MINDANAO STATE UNIVERSITY

College of Business Administration and Accountancy

ACCOUNTANCY DEPARTMENT
Marawi City

ACCOUNTING 151 (AUDITING THEORY)

Prelim Examination
1st Semester, A.Y. 2016-2017

MULTIPLE CHOICES. Read carefully the questions below and choose the best
statement among the choices. Shade the letter corresponding to your answer on the
answer sheet provided with this questionnaire. Use only black/blue ballpoint pens
in shading. DO NOT use friction pens. FIVE erasures are allowed; the rest will
not be given points.
1. Which of the following is not a benefit of using IT based controls?
A. Ability to process large volumes of transactions
B. Ability to replace manual controls with computer-based controls.
C. Reduction in misstatements due to consistent processing of transactions.
D. Over-reliance on computer generated reports.
2. Which of the following is not a risk specific to IT environments?
A. Reliance on the functioning capabilities of hardware and software.
B. Increased human involvement
C. Loss of data due to insufficient backup.
D. Reduced segregation of duties.
3. Which of the following is not an enhancement to internal control that will
occur as a consequence of increased reliance on IT?
A. Computer controls replace manual controls
B. Higher quality information is available
C. Computer-based controls provide opportunities to enhance segregation of
duties.
D. All of the above are enhancement
4. When the client uses a computer but the auditor chooses to use only the non-
IT segment of internal control to assess control risk, it is referred to as
auditing around the computer. Which one of the following conditions need not
be present in order to audit around the computer?
A. Computer programs must be available in English
B. The source documents must be available in a non-machine language.
C. The documents must be filed in a manner that makes it possible to locate
them.
D. The output must be listed in sufficient detail to enable the auditor to trace
individual transactions
5. Which of the following statements related to application controls is correct?
A. Application controls relate to various aspects of the IT function including
software acquisition and the processing of transactions.
B. Application controls relate to various aspects of the IT function including
physical security and the processing of transactions in various cycles.
C. Application controls relate to all aspects of the IT function.
D. Application controls relate to the processing of individual transactions.
6. General controls include all of the following except:
A. Systems development C. Online security
B. Processing controls D. Hardware controls
7. ____________ involves implementing a system in one part of the organization,
while other locations continue to use the current system.
A. Parallel testing C. Online testing
B. Pilot testing D. None of the above
8. To obtain evidence that user identification and password controls are
functioning, an auditor would most likely
A. Attempt to sign on to the system using invalid user identification and
passwords.
B. Write a computer program that simulates the logic of the client’s access
control software
C. Extract a random sample of processed transactions and ensure that the
transactions were appropriately authorized.
D. Examine statements signed by employees stating that they have not divulged
their user identifications and passwords to any other person.
9. When IT programs or files can be accessed from terminals, users should be
required to enter a(n)
A. Echo check C. Parity check
B. Self-diagnosis test D. Personal identification code
10. Which of the following is not a characteristic of an on-line processing
system?
A. Output of the data files is available on request.
B. Master files are updated at the time the entry is made
C. Display terminals are used for both input and output purposes.
D. Programming is not allowed on-line and must be done separately.
11. A database management system
A. Physically stores each element of data only once.
B. Stores same data on different files for different purposes, but always knows
where they are and how to retrieve them.
C. Allows quick retrieval of data but at a cost of inefficient use of file
space.
D. Allows quick retrieval of data, but it needs to update filed continually.
12. Which of the following is not associated with converting from a manual to an
IT system?
A. It usually centralizes data
B. It permits higher quality controls over operations
C. It may eliminate the control provided by division of duties of independent
persons who perform related functions
D. It may take the recordkeeping function and the document preparation function
away from those who have custody of assets and put those functions into the
IT center.
13. Which of the following statements about general controls is not correct?
A. Backup and disaster recover plans should identify alternative hardware to
process company data.
B. Successful IT development efforts require the involvement of IT and non-IT
personnel.
C. The chief information officer should report to senior management and the
board.
D. Programmers should have access to computer operations to aid users in
resolving problems.
14. In complex IT system, which of the following factors does not increase the
likelihood of material misstatements in the financial statements?
