAEF

a. Embezzling Receipts

b. stealing entity's assets

c. lapping of AR

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2 things in committing fraud

a. motivation

b. perceived opportunity

Respon. of MGT and indls charged with governance (PSA 240)

a. MGT- establish a control environment and to implement internal control policies and procedures
designed to ensure the detection and prevention of fraud and error

b. IND C W G - ensure integrity of an entity's acctg and financial reporting systems and that appro.
controls are in place.

Auditor's Responsibility

-cannot be held for the PREVENTION of fraud and error

Planning Phase (Fraud Detection)

- makes inquires of mgt about possibility of fraud

inquiries:
a. mgt's assessment of risks due to fraud

b. controls established to address the risks

c. any material error or fraud that has affected the entity or suspected fraud that the entity is
investigating

Usefulness

: provide info on risk resulting from employee fraud but not mgt fraud

- makes inquiries of those charged with governance

Planning Phase (Fraud Detection)

-auditor should assess the risk that F&E cause material misstatements

Fraud Risk Factors

dont indicate existence of fraud but have been present in circumstances where frauds have occured

Effects of high risk in Material Misstatements to auditor

-high level of professional skepticism

-reduced ability to assess control risk at less than high level

- audit team may be selected properly

-consider mgt selection and application of significant acctg policies

Testing Phase ( Fraud Detection)

- consider if there's discrepancies

- consider if it resulted from fraud or error

- consider if it is material

Material or Non-material
IF not material

- refer the matter to the appropriate level at least one level above those involved

- be satisfied that it has no other implications

Material or Non-material

If Material

-consider implication for other aspects of an audit

-discuss the matter and the approach to CEO

-attempt to obtain evidence

-suggest that the client consult with legal counsel about questions of law

Completion Phase (Fraud Detection)

auditor should obtain a written representation from the client's mgt that;

- it acknowledges its responsibilities

-it believes the effect of uncorrected fs misstatement are immaterial

-it has disclosed to the auditor all significant facts

-it has disclosed to the auditor the results of its assessment of the risk

Consider the effects of Auditor's report

- if material error and fraud exists, he should request the mgt to revise the fs, otherwise he will express
qualified/adverse opinion

- if he is limited to the scope of the examination, he should either express qualify or disclaim his opinion

Consider the effects of Auditor's report

-mgt fraud is harder to detect than employee fraud

-fraud is harder to detect than error

Noncompliance with Laws and Regulations

acts of omission or commission by the entity being audited, either intentional or unintentional,which are
contrary to the prevailing lawrs or regulations

Examples of noncompliance

a. tax evasion

b. violation of environmental protection laws

c. inside trading of securities

ways to conceal noncompliance

a. collusion

b. forgery

c. deliberate failure to record transactions

d. senior mgt override of controls

e. intentional misrepresentation to auditor

Mgt's responsibilities (noncompliance)

-responsible for the detection and prevention of noncompliance

Policies and procedures for the prevention and detection of noncompliance

a. monitoring legal reqts

b. instituting and operating appropriate systems of internal ctrl

c. developing,publicizing and following a code of conduct

d. ensuring employees are properly trained

e. monitoring compliance with code of conduct

f. engaging legal advisors

g. maintaining a register of significant laws

Auditor's responsibilities (noncompliance)

detect noncompliance
Planning Phase (noncompliance detection)

1. obtain a general understanding of the legal and regulatory framework

- use existing knowledge

-inquire and discuss mgt about entity's policies, procedures, laws or regulations that affects operation

2. design procedures to help identify instances of noncompliance

- inquire if they comply

- inspect correspondence with the relevant licensing or regulatory authorities

3. design procedures to obtain sufficient appropriate audit evidence about compliance

Testing Phase (noncompliance detection)

4. obtain understanding of the nature of the act and the circumstances in which it has occurred, and
sufficient info to evaluate the possible effect on the FS. consider;

-potential financial consequences

-whether pot. fin. con. require disclosure

-whether pot. fin. con. are so serious

5. when there's noncompliance, he should document the findings, discuss them with mgt, and consider
the implication

Completion Phase (noncompliance detection)

6. he should obtain written confirmation of disclosure of all noncompliance

Consider the effect on the Auditor's report

7. If there's noncompliance that materially affects fs, he should request the mgt to revise the fs
otherwise qualified or adverse

8. if limited- express qualified or disclaimer

Concern of auditor

-noncompliance should be direct and material