Chapter 13 [Salosagcol] Flashcards
1
Q
Society has attached a special meaning to the term “professional.” A professional is
a. Someone who has passed a qualifying exam to enter the job market.
b. A person who is expected to conduct himself or herself at a higher level than the requirements of society’s laws or regulations.
c. Any person who receives pay for the services performed.
d. Someone who has both an education in the trade and on-the-job experience received under an experienced supervisor
A
B
2
Q
The code of professional ethics for CPAs promulgated by the Board of Accountancy applies to
a. All CPAs in public practice
b. All CPAs in government
c. All CPAs in public practice and employed in private business
d. All CPAs in public practice, employed in private practice and industry, in the government, and in education
A
D
3
Q
Which of the following statements best describes why the profession of certified public accountants has deemed it essential to promulgate a code of ethics and to establish a mechanism for enforcing observance of the code?
a. A distinguishing mark of a profession is its acceptance of responsibility to the public.
b. A prerequisite to success is the establishment of an ethical code that stresses primarily the professionals responsibility to clients and colleagues
c. A requirement of most laws calls for the profession to establish a code of ethics
d. An essential means of self-protection for the profession is the establishment of flexible ethical standards by the profession
A
A
4
Q
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
A
A
5
Q
Which of the following statements is true when the CPA has been engaged to perform an audit of financial statements?
a. The CPA firm is engaged and paid by the client; therefore, the firm has primary responsibility to be an advocate for the client.
b. The CPA firm is engaged and paid by the client, but the primary beneficiaries of the audit are those who rely on the financial statements
c. Should a situation arise where there is no convincing authoritative standard available, and there is a choice of actions which could impact a client’s financial statements, the CPA is free to endorse the choice which is in the investors’ interests
d. The CPA firm’s paramount concern should be the interest of the client
A
B
6
Q
Which of the following is not one of the characteristics of a profession?
a. Mastery of a particular intellectual skill acquired by training and education
b. Adherence by its members to a common code of conduct
c. Acceptance of a duty to society as a whole
d. A responsibility to protect exclusively the interest of a client or employer.
A
D
7
Q
In order to achieve the objectives of the accountancy profession, professional accountants have to observe a number of prerequisites or fundamental principles. The fundamental principles include the following, except
a. Objectivity
b. Professional Competence and due Care
c. Technical Standards
d. Confidence
A
D
8
Q
The principle of professional competence and due care imposes certain obligations on professional accountants. Which of the following is not one of those obligations required by this principle?
a. To act diligently in accordance with applicable technical and professional standards
b. To be far, intellectually honest and free of conflict of interest
c. To become aware and understand relevant technical, professional and business developments
d. To obtain professional knowledge and experience to enable them to fulfill their responsibilities.
A
B
9
Q
Competence as a certified public accountant includes all the following except
a. Having the technical qualifications to perform an engagement
b. Possessing the ability to supervise and evaluate the quality of staff work
c. Warranting the infallibility of the work performed
d. Consulting others if additional technical information is needed
A
C
10
Q
An auditor who accepts an audit engagement and does not possess the industry expertise of the business entity should
a. Engage financial experts familiar with nature of the business entity
b. Obtain knowledge of matters that relate to the nature of the entity’s business
c. Refer a substantial portion of the audit to another CPA who will act as the principal auditor
d. First inform management that an unmodified opinion cannot be issued
A
B
11
Q
Professional competence should include
a. Attainment of professional competence, Maintenance of professional competence
b. Maintenance of professional competence
c. None of the two
d. Attainment of professional competence
A
A
12
Q
The phase of professional competence that requires a professional accountant to adopt a program designed to ensure quality control in the performance of professional services consistent with technical and professional standards is:
a. Attainment of professional competence
b. Maintenance of professional competence
c. Application of professional competence
d. Review of professional competence
A
B
13
Q
Which of the following is the least required in attaining professional competence?
a. High standard of general education
b. Specific education, training and examination in professionally relevant subjects
c. Period of meaningful work experience
d. Continuing awareness of development in the accountancy profession
A
D
14
Q
The essence of the due care principle is that the CPA should not be guilty of
a. Bias
b. Errors in judgment
c. Fraud
d. Negligence
A
D
15
Q
The principle of confidentiality applies to:
a. Professional accountants in public practice
b. Professional accountants in commerce and industry
c. Professional accountants in government
d. All professional accountants
A
D
16
Q
The principle of confidentiality imposes an obligation on professional accountants to refrain from:
a. Disclosing confidential information to another party even if the client authorizes the disclosure
b. Using confidential information acquired as a result of professional and business relationships to their personal advantage or the advantage of third parties
c. Disclosing information to defend themselves in case of litigation
d. Responding to an inquiry or investigation conducted by the Professional Regulatory Board of Accountancy
A
B
17
Q
A CPA shall not disclose confidential information obtained during an audit engagement in which one of the following situations?
a. When the security of the state requires
b. With the consent of the client
c. In defense of himself when sued by his client
d. To a successor auditor without the client’s permission
A
D
18
Q
Which of the following is incorrect regarding confidentiality?
a. Professional accountants have an obligation to respect the confidentiality of information about a client’s or employer’s affairs acquired in the course of professional services.
b. The duty of confidentiality ceases after the end of the relationship between the professional accountant and the client or employer
c. Confidentiality should always be observed by a professional unless specific authority has been given to disclose information or there is a legal or professional duty to disclose
d. Confidentiality requires that a professional accountant acquiring information in the course of performing professional services neither uses nor appear to use that information for personal advantage or for the advantage of a third party.
A
B
19
Q
The confidential relationship will be violated if, without client’s permission, the CPA provides working papers about a client to
a. A court of law which subpoenas them
b. Another CPA as part of PICPA’s quality assurance review program
c. Another CPA firm which has just purchased the CPA’s entire practice
d. An investigative or disciplinary body of the Board of Accountancy which is conducting a review of the CPA’s practice
A
C
20
Q
Which one of the following is false?
a. Confidentiality is broken when an auditor is presented with subpoena concerning an audit client
b. Information that a CPA obtains from a client is generally not privileged.
c. When the Board of Accountancy conducts a review of the quality controls of another CPA firm, permission of the client is not needed to examine audit documentation
d. A CPA firm which observes substandard audit documentation of another firm during a quality control review should immediately inform the firm being reviewed in order to rectify the deficiency
A
A
21
Q
Which of the following is considered a violation of rules on confidentiality?
a. The CPA discloses information to protect his own interest in the course of legal proceedings.
b. The CPA discloses information to a successor auditor after obtaining the client’s permission.
c. The CPA discloses information to another CPA in compliance with a quality control review conducted by the Board of Accountancy.
d. The CPA divulges information disclosed to him by a prospective client.
