41.

If in the preceding number reciprocity law can be applied, the gross estate is
A. P1, 050, 000
B. P1, 195, 000
C. P1, 250, 000
D. P1, 070, 000
42. Based on the above problem but assuming that the PLDT shares of stocks are not listed in
the local stock exchange, and there are 1, 000 shares at the time of death, the company’s
outstanding shares were 10, 000 shares. Its retained earnings was P2, 000, 000,
par value per share was P50. The gross estate should show the said shares at
A. Still at P75, 000
B. P250, 000
C. P200, 000
D. P0
43. Which of the following statements is not correct?
A. Taxes may be imposed to raise revenues or to provide disincentives to certain
activities within the state.
B. The state can have the power to taxation even if the Constitution does not expressly
give it the power to tax.
C. For the exercise of the power of taxation, the state can tax anything at any time.
D. The provisions of taxation in the Philippine Constitution are grants of power
and not limitations on taxing powers. be an effective control
mechanism for evaluating the organization’s internal
control structure. The Birch Company’s internal
auditing function reports directly to the
controller. Comment on the effectiveness of this
organizational structure.
12. According to COSO, the proper segregation of
functions is an effective internal control procedure.
Comment on the exposure (if any) caused
by combining the tasks of paycheck preparation
and distribution to employees.
13. Explain whether authorizations are necessary in a
computer environment.
14. Explain how an IT environment affects the segregation
of functions.
15. Explain how an IT environment affects supervision.
16. Explain how an IT environment affects the firm’s
obligation to maintain adequate accounting records.
17. Explain how an IT environment affects access
control.
18. Explain how an IT environment affects independent
verification.
19. How has the Sarbanes-Oxley Act affected internal
controls?
20. Discuss the key features of Section 302 of SOX.
21. Discuss the key features of Section 404 of SOX.
22. Section 404 requires management to make a
statement identifying the control framework
used to conduct its assessment of internal controls.
Discuss the options in selecting a control
framework.
23. Explain how general controls impact transaction
integrity and the financial reporting process.
24. Prior to SOX, external auditors were required to
be familiar with the client organization’s internal
controls, but not test them. Explain.
25. Does a qualified opinion on management’s assessment
of internal controls over the financial reporting
system necessitate a qualified opinion on
the financial statements? Explain.
26. The PCAOB Standard No. 5 specifically requires
auditors to understand transaction flows in designing
their tests of controls. What steps does
this entail?
27. What fraud detection responsibil