A. Reduced human involvement
B. Uniformity of processing
C. Ease of access to data.
D. Specialists are needed to write computer programs.
15. An important characteristic of IT is uniformity of processing. Therefore, a
risk exists that
A. Auditors will not be able to access data quickly.
B. Auditors will not be able to determine if data is processed consistently.
C. Erroneous processing can result in the accumulation of a great number of
misstatements in a short period of time.
D. All of the above
16. Controls which apply to a specific use of the system are called
A. User controls C. Systems controls
B. General controls D. Applications controls
17. Which of the following is not an example of an applications control?
A. An equipment failure causes an error message on the monitor.
B. There is a preprocessing authorization of the sales transactions.
C. There are reasonableness tests for the unit selling price of a sale.
D. After processing, all sales transactions are reviewed by the sales
department.
18. Which of the following is not a general control?
A. Reasonableness test for unit selling price of a sale.
B. Equipment failure causes error messages on monitor.
C. Separation of duties between programmer and operators.
D. Adequate program run instructions for operating the computer.
19. Controls which are built in by the manufacturer to detect equipment failure
are called
A. Input controls C. Hardware controls
B. Fail-safe controls D. Manufacturer’s controls
20. Auditors usually evaluate the effectiveness of
A. Hardware control first
B. Sales-cycle controls first
C. General controls before applications controls.
D. Applications controls first
21. Controls which are designed to assure that the information processed by the
computer is authorized, complete, and accurate are called
A. Input controls C. Output controls
B. Processing controls D. General controls
22. Programmers should be allowed access to
A. Computer operations
B. Actual programs used in processing transactions
C. All programming code
D. None of the above
23. Which of the following is not a processing control?
A. Control totals C. Check digits
B. Logic tests D. Computations tests
24. Controls over output are not designed to assure that data generated by the
computer are
A. Accurate
B. Distributed only to authorized people
C. Complete
D. Relevant
25. Most auditors evaluate application and general controls in what manner?
A. Most auditors evaluate application and general controls simultaneously.
B. Most auditors evaluate the effectiveness of general controls before
evaluating application controls.
C. Most auditors evaluate the effectiveness of application controls before
evaluating general controls.
D. Most auditors evaluate application and general controls only if they do not
intend to rely on systems controls
26. When the auditor considers only the non-IT controls in assessing control
risk, it is commonly referred to as
A. The single-stage audit C. Auditing around the computer
B. The test deck approach D. Generalized audit software (GAS)
27. The auditor’s objective to determine whether the client’s computer programs
can correctly handle valid and invalid transactions as they arise is
accomplished through the
A. Test data approach
B. Generalized audit software approach
C. Microcomputer-aided auditing approach
D. Generally accepted auditing standards
28. The audit approach in which the auditor runs his or her own program on a
controlled basis in order to verify the client’s data recorded in a machine
language is
A. The test data approach
B. Called auditing around the computer
C. The generalized audit software approach
D. The microcomputer-aided auditing approach
29. Which of the following is not one of the three categories of testing
strategies when auditing through the computer?
A. Pilot simulation C. Parallel simulation
B. Test data approach D. Embedded audit module
30. Generalized audit software
A. Is often used even when a client’s data are not computerized.
B. Is used when a client’s software is not compatible with the auditor’s.
C. Is a method of verifying a client’s data which are recorded in a machine
language.
D. Can be used for all three of the above
31. Internal control is ineffective when computer personnel
A. Participate in computer software acquisition decisions.
B. Design documentation for computerized systems
C. Originate changes in master files.
D. Provide physical security for program files.
32. An auditor’s investigation of a company’s IT control procedures has disclosed
the following four circumstances. Indicate which circumstance constitutes a
weakness in internal control.
A. Computer operators do not have access to the complete run manual.
B. Computer operators are closely supervised by programmers.
C. Programmers do not have the authorization to operate equipment
D. Only one generation of back-up files is stored in an off-premises location.
33. Because general control have a ____ effect on the operating effectiveness of
application controls, auditors must consider general controls.