A
D
22
Q
When a professional accountant leans of a material error or omission in a tax return of a prior year, or of the failure to file a required tax return, the professional accountant has a responsibility to do the following except
a. Promptly advise the client or employer of the error or omission and recommend that disclosure be made to the revenue authorities.
b. Immediately inform the revenue authorities.
c. Take reasonable steps to ensure that the error is not repeated in subsequent tax returns if the professional relationship with the client or employer can be continued.
d. Inform the client or the employer that it is not possible to act for them in connection with that return or other related information submitted to the authorities if the client or the employer does not correct the error.
A
B
23
Q
In which of the following circumstances would a CPA be bound by ethics to refrain from disclosing any confidential information obtained during the course of a professional engagement?
a. The CPA is issued a summon enforceable by a court order which orders the CPA to present confidential information.
b. A major stockholder of a client company seeks accounting information from the CPA after the management declined to disclose the requested information.
c. Confidential client information is made available with client’s permission.
d. An inquiry by the Professional Regulation Commission and the CPA needs the disclosure to defend himself.
A
B
24
Q
The principal of professional behavior requires a professional accountant to
a. Be straightforward and honest in performing professional services.
b. Be fair and should not allow prejudice or bias, conflict of interest or influence of others to override objectivity.
c. Perform professional services with due care, competence and diligence.
d. Act in a manner consistent with the good reputation of the profession and refrain from any conduct which might bring discredit to the profession.
A
D
[Code of Ethics for Professional Accountants, IFAC]
The principle of professional behavior imposes an obligation on all professional accountants to comply with relevant laws and regulations and avoid any action that the professional accountant knows or should know may discredit the profession. This includes actions that a reasonable and informed third party, weighing all the specific facts and circumstances available to the professional accountant at that time, would be likely to conclude adversely affects the good reputation of the profession
25
Identify the incorrect statement. "A professional accountant rendering tax service is entitled to put forward the best position in favor of a client or an employer, provided..."
a. It does not impair the accountant's integrity and objectivity.
b. It is rendered with professional competence.
c. It is consistent with the law.
d. The professional accountant assumes responsibility for the content of the tax return.
D
26
A professional accountant's name can be associated with information that:
a. Contains a misleading statement
b. Intentionally omits or obscures information
c. Uses estimates
d. Contains information without any real knowledge of whether they are true or false.
C
27
When a professional accountant performs services in a country other than the home country and differences on specific matters exist between ethical requirements of the two countries, the professional accountant should apply
a. The ethical requirements of his or her home country
b. The ethical requirements of the country in which services are being performed
c. The stricter of the two ethical requirements
d. The less strict ethical requirements
C
28
If the ethical requirements in the country in which a CPA firm practices are either more or less restrictive than the Philippine Code of Ethics, the CPA firm must follow
a. The Philippine Code of Ethics
b. The ethical requirements of the country where the CPA practices
c. Whichever rules are less restrictive
d. Whichever rules are more restrictive
D
29
Which fundamental principal is seriously threatened by an engagement that is compensated based on the net proceeds on loans received by the client from a commercial bank?
a. Integrity
b. Objectivity
c. Confidentiality
d. Professional behavior
B
30
The Code of Professional Ethics states that a CPA should maintain integrity and objectivity. The term "objectivity" in the code refers to a CPA's ability
a. To choose independently between alternate accounting principles and auditing standards.
b. To distinguish independently between accounting practices that are acceptable and those that are not.
c. To be unyielding in all matters dealing with auditing procedures.
d. To maintain an impartial attitude on all matters that come under the CPA's review.
D
31
One of the major differences between auditors and other professionals is that most professionals
a. Do not have to pass rigorous examination to be admitted in the profession.
b. Are not expected to act in the best interest of the public.
c. Need not be concerned about independence.
d. Do not need the confidence of the public.
C
32
Independence in auditing means
a. Not having any financial or economic relationship with the client.
b. Being an advocate of the assurance client.
c. Taking an unbiased viewpoint.
d. Not having a loan to or from an assurance client.
C
33
Which of the following most accurately states how objectively has been defined by the Code of Ethics?
a. Being honest ad straight forward in all professional and business relationships.
b. A state of mind that provision of an option without being affected by influences that compromise professional judgement.
c. A combination of impartiality, intellectual honesty and a freedom from conflict of interest.
d. Avoiding facts and circumstances that could reduce the public confidence in the professional accountant's report.
C
34
A CPA, while performing an audit, strives to achieve independence in appearance in order to
a. Reduce risk and liability
b. Become independent in mind
c. Maintain public confidence in the profession
d. Comply with the generally accepted standards of fieldwork
C
35
Holding a financial interest in an audit client may create a self-interest threat. The existence and significance of any threat created depends on:
a. The role of the person holding the financial interest
b. Whether the financial interest is direct or indirect, and
c. The materiality of the financial interest
d. The type of opinion that the auditor expects to issue
D
## FOOTNOTE
???
Holding a financial interest in an audit client may create a self-interest threat. The existence and significance of any threat created depends on
I. The role of the person holding the financial
interest.
II. Whether the financial interest is direct or
indirect.
