41. Which of the following is not a qualification of a CPA in MAS practice?

a. Familiarity with the client’s financial accounting and internal control systems

b. Analytical experience in problem solving

c. Professional independence, objectivity and integrity

d. Auditor of the client

41-D

42. As a consultant, the CPA practitioner should

a. Exercise administrative control over the client’s staff to avoid unnecessary delays in
implementation.

b. Encourage dependence of client on the consultant’s staff so as to pinpoint clear

responsibility in implementing systems.

c. Not take responsibility for making decisions and policy judgments in MAS engagements.

d. Conduct his engagement as if he is a member of the client’s organization.

42-C

43. The Revised Accountancy Law incorporates the Code of Professional Ethics for CPAs.
The provision of management advisory services is among the areas of public accounting. It is,
however, not exclusive to CPAs. Considering these premises, which of the following statements
is applicable?

a. Management advisory services as a field of practice is considered as an integral part of

public accounting thus, the Code of Professional Ethics for CPAs covers management advisory
services.

b. CPAs in the practice of audit and management consulting services may advertise and
charge contingent fees.

c. The practice of management advisory services should not be extended to existing audit
clients since this will adversely affect the CPA’s independence.

d. CPAs in the practice of management advisory services are not bound by the Board of
Accountancy but are bound by the said law in the practice of audit.
43-A

44. Which of the following statements is False?

a. CPAs provide management services to go around the ethical constraints as mandated

by the Accountancy Act.

b. Businesses hire management consultants to help define specific problems and develop
solutions.

c. Included in the practice of consulting is the provision of confidential service in which the
identity of the client is concealed.

d. CPAs performing management services may be considered to be in the practice of

management consulting.

44-A

45. Which of the following statements is not acceptable?

a. A CPA represents three major players in the industry in rationalizing the industry’s
incentive before the government public hearing.

b. A CPA shares with a new and substantial client information regarding another client
belonging to the same industry.

c. A CPA provides consulting services to an existing audit client.

d. A CPA offers and provides consulting services to two major competing client.

45-B

46. Mr. Rey Carlos, a CPA firm’s partner-in-charge of quality assurance and review is arguing
with Mr. Reuben Fortuna, the consulting partner regarding the question of independence as Mr.
Fortuna is presently rendering consulting services to T. Ang and Nga Co., an audit client of the
firm. Related to this issue of independence, all of the following statements are not valid except

a. Independence is never sacrificed for as long as the auditor/consultant is correct in his

decisions for the client.
b. A CPA who renders both audit and consulting services to a client by virtue of his
competence/expertise and extensive knowledge of the client’s business is in the best position to
render decisions for the client and should do so.

c. The client is the ultimate decision maker and the auditor and/or consultant should not
make decisions for the client.

d. It is us up to professional judgment and discretion of the auditor/ consultant to render

decisions for the client for as long as his professional fees are commensurate to the benefit that
the client will derive from the engagement.

46-C

47. Which of the following acts is not performed by an independent CPA engaged to design
the accounting system?

a. Formulation of the chart of accounts.

b. Design of business and accounting forms.

c. Supervision of implementation of system and procedures recommended

d. Preparation of an accounting manual.

47-C

48. Which of the following will not impair the independence of a CPA in the rendition of
Management Services?

a. The CPA performs decision-making services for his client.

b. The CPA performs services wherein he is in effect, acting as an employee of the client.

c. The CPA loses his objectivity and acts in a manner as if he is advocating for the interest
of his client.

d. The CPA does not extend his services beyond the presentation of recommendations or
giving of advice.

48-D
49. A CPA should reject management advisory services engagement if

a. It would require him to make management decisions for an audit client.

b. The proposed engagement is not accounting related.

c. His recommendations are to be subjected to a review by the client.

d. He audits the financial statements of a subsidiary of the prospective client.

49-A

50. After preliminary audit arrangements have been made, an engagement confirmation letter
should be sent to the client. This letter usually should not include

a. An estimate of the time to be spent on the audit work by audit staff and management.

b. A reference to the auditor’s responsibility for the detection of errors and irregularities.

c. A statement that management advisory services would be available upon request.

d. A statement that management letter will be issued outlining comments and suggestions
as to any procedures requiring the client’s attention.

50-C