A. Nominal C. Pervasive
B. Mitigating D. Worsening
34. Errors in data processed in a batch computer system may not be detected
immediately because
A. Transaction trails in a batch system are available only for a limited period
of time.
B. There are time delays in processing transactions in a batch system.
C. Errors in some transactions cause rejection of other transactions in the
batch.
D. Random errors are more likely in a batch system than in an on-line system.
35. Which of the following is not a characteristic of a batch-processed computer
system?
A. The production of numerous printouts.
B. Keypunching of transactions, followed by machine processing.
C. The posting of a transaction, as it occurs, to several files, without
intermediate printouts.
D. The collection of like transactions that are sorted and processed
sequentially against a master file.
36. In an IT system, automated equipment controls or hardware controls are
designed to
A. Correct errors in the computer programs
B. Monitor and detect errors in source documents
C. Detect and control errors arising from use of equipment
D. Arrange data in a logical sequential manner for processing purposes.
37. If a control total were to be computed on each of the following data items,
which would best be identified as a hash total for a payroll IT application?
A. Net pay C. Hours worked
B. Department numbers D. Total debits and total credits
38. A company uses the account code 669 for maintenance expense. However, one of
the company clerks often codes maintenance expense as 996. The highest
account code in the system is 750. What would be the best internal control
check to build into the company’s computer program to detect this error?
A. A check for this type of error would have to be made before the information
was transmitted to the IT department.
B. Valid-character test.
C. Sequence check
D. Valid-code test.
39. Data Corporation has just completely computerized its billing and accounts
receivable record keeping. You want to make maximum use of the new computer
in your audit of Data Corporation. Which of the following audit techniques
could not be performed through a computer program?
A. Tracing audited cash receipts to accounts receivable credits.
B. Selecting on a random number basis accounts to be confirmed.
C. Resolving differences reported by customers on confirmation requests.
D. Examining sales invoices for completeness, consistency between different
items, valid conditions and reasonable amounts.
40. Which of the following is not an application control?
A. Preprocessing authorization of sales transactions
B. Reasonableness test for unit selling price of sale.
C. Post-processing review of sales transactions by the sales department.
D. Separation of duties between computer programmer and operators.
41. The emphasis in auditing IT systems for accuracy of processing is likely to
be on
A. The sales and collection cycle since the contains the vast majority of
transactions
B. Testing for unusual transactions
C. Input documentation
D. Qualifications of programmers
42. Application controls vary with each application in the IT system. In
attempting to review and gain an understanding of the internal control
system, the auditor must evaluate the application controls for
A. Every audit area
B. Every material audit area
C. Every audit area in which the client uses the computer
D. Every audit area where the auditor plans to reduce assessed control risk.
43. Many clients have their data processed at an independent computer service
center (IT outsourcing). The difficulty the independent auditor faces when a
computer service center is used is
A. Gaining the permission of the service center to review their work.
B. Finding compatible programs that will analyze the service center’s programs.
C. In determining the adequacy of the service center’s internal controls.
D. In trying to abide by the Code of Professional Conduct to maintain the
security and confidentially of client’s data.
44. An independent auditor studies and evaluates a client’s IT system. The
auditor’s study includes two phases: (1) a review of the system and (2)
tests of controls. The latter phase might include which of the following?
A. Examination of system flowcharts to determine whether they reflect the
current status of the system.
B. Examination of the systems manuals to determine whether existing procedures
are satisfactory.
C. Examination of the machine room log book to determine whether control
information is properly recorded.
D. Examination of organization charts to determine whether IT department
responsibilities are properly separated to afford effective control.
45. An auditor who is testing IT controls in a payroll system would most likely
use test data that contain conditions such as
A. time tickets with invalid job numbers
B. Overtime not approved by supervisors
C. Deductions not authorized by employees
D. Payroll checks with authorized signatures.
46. When an on-line, real-time (OLRT) system is in use, internal control can be
strengthen by
A. Providing for the separation of duties between key punching and error listing
operations.
B. Attaching plastic file protection rings to reels of magnetic tape before new
data can be entered on the file.
C. Preparing batch totals to provide assurance that file updates are made for
the entire input.
D. Making a validity check of an identification number before a user can obtain
access to the computer files.