III. The materiality of the financial interest.
A. I and II only.
B. I and III only.
C. II and III only.
D. I, II, and III.
ANSWER: D
36
The concept of materiality would be least important to an auditor in determining
a. Transactions that should be reviewed
b. The need for disclosing a particular transaction or event
c. The extent of audit work planned for particular account
d. The effect of an auditor's direct financial interest in client
D
37
The primary factor that distinguishes a direct from an indirect financial interest is the
a. Materiality of the amount involved
b. Control over investment decisions
c. Risk associated with such investment
d. Relationship between the investor and investee
B
38
Ultimately, the decision as to whether the CPA is independent or not, will be made by the
a. Client
b. Audit committee
c. Public
d. Auditor
D
39
The Philippine Code of Ethics for professional accountants requires independence
*Refer to page 742, number 39*
a. Yes; Yes
b. Yes; No
c. No; No
d. No; Yes
A
40
Independence is required whenever a professional accountant performs
a. Professional services
b. Assurance services
c. Non-assurance services
d. Tax consultancy services
B
41
Not all engagements performed by professional accountants are assurance engagements. Other engagements frequently performed by professional accountants that are not assurance engagements include the following, except
a. Agreed-upon procedures
b. Compilation of financial or other information
c. Management consulting
d. Examination of prospective financial information
D
42
According to the principles of the Code of Ethics
a. All professional CPAs should maintain independence
b. All professional CPAs public practice should maintain independence
c. All professional CPAs in public practice should maintain independence when providing assurance services
d. All professional CPAs in public practice should maintain independence when providing auditing tax, and advisory services
C
43
It refers to the avoidance of facts and circumstances that are so significant that a reasonable and informed third party, having knowledge of all relevant information, including safeguards applied, would reasonably conclude a firm's or a member of the assurance team's integrity, objectivity or professional skepticism had been compromised.
a. Independence in fact
b. Independence in appearance
c. Independence of mind
d. Inherent independence
B
44
When CPAs are able to maintain their actual independence, it is referred to as independence in:
a. Conduct
b. Appearance
c. Fact
d. Total
C
45
If requested to perform a review engagement for a nonpublic entity in which an accountant has an immaterial direct financial interest, the accountant is
a. Independent and, therefore, may issue a review report
b. Not independent and, therefore, may not issue a review report
c. Not independent and, therefore, may issue a review report
d. Not independent and, therefore, may not be associated with the financial statements
C
46
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 identified users
d. For non-assurance engagements
A
## Footnote
[Code of Ethics for Professional Accountants, IFAC]
In the case of audit engagements, it is in the public interest and, therefore, required by this Code of Ethics, that members of audit teams, firms and network firms shall be independent of audit clients.
Network firm: Any entity which is part of a larger structure that is aimed at co-operation and which is: controlled by the firm; or. under common control, ownership or management; or. part of a larger structure that is clearly aimed at profit or cost sharing
47
Which of the following should be independent of the financial statement audit client?
*refer to number 47, page 744*
a. Yes, Yes, Yes
b. Yes, Yes, No
c. Yes, No, No
d. Yes, No, Yes
A
48
For assurance engagements provided to clients that are not audit clients, when the assurance report is expressly restricted for use by identified users, the following should be independent of the client:
*Refer to number 48, page 744*
a. Yes, Yes, Yes
b. Yes, Yes, No
c. Yes, No, No
d. Yes, No, Yes
C
49
Which of the following statements is not correct about independence requirements?
a. For assurance engagements provided to audit client, the members of the assurance team, the firm and network firms are required to be independent of the client.
b. For assurance engagements provided to non-audit clients, the members of the assurance team and the firm are required to be independent of the client.
c. For assurance engagements provided to non-audit clients, where the distribution of the assurance report is limited only to specified users, the members of the assurance team are required to be independent of the client.
d. For assurance engagements provided to non-audit clients, where the distribution for the assurance report is limited only to specified users, the firm should independent of the client.
D
50
Which of the following professional services does not require independence?
a. Direct reporting engagements
b. Examination of financial forecast
c. Tax consultancy services
d. Assertion-based engagements
C
##Footnote
Source: Coursehero
51
For which of the following professional services must CPAs be independent?
a. Management advisory services
b. Audits of financial statements
c. Preparation of tax returns
d. All three of the above
B
52
A CPA firm should decline an offer to perform consulting services engagement if
a. The proposed engagement is not accounting-related
b. Recommendations made by the CPA firm are to subjected to review by the client
c. Acceptance would require the CPA firm to make management decisions for an assurance client
d. Any of the above is true
C
53
The members of the assurance team and the firm should be independent of the assurance client during the period of the assurance engagement. For this purpose, the period of the engagement:
a. Starts when the assurance team begins to perform assurance services and ends when the assurance report is issued.
b. Starts when the assurance team begins to perform assurance services and ends when the fieldwork is completed.
c. Starts when the engagement letter is prepared and ends when the fieldwork is completed.
d. Starts when the engagement letter is prepared and ends when the assurance report is issued.
A
54
This occurs as a result of the financial or other interests of a professional accountant or of an immediate or close family member.
a. Self-interest threat
b. Self-review threat
c. Advocacy threat
d. Familiarity threat
A
55
This occurs when, because of a close relationship, a professional accountant becomes too sympathetic to the interests of others.
a. Self-interest threat
b. Self-review threat
c. Advocacy threat
d. Familiarity threat
D
56
According to the Code of Ethics, compliance with fundamental principles is potentially affected by self-interest, self-review, advocacy, familiarity and intimidation threats. Which of the following best describes "advocacy threat"?
a. This occurs when a firm or a member of the assurance team could benefit from financial interest in an assurance client.
b. This occurs when any product or judgement of a previous engagement needs to be re-evaluated in reaching conclusions on the assurance engagement.
c. This occurs when a member of assurance team was previously aa director or officer of a the assurance client.
d. This occurs when a firm, or a member of the assurance team promotes, or may be perceived to promote, an assurance client's position or opinion to the point that objectivity may, or may be perceived to be, compromised.
D
57
This occurs when any product or judgement of a previous assurance engagement or non-assurance engagement needs to be revaluated in reaching conclusions on the assurance engagement or when a member of the assurance team was previously a director or officer of the assurance client, or was a employee in a position to exert direct and significant influence over the subject matter if the assurance engagement.
a. Self-interest threat
b. Self-review threat
c. Advocacy threat
d. Familiarity threat
B
58
This threat occurs when a member of the assurance team may be deterred from acting objectively and exercising professional skepticism by threats, actual or perceived, from the directors, officers or employees of an assurance client.
a. Intimidation threat
b. Familiarity threat
c. Advocacy threat
d. Self-interest threat
A
59
Which of the following circumstances would least likely create self-interest threat?
a. Contingent fees relating to assurance engagements.
b. A direct financial interest or material indirect financial interest in an assurance client.
c. A loan or guarantee to or from an assurance client or any of its directors or officers.
d. Having a close personal relationship between a member of the assurance team and the assurance client, its directors, officers or employees.
D
## Footnote
"D" is a familiarity threat.
60
Which of the following would 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 relationships with an assurance client.
d. Pressure to reduce inappropriately the extent of work performed in order to reduce fees.
D
61
Which of the following would most likely create self-review threat?
a. Financial interest in a client.
b. Litigation involving professional accountant and a client.
c. A former partner joins the assurance client.
d. A former officer of a client is now a member of the assurance team.
D
62
Examples of circumstances that may create self-review threat do not include
a. Preparation of original data used to generate financial statements or preparation of other records that are the subject matter of the assurance engagement
b. A member of the assurance team being, or having recently been, an employee of the assurance client in a position to exert direct and significant influence over the subject matter of the assurance engagement
c. Performing services for an assurance client that directly affect the subject matter of the assurance engagement
d. Potential employment with an assurance client.
D
63
Which of the following is an example of an intimidation threat that may affect the independence of the professional accountant?
a. Preparation of original data used to generate financial statements or preparation of other records that are the subject matter of the assurance engagement.
b. Threat of replacement over disagreement in the application of an accounting principle.
c. Dealing in, or being a promoter of, share or other securities in an audit client.
d. A member of the assurance team having an immediate family member or close family member who is a director or officer of the assurance client
B
## Footnote
[Code of Ethics for Professional Accountants, IFAC]
Examples of circumstances that create intimidation threats for a professional accountant in public practice include:
- A firm being threatened with dismissal from a client engagement.
- An audit client indicating that it will not award a planned non-assurance contract to the firm if the firm continues to disagree with the client’s accounting treatment for a particular transaction.
- A firm being threatened with litigation by the client.
- A firm being pressured to reduce inappropriately the extent of work performed in order to reduce fees.
- A professional accountant feeling pressured to agree with the judgment of a client employee because the employee has more expertise on the matter in question.
- A professional accountant being informed by a partner of the firm that a planned promotion will not occur unless the accountant agrees with an audit client’s inappropriate accounting treatment.
64
Acting for an audit client in the resolution of a dispute or litigation would most likely create
a. Self-interest threat
b. Intimidation threat
c. Advocacy threat
d. Familiarity threat
C
65
The preparation of accounting records or financial statements for an audit client will most likely create
a. Self-interest threat
b. Self-review threat
c. Intimidation threat
d. Familiarity threat
B
66
Using the same senior personnel on an assurance engagement over a long period of time would most likely create
a. Intimidation threat
b. Advocacy threat
c. Familiarity threat
d. Self-interest threat
C
## Footnote
[Code of Ethics for Professional Accountants, IFAC]
Examples of circumstances that create familiarity threats for a professional accountant in public practice include:
- A member of the engagement team having a close or immediate family member who is a director or officer of the client.
- A member of the engagement team having a close or immediate family member who is an employee of the client who is in a position to exert significant influence over the subject matter of the engagement.
- A director or officer of the client or an employee in a position to exert significant influence over the subject matter of the engagement having recently served as the engagement partner.
- A professional accountant accepting gifts or preferential treatment from a client, unless the value is trivial or inconsequential.
- Senior personnel having a long association with the assurance client
67
Accepting gifts or undue hospitality from an assurance client would most likely create
a. Familiarity threat
b. Self-review threat
c. Advocacy threat
d. Intimidation threat
A
68
Which of the following circumstances would least likely create familiarity threat?
a. A member of the assurance team having an immediate family member or close family member who is a director or officer of the assurance team
b. A member of the assurance team having an immediate family member of close family member who, as an employee of the assurance client, is in apposition to exert direct and significant influence over the subject matter of the assurance engagement.
c. A former partner of the firm being a director, officer of the assurance client or an employee in a position to exert direct and significant influence over the subject matter of the assurance engagement
d. A former director or officer of the assurance client joins the assurance team
D
## FOOTNOTE
"D" is a Self-review threat
69
When the total fees generated by an assurance client represent a large proportion of a firm's total fees, the dependence on that client or client group and concern about the possibility of losing the client will most likely create:
a. Self-interest threat
b. Self-review threat
c. Intimidation threat
d. Familiarity threat
A
## FOOTNOTE
[Code of Ethics for Professional Accountants]
Examples of circumstances that create self-interest threats for a professional accountant in public practice include:
- A member of the assurance team having a direct financial interest in the assurance client.
- A firm having undue dependence on total fees from a client.
- A member of the assurance team having a significant close business relationship with an assurance client.
- A firm being concerned about the possibility of losing a significant client.
- A member of the audit team entering into employment negotiations with the audit client.
- A firm entering into a contingent fee arrangement relating to an assurance engagement.
- A professional accountant discovering a significant error when evaluating the results of a previous professional service performed by a member of the professional accountant’s firm.
70
The provision of services by a firm or network firm to an audit client that involve the design and implementation of financial information technology systems that are used to generate information forming part of a client's financial statements may most likely create.
a. Self-interest threat
b. Self-review threat
c. Intimidation threat
d. Familiarity threat
B
71
When threats to compliance with the fundamental principles that are other than those clearly insignificant are identified, the professional accountant should
a. Continue the engagement but with heightened level of professional skepticism
b. Downgrade the nature of engagement to one that does not require compliance with the fundamental principles
c. Assign more experienced staff to the engagement
d. Apply appropriate safeguards to eliminate threats or to reduce them to an acceptable level
D
72
Safeguards fall into two broad categories. Safeguards created by the profession, legislation or regulation does not include:
a. Educational, training and experience requirements for entry into the profession
b. Continuing professional development requirements
c. Corporate governance regulations
d. Documented policies regarding identification of threats to compliance with the fundamental principles
D
## Footnote
Safeguards created by the profession, legislation or regulation include:
- Educational, training and experience requirements for entry into the profession.
- Continuing professional development requirements.
- Corporate governance regulations.
- Professional standards.
- Professional or regulatory monitoring and disciplinary procedures.
- External review by a legally empowered third party of the reports, returns, communications or information produced by a professional accountant.