47. Which of the following is not a general control?
A. The plan of organization and operation of IT activity.
B. Procedures for documenting, reviewing, and approving systems and programs.
C. Processing controls.
D. Hardware controls.
48. In comparing (1) the adequacy of the hardware controls in the system with (2)
the organization’s methods of handling the errors that the computer
identifies, the independent auditor is
A. Unconcerned with both (1) and (2)
B. Equally concerned with (1) and (2).
C. Less concerned with (1) than with (2).
D. More concerned with (1) than with (2).
49. The most important output control is
A. Distribution control, which assures that only authorized personnel receive
the reports generated by the system.
B. Review of the data for reasonableness by someone who knows what the output
should look like.
C. Control totals, which are used to verify that the computer’s results are
correct.
D. Logic tests, which verify that no mistakes were made in processing.
50. When auditing a computerized system, an auditor may use the test data
approach as an audit tool. This technique.
A. Is more applicable to independent audits than internal audits.
B. Involves introducing simulated transactions into the client’s actual
application programs.
C. Is a commonly used audit technique for auditing around the computer.
D. Should not involve the actual application programs the client uses throughout
the year, since use of the actual programs would contaminate the client’s
accounting data.
51. The underlying reason for a code of professional conduct for any profession
is
A. The need for public confidence in the quality of service of the profession
B. That it provides a safeguard to keep unscrupulous people out.
C. That it is required by federal legislation
D. That it allows licensing agencies to have a yardstick to measure deficient
performance.
52. “Independence” in auditing means
A. Remaining aloof from client
B. Not being financially dependent on client.
C. Taking an unbiased viewpoint.
D. Being an advocate for the client.
53. Not included as “direct financial interest” of the CPA would be financial
interests of a
A. Spouse
B. Dependent child
C. Relative supported by the CPA
D. CPA in a Mutual fund which had an ownership interest in client company
54. Several months after an unqualified audit report was issued, the auditor
discovers the financial statements were materially misstated. The client’s
chief executive officer agrees that the statements are misstated, but refuses
to issue a correction, and claims that “confidentiality” prevents the CPA
from informing anyone.
A. CEO is correct. Auditor must maintain confidentiality.
B. CEO is wrong, but since auditor’s report is issued, it is too late to
retract.
C. CEO is correct, but to be ethically correct the auditor should violate the
confidentiality rule and disclose the error.
D. CEO is wrong, and auditor has an obligation to issue a revised correct audit
report, even if CEO will not revise and correct the financial statements
55. A member in public practice may not perform for a contingent fee any
professional services for a client for whom the member or member’s firm
performs.
A. An audit
B. A review
C. Either an audit or review
D. Any service regardless of the specific nature of the service
56. CPAS prohibited from which of the following forms of advertising?
A. Self-laudatory advertising
B. Celebrity endorsement advertising
C. Use of trade names, such as “Awesome Auditors.”
D. Use of phrases, such as “Guaranteed largest tax refunds in town!”
57. To emphasize auditor independence from management, many corporations
A. Appoint a partner of the CPA firm conducting the examination to the
corporation’s audit committee
B. Establish a policy of discouraging social contact between employees of the
corporation and the staff of the independent auditor
C. Have the independent auditor report to an audit committee of outside members
of the board of directors.
D. Request that a representative of the independent auditor be on hand at the
annual stockholders’ meeting
58. In a code of conduct, the advantage of general statements of ideal conduct,
as opposed to specific rules of behavior, is
A. The emphasis on positive activities
B. The ability to enforce the ideals
C. The enforceability of minimum behavior and performance standards.
D. The tendency to define the rules as maximum rather than minimum standards.
59. An example of an “indirect ownership interest in a client” would be ownership
of a client’s stock by a member’s
A. Dependent child
B. Spouse
C. Non-dependent grandfather
D. All of the above are examples of indirect ownership
60. Which of the following circumstances would ordinarily not impair the
auditor’s independence?
A. Litigation by client against audit firm related to tax services
B. Litigation by client against audit firm claiming a deficiency in the previous
audit
C. Litigation by audit firm against client claiming management fraud or deceit.
D. Intent to start a lawsuit at some future date, after the current audit is
completed, claiming a deficiency in the previous audit.