73
When the safeguards available are insufficient to eliminate the threats to independence or to reduce them to an acceptable level, or when a firm chooses not to eliminate the activities or interest creating the threat, the only course of action available will be the
a. Issuance of an adverse opinion
b. Issuance of qualified opinion or disclaimer of opinion
c. Issuance of unmodified opinion with explanatory paragraph
d. Refusal to perform, or withdrawal from, the assurance engagement
D
74
Firm-wide safeguards in the work environment may include:
a. Leadership of the firm that stresses the importance of compliance with the fundamental principles
b. Having appropriate body independent of management appoint the external auditor.
c. The creation of a corporate governance structure that provides appropriate oversight and communications regarding the firm's services
d. Professional standards`
A
75
Safeguards within the client's systems and procedures may include:
a. Involving another firm to perform or re-perform part of the assurance engagement
b. Discussing independence issues with the audit committee or others charged with governance
c. Policies and procedures to emphasize the assurance client's commitment to fair financial reporting
d. Involving an additional professional accountant to review the work done or otherwise advise as necessary
C
76
The rotation of senior accounting personnel can be regarded as a safeguard
a. Created by the profession
b. Created within the client's system and procedures
c. Created in the work environment
d. Created within the business community
C
77
Which of the following is not one of the safeguards in the work environment?
a. Using different partners and teams with separate reporting lines for the provision of non-assurance services to an assurance client.
b. Rotation of senior personnel
c. Documented internal policies and procedures requiring compliance with the fundamental principles
d. Continuing professional education requirements
D
78
Which of the following statements about CPA's financial interest in client is incorrect?
a. Immaterial indirect financial interest impairs the CPA's independence
b. Immaterial direct financial interest impairs the CPA's independence
c. Material direct financial interest impairs the CPA's independence
d. Material indirect financial interest impairs the CPA's independence
A
79
Which of the following safeguards could address the threat created by a material direct financial interest in an assurance client?
a. Disposal of financial interest in total, Disposal of sufficient amount of financial interest to make it immaterial, Removing the member of the assurance team from the assurance client
b. Disposal of financial interest in total, Disposal of sufficient amount of financial interest to make it immaterial
c. Disposal of sufficient amount of financial interest to make it immaterial
d. Disposal of financial interest in total, Removing the member of the assurance team from the assurance client
D
80
If a firm, or a network firm, has a material direct financial interest in an audit client of the firm, the self-interest threat created would be so significant no safeguards could reduce the threat to an acceptable level. The action appropriate to permit the firm to perform the engagement would be to
a. Dispose of the financial interest
b. Dispose of a sufficient amount of it so that the remaining interest is no longer material
c. Either a or b
d. Neither a nor b
A
81
If a member of the assurance team, or their immediate family member, has a direct financial interest, or a material indirect financial interest, in the assurance client, the self-interest threat created would be so significant. Consequently, the professional accountant should apply appropriate safeguards in order to eliminate the threat or reduce it to an acceptable level. Which of the following safeguards would not be appropriate?
a. Dispose of the direct financial interest prior to the individual becoming a member of the assurance team
b. Dispose of the indirect financial interest in total prior to the individual becoming a member of the assurance team
c. Dispose of a sufficient amount of the indirect financial interest so that the remaining interest is no longer material prior to the individual becoming a member of the assurance team
d. Limit the participation of the member of the assurance team
D
82
Close business relationships can be regarded as an indirect financial interest and therefore would impair the professional accountant's independence unless
a. The amount is immaterial
b. The relationship is insignificant
c. Both a and b
d. Neither a nor b
C
83
Close family members do not include:
a. Parents
b. Siblings
c. Non-dependent child
d. Spouse
D
84
Immediate family members include
a. Parent
b. Siblings
c. Non-dependent child
d. Spouse
D
85
Which of the following is required for loans not to impair the independence of the professional accountants?
a. The loan must not be material; The loan must be obtained under normal lending procedures, terms and requirements; The client must be a financial institution
b. The loan must not be material
c. The loan must not be material; The loan must be obtained under normal lending procedures, terms and requirements
d. The loan must be obtained under normal lending procedures, terms and requirements; The client must be a financial institution
A
86
The following loans and guarantees will not impair independence, except:
a. A loan from, or a guarantee thereof by, an assurance client that is a bank or a similar institution, to the firm, provided the loan is immaterial to both the firm and the assurance client
b. A loan from, or a guarantee thereof by, an assurance client that is a bank or a similar institution, to a member of the assurance team, provided the loan is immaterial to both the firm and assurance client
c. Deposits made by, or brokerage accounts of, a firm or a member of the assurance team with an assurance client that is a bank, broker or similar institution, provided the deposit or account is held under normal commercial terms
d. A loan to an assurance client that is not a bank or similar institution
D
87
An auditor's independence is considered impaired if the auditor has:
a. An immaterial, indirect financial interest in a client
b. An outstanding balance on a credit card issued by a client
c. An automobile loan from a client bank, collateralized by the automobile
d. A joint, closely held business investment with the client that is material to the auditor's net worth
D
88
A self-interest threat may be created, if fees due from an assurance client for professional services remain unpaid for a long time. Hence, professional fees for prior year's engagements must be paid before
a. The client engages the services of the professional accountant to audit the current year's financial statements
b. The professional accountant formulates an opinion on the current year's financial statements
c. The audit report on the current year's financial statements is issued
d. The commencement of the current year's audit engagement
C
89
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
C
90
An auditor would be considered independent in which of the following instances?
a. The auditor's checking account is held at a client financial institution
b. The auditor is also an attorney who acts at the client's general counsel
c. An employee of the auditor donates service as treasurer of a charitable organization that is a client
d. The client owes the auditor fees for two consecutive annual audits
A
91
Which of the following activities would least likely impair the professional accountant's independence?
a. Serving as an officer or director of an audit client
b. Determining which recommendation of the firm should be implemented
c. Being an honorary board member of an audit cleint
d. Reporting, in a management role, to those charged with governance
C
## FOOTNOTE
There are two basic reasons why a person gets the “honorary” title. S/he may have been of great service to the organization and/or the people it serves; or, s/he may be very well known, respected and influential but has done LITTLE or NOTHING for the organization and its constituency.
92
Which of the following would least likely be considered a violation of the independence?
a. Receiving a gift from an assurance client
b. Providing tax preparation services
c. Providing legal services to an assurance client in legal dispute
d. Providing bookkeeping services to an audit client that is listed in the stock exchange
B
93
The Code of Ethics requires a cooling off period of how long before a member of an audit team can work for a client in a key management position?
a. One year
b. Two years
c. Three years
d. It is not specified, rather it is left to the individual auditor's discretion
A
94
An engagement partner who is rotated in the audit of financial statements of listed entity can only participate in the audit engagement for the same client after a period of
a. Two years
b. Three years
c. Five years
d. Twelve months
C
## Footnote
[pg. 650]
Engagement partner: Time on period 7 years; Cooling off period 5 years
Quality control reviewer: Time on period 7 years; Cooling off period 3 years
Other Key Audit Partner Role: Time on period 7 years: Cooling off period 2 years
95
A CPA firm should decline an offer to perform management advisory services engagement for a nonpublic company if
a. The CPA firm audits the financial statements of a subsidiary of the prospective client
b. Recommendations made by the CPA firm are to be subject to review by the client
c. Acceptance would require the CPA firm to make management decisions for an audit client
d. The proposed engagement is not accounting related
C
96
Which of the following will not normally impair the auditor's independence?
a. An immediate family member of a member of the assurance team is a director, an officer or an employee of the assurance client in a position to exert direct and significant influence over the subject matter of the assurance engagement
b. A member of the assurance team participates in the assurance engagement while knowing, or having reasons to believe, that he or she is to, or may, join the assurance client some time in the future
c. A partner or employee of the firm serves as an officer or as a director on the board of an assurance client
d. A partner or an employee of the firm receives a token gift from an assurance client
D
## Footnote
Gift is immaterial in amount
97
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
C
98
Contingent fee pricing of public accounting services is
a. Never restricted in public accounting practice
b. Considered an act discreditable to the profession
c. Always strictly prohibited in the public accounting practice
d. Prohibited for clients for whom assurance services are provided
D
## Footnote
[Code of Ethics for Professional Accountants, IFAC]
Contingent fees are widely used for certain types of non-assurance engagements. They may, however, create threats to compliance with the fundamental principles in certain circumstances. They may create a self-interest threat to objectivity.
99
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 to perform the service
d. Attainment of specific findings
D
100
An auditor should not undertake an engagement of his fee is to be based upon
a. A percentage of audited net income
b. Per diem rates plus expenses
c. A fixed amount
d. The complexity of the service rendered
A
101
In which of the following situations would a public accounting firm have violated the Code of Ethics in determining its fee?
a. A fee which is based upon the nature of the engagement rather than upon the actual time spent on the engagement
b. A fee based on the degree of responsibility that the service entails
c. A fee based on whether or not the auditor's report leads to the approval of client's application for bank loan
d. A fee that will be established as a result of a bankruptcy proceedings
C
102
Fees are not to be regarded as contingent if these are
a. Computed as a percentage of the client's total revenue
b. Computed as a percentage of the amount that the company can save from its tax return
c. Dependent on the approval of a bank loan
d. Based on judicial or other government agency proceedings
D
103
The provision of legal services by a firm, or network firm, to an entity that is an audit client may create
a. Advocacy threat
b. Self-review threat
c. None of the above
d. Advocacy threat, Self-review threat
D
104
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 would situation most likely create
a. Self-interest threat
b. Self-review threat
c. Intimidation threat
d. Familiarity threat
A
105
When the question arises whether a CPA firm may do both bookkeeping and auditing services for the same client, the Code of Professional Ethics
a. Allows it provided the client is not a public interest entity and the services are purely clerical in nature
b. Prohibiits it
c. Is silent and allows each firm to determine the answer
d. None of the above
A
106
The Code of Ethics permits a CPA firm to do both bookkeeping and auditing for the same client if certain requirements are satisfied. Which of the following is not one of those requirements?
a. The client must accept full responsibility for the financial statements, and must be sufficiently knowledgeable about the activities, financial condition, and the accounting principles so that client can accept that responsibility
b. The client is required to file an annual report with the Securities and Exchange Commission and the Philippine Stock Exchange
c. The CPA must not assume the role of employee or of manager
d. The client is not a public interest entity
B
107
A professional accountant in public practice to whom the existing accountant or the client of existing accountant has referred audit, accounting, taxation, consulting or similar appointments, or who is consulted in order to meet the needs of the client is called:
a. A management consultant
b. A receiving accountant
c. An expert
d. A successor auditor
B
108
A successor auditor is required to communicate with the previous auditor. The primary concern in this communication is
a. Information which will help the successor auditor determine whether there are issues about management integrity
b. To learn about client by examining predecessor's working papers
c. To enable successor auditor to perform a more efficient audit
d. To save successor auditor time and money in gathering data
A
109
Although it is possible to take the extreme position that anything affecting either independence in fact or in appearance must be eliminated to ensure a high level of respect in the community, the difficulty with this position is that it is likely to restrict significantly
a. The services offered to clients
b. The freedom of CPAs to practice in the traditional manner
c. The ability of CPA firms to hire competent staff
d. All three of the above
D
110
The objective of the Philippine Accountancy Act of 2004 includes
a. The standardization and regulation of accounting education
b. Governing 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
D
111
Which of the following does not constitute a practice of accountancy?
a. A person holding out himself as one skilled in the knowledge, 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 representing his/her employer before government agencies on tax and other accounting related matters
c. A person in educational instiution teaching accounting, auditing, busienss law, taxation or other technically related subjects
d. A person is appointed as a marketing director of a government owned and controlled corporation
D
112
The following statements relate to the Board of Accountancy. Which statement is correct?
a. The Board consists of a Chairman and six members
b. The chairman and members are appointed by the President of the Philippines upon recommendation of PICPA
c. The Professional Regulation Commission may remove from the Board any member whose certificate to practice has been removed or suspended
d. Majority of the board members shall as much as possible be in public practice
A
## Footnote
b. The chairman and members are 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 the APO
c. The president, upon recommendation of the Commission, after giving the concerned member an opportunity to defend himself, may suspend or remove any member on the following grounds:
- neglect of duty/incompetence
- violation or tolerance of any violation of the Act
- final judgment of crimes
- manipulation of CPALE
d. The four sectors in the practice of accountancy shall as much as possible be equitably represented in the Board
112
The Professional Regulatory Board of Accountancy shall be composed of a chairman and six (6) members to be appointed by the <1> from a list of three (3) recommendees for each position and ranked by <2>, from a list of five (5) nominees for each position submitted by <3>
a. Commission; PICPA; President of the Philippines
b. President of the Philippines; PICPA; Commission
c. Commission; Commission; PICPA
d. President of the Philippines; Commission; PICPA
D
113
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 reccommendees 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 service 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
C
## FOOTNOTE
[Sec. 4, P.D. No. 692]
The Board of Accountancy and its composition. — The Board of Accountancy shall be composed of a chairman and six (6) members to be appointed by the President of the Philippines upon recommendation of the Professional Regulation Commission.