61. A CPA is allowed to accept referral fee for recommending a client to another
CPA if
A. The client approves of the transaction either before or after the event
B. The client pre-approves the transaction
C. Payment of the referral fee is disclosed to the client
D. None of the above are true. Referrals are never acceptable.
62. “A professional accountant should be straight forward and honest in all his
professional and business relationship.” This description appropriately
describes the fundamental principle of:
A. Integrity C. Objectivity
B. Confidentiality D. Professional behavior
63. Which of the following is not a fundamental principle in codes of ethics for
professional accountants?
A. Act in the client’s best interest
B. Objectivity and independence
C. Maintain the good reputation of the profession
D. Maintain confidentiality
64. A threat that prevents the professional accountant from acting objectively by
threats, actual or perceived.
A. Self-interest C. Familiarity
B. Intimidation D. Advocacy
65. A financial interest beneficially owned through a collective investment
vehicle, estate, trust or other intermediary over which the individual or
entity has no control.
A. Indirect financial interest C. Financial instrument
B. Direct financial interest D. Clients’ monies
66. A form of threat which may occur when a previous judgment needs to be
reevaluated by the professional accountant who is responsible for the
judgment.
A. Self-interest threat C. Self-review threat
B. Familiarity threat D. Advocacy threat
67. Occurs when any product or judgment of a previous assurance engagement or
non-assurance engagement needs to be reevaluated in reaching conclusions on
the assurance engagement or when a member of the assurance team was
previously a director or officer of their assurance client, or was an
 employee in a position to exert direct and significant influence over the
subject matter of the assurance engagement.
A. Self-interest threat C. Self-review threat
B. Advocacy threat D. Familiarity threat
68. Safeguards created by the profession, legislation or regulation, include the
following, except:
A. Educational, training and experience requirements for entity into the
profession.
B. Continuing education requirements.
C. Legislation governing the independence of the firm
D. Policies and procedures that emphasize the assurance client’s commitment to
fair financial reporting.
69. Which of the following is an example of engagement-specific safeguards?
A. Advising partners and professional staff of those assurance clients and
related entities from which they must be independent.
B. Consulting an independent third party, such as a committee of independent
directors, a professional regulatory body or another professional accountant.
C. Policies and procedures that will enable the identification of interests or
relationships between the firm or members of engagement teams and clients.
D. External review by a legally empowered third party of the reports, returns,
communications or information produced by a professional accountant.
70. Which of the following examples of safeguards that may effectively reduce
threats to compliance with the fundamental principles is created by the
profession, legislation or regulation?
A. Published policies and procedures to encourage and empower staff to
communicate to senior levels within the firm any issue relating to compliance
with the fundamental principles that concerns them.
B. Effective, well-publicized complaints systems operated by the employing
organization, the profession or a regulator, which enable colleagues,
employers, and members of the public to draw attention to unethical behavior.
C. Designating a member of senior management to be responsible for overseeing
the adequate functioning of the firm’s quality control system.
D. Disclosing to those charged with governance of the client the nature of
services provided and the extent of fees charged.
71. If a professional accountant is billing an audit client a number of hours
greater than those actually worked. Which of the following fundamental
principles is likely violated?
A. Objectivity C. Integrity
B. Professional due care D. Confidentiality
72. Which of the following is least likely an indication that the CPA violates
the integrity principle? The CPA is associated with reports on information
that
A. The CPA issues a qualified opinion due to scope limitation because he fails
to arrive at a clear-cut conclusion.
B. Contains a materially false or misleading statement
C. Omits or obscure information required to be included when such omission or
obscurity would make the information misleading.
D. Contains statements or information furnished recklessly.
73. Which of the following may not be a professional duty to disclose
confidential information?
A. In compliance with the quality review of a member body or professional body.
B. In compliance with technical standards and ethics requirements
C. In response to specific inquiry from the major stockholder
D. In protecting the professional interests of the professional accountant in
case of litigation.