The Board shall elect a VICE-chairman from among its members for a term of one year. The Chairman shall preside in all meetings of the Board and in the event of a vacancy in the office of the Chairman, the vice-chairman shall assume such duties and responsibilities until the end of the term or until such time as a Chairman is appointed.
114
Which of the following is not one of the qualifications of the members of the Board of Accountancy?
a. He/She must be a natural-born citizen and a resident of the Philippines
b. He/She must be a duly Certified Public Accountant with at least ten years of experience in practice of public accountancy
c. 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
d. He/She must not be a director or officer of PICPA at the time of this appointment
B
## Footnote
** Any sector of accountancy
115
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 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
A
## Footnote
**Must be a natural-born citizen and a resident of the Philippines
116
Which statement is correct regarding the term of office of the chairman and the members of the Board of Accountancy (BOA)?
a. No person who has served three (3) successive complete terms shall be eligible for reappointment until the lapse of one (1) year
b. Appointment to fill up an unexpired term is to be considered a complete term
c. A person may serve in the Board of Accountancy for eight consecutive years
d. No person shall serve in the Board for more than 10 years
C
117
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 violated RA 9298
d. A member of the Board has been sued of crimes involving moral turpitude
D
## Footnote
Grounds for Suspension or Removal of Members of the BOA:
1. Neglect of duty/incompetence
2. Violation or tolerance of any violation of this Act and its implementing rules and regulations on the CPA's Code of Ethics and the technical and professional standards of practice for CPAs
3. Final judgment of crimes involving moral turpitude
4. Manipulation or rigging of the CPA's licensure examination results, disclosure of secret and confidential information in the examination questions prior to the conduct of said examination or tampering of grades
118
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 issue, suspend, revoke, or reinstate the certificate of registration for the practice of the accountancy profession
c. To prescribe and/or adopt a code of ethics for the practice of accountancy
d. To adopt an official seal of the Commission
D
119
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 prepare questions for the CPA licensure examination which shall strictly within the scope of the syllabi of the subjects for examination
c. To investigate violations of the RA 9298
d. To supervise PICPA
D
120
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 conduct an oversight into the quality of audits of financial statements through a review of the quality control measures
c. To delegate its power and function to determine and prepare test questions for the CPA licensure examination
d. 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
## Footnote
[Sec. 5, P.D. No. 692]
Functions of the Board of Accountancy. — The Board of Accountancy shall have the following functions:
a) To determine and prescribe minimum requirements leading to the admission of candidates to the certified public accountant's examinations;
b) To determine and prepare the contents of licensure examinations; score and rate the examination papers and submit the results thereof to the Commission within two hundred forty (240) days after the last examination day unless otherwise directed by the Commission;
c) To look from time to time into the conditions affecting the practice of the accountancy profession and whenever necessary, adopt such measures as may be deemed proper for the enhancement and the maintenance of high professional, ethical and technical standards;
d) To investigate violations of the Accountancy Law and the rules and regulations promulgated thereunder and for this purpose to issue summons, subpoena and subpoena duces tecum to violators or witnesses thereof and compel their attendance to such investigation or hearings;
e) To promulgate decisions on such administrative cases subject to review by the Commission;
f) After due process, to suspend, revoke, or reissue certificates of registration for causes provided for by law or by the rules and regulations promulgated therefor;
g) To perform such other functions and duties as may be deemed necessary to effectively implement policies with respect to the regulation and practice of the profession.
121
The auditing standard setting body created by the PRC is known as
a. Financial Reporting Standards Council (FRSC)
b. Auditing Standards and Practices Council (ASPC)
c. Accounting Standards Council (ASC)
D. Auditing and Assurance Standards Council (AASC)
D
## Footnote
The Auditing and Assurance Standards Council (AASC) was created in December 2005, under the Philippine Accountancy Act of 2004, by the Professional Regulation Commission upon the recommendation of the Board of Accountancy (BOA). The AASC is tasked to assist the BOA to establish and promulgate auditing standards in the Philippines.
122
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
C
## Footnote
a. The AASC shall be composed of fifteen members with a chairman
b. The Chairman and members of the FRSC and AASC shall be appointed by the Commission upon the recommendation of the BOA in coordination with the APO
d. Not mentioned
123
The sector that is most represented in theAASC is the
a. Commerce and Industry
b. Academe
c. Government
d. Public Practice
D
124
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 shall be 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
D
125
Which of the following government regulatory agencies is not represented in the AASC?
a. Securities and Exchange Commission
b. Bureau of Internal Revenue
c. Banko Sentral ng Pilipinas
d. Board of Accountancy
B
126
Educational Technical Council (ETC) differs from accounting and auditing standard setting councils in that
a. ETC is composed of 15 members with a chairpman
b. The chairman and members of ETC are appointed by the COmmission
c. The chairman and members of ETC have a three year term renewable for another term
d. The chairman of ETC must have been or presently a senior accounting practitioner in Academe/Education
D
127
Which of the following is not one of the functions of ETC (Educational Technical Council)?