74. Which of the following least likely create “self-interest threat”?
A. Undue dependence on total fees from an assurance client.
B. Concern about the possibility of losing the engagement
C. Having a close business relationship with an assurance client.
D. Pressure to reduce inappropriately the extent of work performed in order to
reduce fees.
75. 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 C. Advocacy threat
B. intimidation threat D. familiarity threat
76. 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 C. Self-review threat
B. intimidation threat D. familiarity threat
77. A CPA-lawyer, acting as a legal counsel to one of his audit client, is an
example of
A. Self-interest threat C. Self-review threat
B. Advocacy threat D. Familiarity threat
78. In determining estimates of fees, an auditor may take into account each of
the following, except the:
A. Value of the service to the client
B. Degree of responsibility assumed by undertaking the engagement.
C. Skills required in performing the service
D. Attainment of specific findings.
79. The network firms are required to be independent of the client
A. for assurance engagements provided to an audit client
B. for assurance engagements provided to clients that are not audit clients,
when the report is not expressly restricted for use by identified users
C. for assurance engagements provided to clients that are not audit clients,
when the assurance report is expressly restricted for use by identifies users
D. All of the above
80. The recommendation for the appointment of the external auditors by the audit
committee is an example of:
A. Safeguards reducing the risk of conflict of interest created by the
profession, legislation, or regulation
B. Safeguards reducing the risk of conflict of interest between an auditor and
the management
C. Safeguards reducing the risk of conflict of interest within a professional
accounting firm’s own systems and procedures.
D. All of these
81. Which of the following is not an objective of the Philippine Accountancy Act
of 2004
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. The development and improvement of accounting standards will be generally
accepted in the Philippines.
82. A CPA is in public accounting practice when he/she
A. Represents his/her employer before government agencies on tax and other
related matters related to accounting.
B. Represents his/her clients before government agencies on tax and other
matters related to accounting.
C. Teaches accounting, auditing, management advisory services, accounting aspect
of finance, business law, taxation, and other technically related subjects.
D. Holds, or appointed to, a position 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.
83. Section 4 of the Rules and Regulations Implementing RA 9298 (IRR) provides
that any position in any business or company in the private sector which
requires supervising the recording of financial transactions, preparation of
financial statements, coordinating with external auditors for the audit of
such financial statements, and other related functions occupied by duly
registered CPA. It provides further that the business or company where such
position exists has a
A. Paid-up capital of at least P5, 000,000 and/or an annual revenue of at least
P10, 000,000.
B. Paid-up capital of at least P10, 000,000 and/or an annual revenue of at least
P5, 000,000.
C. Paid-up capital and/or an annual revenue of at least P10, 000,000.
D. Paid-up capital and/or an annual revenue of at least P5, 000,000.
84. Section 5 of the Accountancy Act of 2004 states that the Board of Accountancy
shall be composed of a chairman and
A. 2 members B. 4 members C. 6 members D. 8 members
85. If the PICPA fails to submit to the PRC its own nominees within 60 days prior
to the expiry of the term of an incumbent chairman or member of the Board of
Accountancy (BOA), the PRC in consultation with the BOA shall submit to the
President a list of how many nominees for each vacant position?
A. 2 B. 3 C. 4 D. 5
86. A member of the BOA shall, at the time of his/her appointment, possess which
of the following qualifications?
A. Must be a natural-born citizen of the Philippines
B. Must be a Filipino citizen
C. Must be a Filipino citizen and a resident of the Philippines
D. Must be a natural-born citizen and a resident of the Philippines
87. According to section 7 of the IRR, no person who has served two successive
complete terms as chairman or member of the Board of Accountancy shall be
eligible for reappointment as chairman or member until the lapse of
A. 1 year B. 2 years C. 3 years D. 4 years
88. The Board of Accountancy shall elect a vice-chairman from among its members
for a term of
A. 2 years B. 1 year C. 3 years D. 5 years
89. Who has the power to suspend/remove any member of the Board of Accountancy?
A. The Chairman of FRSC C. The Chairman of PRC
B. The Chairman of AASC D. The President of the Philippines
90. The following documents shall be submitted by applicants for 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.
91. Any candidate who fails in two (2) complete CPA Board Examinations shall be
disqualified from taking another set of examination unless he/she has
completed at least how many units of subjects given in the licensure
examination?
A. 4 B. 8 C. 16 D. 24
92. The Board of Accountancy shall submit to the PRC the ratings obtained by each
candidate within how many calendar days after the examination?
A. 1 B. 2 C. 5 D. 10
93. The Certificate of Registration issued to successful examinees
A. Is renewable every three years.
B. Is renewable every five years.
C. Shall remain in full force and effect until withdrawn, suspended or revoked
in accordance with RA 9298.
D. Shall bear the signature of the PRC Chairperson and the two PRC Commissioner.
94. The Professional Identification Card issued to successful examinees
A. Is renewable every three years.
B. Is renewable every five years.
C. Shall remain in full force and effect until withdrawn, suspended or revoked
in accordance with RA 9298.
D. Shall bear the signature of the PRC Chairperson and the Chairman and Members
of the Board of Accountancy.
95. The Board of Accountancy may reinstate the validity of a revoked Certificate
of Registration after expiration of how many years from the date of
revocation?
A. 1 B. 2 C. 3 D. 5
96. The following statements relate to the practice of public accountancy. Which
is incorrect?
A. Single practitioners and partners of partnerships organized for the practice
of public accountancy shall be registered CPAs in the Philippines.
B. A partnership engaged in the practice of public accountancy may be carried on
in the form of a general partnership (GP) but not limited liability
partnership (LLP).
C. A CPA is in public practice when he/she represents his/her client before
government agencies on tax and other matters related to accounting.
D. The Securities and Exchange Commission shall not register any corporation
organized for the practice of public accountancy.
97. Which of the following statements concerning ownership of working papers is
incorrect?
A. All working papers made by a CPA and his/her staff in the course of the
examination remain the property of such CPA in the absence of any agreement
(written or oral) between the CPA and the client to the contrary.
B. Working papers include schedules and memoranda prepared and submitted by the
client of the CPA.
C. All working papers, except reports submitted by a CPA to his/her client shall
be treated confidential and privileged.
D. Working papers shall be treated confidential and privileged and remain the
property of the CPA unless such documents are required to be produced through
subpoena issued by any court, tribunal or any government regulatory or
administrative body.
98. All registered CPAs shall obtain and use a seal which shall be circular in
form with a smaller circle within bearing the registrant’s name, registration
number and title. Which of the following is correct?
A. Engraved in the lower portion of the space between the circles is the CPA’s
name.
B. Engraved in the upper portion of the space between the circles is the CPA’s
registration number.
C. Engraved in the middle of the smaller circle are the letters “CPA”.
D. Engraved in the middle of the smaller circle are the CPA’s name and
registration number.
E. Engraved in the middle of the smaller circle is the CPA’s name.
99. Section 36 (Penal Provision) of RA 9298 states that any person who shall
violate any of the provisions of the Act or any of its implementing rules and
regulations shall, upon conviction, be punished by
A. A fine of not less than P50, 000.
B. Imprisonment for a period not exceeding two (2) years.
C. A fine of not less than P50, 000 or by imprisonment for a period not
exceeding two (2) years.
D. A fine of not less than P50, 000 or by imprisonment for a period not
exceeding two (2) years, or both.
100.Which of the following statements concerning the use of firm or partnership
name is incorrect?
A. In the case of an individual CPA, he/she shall do business under his/her
registered name with the BOA and the PRC and as printed in his/her CPA
certificate (for example, Juan Puruntong, CPA).
B. In the case of a firm, it shall do business under its duly registered and
authorized firm name appearing in the registration documents issued by the
Department of Trade and Industry (DTI) and other government offices and such
firm name shall include the real name of the sole proprietor as printed in
his/her CPA certificate (for example, Arnulfo Gumamela and Associates).
C. In the case of a registered partnership, it shall do business under its name
as indicated in its current Articles of Partnership and Certificate of
Registration issued by the Securities and Exchange Commission (SEC) (for
example, Tanya, Sam and Jervi, CPAs).
D. A CPA shall only under an individual, firm, or partnership name in accordance
with Philippine laws and shall not include any fictitious name but may
indicate specialization.