a. Recommend to the Board 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 no observed the quality control measures or who have not complied the the standards of quality prescribed for the practice of public accountancy
b. Determine a minimum standard curriculum for the study of accountancy to be implemented in all schools offering BS Accountancy
c. Establish teaching standards, including the qualifications of the members of the faculty of schools and colleges of accountancy
d. 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
A
128
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. Insanity is not a ground for proceeding against a CPA
c. 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
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
C
129
The following are 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
D
130
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. Both A and B
d. Neither A nor B
C
131
The Board of Accountancy shall submit to the PRC the ratings obtained by each candidate within _____ days after the examination, unless extended for just cause
a. 10
b. 5
c. 2
d. 3
A
132
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 in an educational institution offering or conducting review classes in preparation for CPA Board Examination
c. He/She enrolled the subjects given in the CPA Board Examination in the regular course offering
d. He/She is ready to take another set of examination
A
133
Which of the following shall be issued to examinees who pass the CPA licensure examination?
a. Certificate of accreditation
b. Personal identification card
c. Certificate of registration and professional identification card
d. Certificate of full compliance and PRC ID
C
134
Which of the following is one of the reasons for not issuing a certificate of registration to a successful examinee? The individual:
a. Is of unsold mind
b. Had been guilty of immoral and dishonorable conducted
c. Had been convicted by a court of a criminal offense involving moral turpitude
d. All of the given choices
D
135
A CPA whose certificate of registration has been revoked:
a. Can no longer be reinstated
b. Is automatically reinstated as a CPA by the PRC after two years if he has acted in an exemplary manner
c. May be reinstated by the Professional Regulation Commission after two years if he has acted in an exemplary manner
d. May be reinstated as a CPA by the Board of Accountancy after two years if he has acted in an exemplary manner
D
136
A Professional Identification Card bearing the registration number, date of issuance, expiry date, duly signed by the chairperson of the Commission, shall be issued to every registrant renewable every
a. Two years
b. Three years
c. Four years
d. Five years
B
137
RA 9298, requires that whenever a CPA signs a document in connection with the practice of his/her profession, he or she must indicate the
a. Certificate of Registration number; Social Security Number; Professional Tax Receipt Number
b. Certificate of Registration number; Professional Tax Receipt Number
c. Social Security Number
d. Certificate of Registration number
B
138
The Board of Accountancy may issue certificate of registration and professional identification card to any success 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
B
## Footnote
[sec. 23, R.A. 9298, PRC Website]
"That registration shall not be refused and a name shall not be removed from the roster of CPAs on conviction for a political offense or for an offense which shall not, in the opinion of the Board, either from the nature of the offense, or from the circumstances of the case, disqualify a person from practicing accountancy under RA No. 9298"
139
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
A
140
The following statements relate to roster of CPAs. Identify the incorrect statement
a. A roster showing the names and place of a business of all registered CPAs shall be prepared and updated by the Board
b. Copies of the roster shall be made available to any party as may be deemed necessary
The Board, upon approval of the Commission, may delegate the preparation of this roster to the APO
d. The publication of the roster in the official gazette or in any major news paper of public circulation shall be deemed compliance with the requirement of RA 9298
D
141
Any person who shall violate any of the provisions of the Accountancy Act or any of its implementing rules and regulations promulgated by the Board of Accountancy subject to the approval of the PRC, shall upon conviction, be punished by
a. Lethal injection
b. A fine of not more than P50,000
c. Imprisonment for a period not exceeding two years
d. A fine of not less than P50,000 or by imprisonment for a period not exceeding two years or both
D
142
Who is not permitted under 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
A
142
A certificate of accreditation shall be issued to certified public accountants in public practice only upon showing,, in accordance with rules and regulations promulgated by the Board and approved by the Commission, that such registrant has acquired how many years of meaningful experience in any of the areas of public practice?
a. One
b. Two
c. Three
d. Four
C
143
Below are names of four CPA firms and pertinent facts relating to them. Unless otherwise indicated, the individuals named are CPAs and partners and there are no other partners. Which firm name and facts indiacate a violation of the Philippine Accountancy Act of 2004?
a. Binhi, Binti and Bigti, CPAs (Bigti died about 5 years ago; Binhi and Binti are continuing the firm
b. Tiu and Ramos, CPAs (The name of R. Hermosilla, CPA, a third partner is omitted from the firm name)
c. BItay and Bigo, CPAs (Bitay died about three years ago; Bigo is continuing the firm as a sole practiioner)
d. J. Vicencio and Co., CPAs (J. Vicencio has ten other partners who are all CPAs)
C
144
CPAs, firms and partnerships of CPAs engaged in the practice of public accountancy including partners and staff members threof, shall register with the Commission and the Board, such registration to be renewed every three years on or before _____
a. April 15
b. December 31
c. September 30
d. May 31
C
145
If the application for registration to practice public accountancy of Vicencio and Co. CPAs, was approved on April 30, 20x6, the registration shall expire on
a. September 30, 20x8
b. September 30, 20x9
c. April 30, 20x9
d. December 31, 20x8
D
## Footnote
Validity of registration for accreditation is for a period of 3 years (renewable after 3 years on or before September 30 on the year of expiry). The registration of applicants approved during any month of the year shall expire on December 31 on the third year following its approval.
146
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. Philippine Institute of CPAs (PICPA)
c. Association of CPAs in Public Practice (ACPAPP)
d. Association of CPAs in Education (ACPAE)
B
## Footnote
The Philippine Institute of Certified Public Accountants (CPAs) or PICPA is a non-stock, non-profit organization duly recognized and accredited by the Professional Regulation Commission (PRC) as the Accredited Integrated Professional Organization (AIPO) for Accountancy in the Philippines.
147
The PICPA shall renew its certificate of accreditation once every
a. Two years
b. Three years
c. Four years
d. Five years
B
148
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 the Board in coordination with APO
d. The chairperson and members of the Council shall have a term of three years renewable for another term
B
149
For every CPE seminars or conventions attended, participant CPAs shall get
a. One credit unit per hour
b. two credit units per hour
c. three credit units per hour
d. five credit units per hour
A
150
A registered professional shall be permanently exempted from CPE requirements upon reaching the age of
a. 55 years old
b. 65 years old
c. 60 years old
d. 70 years old
B
151
A registered CPA who is working or practicing his/her profession or furthering abroad shall be temporarily exempted from the compliance with CPE requirements during the period of his/her stay abroad, provided that prior to the date of renewal he/she has been out of the country for at least
a. Four years
b. Three years
c. Two years
d. One year
C
152
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 nevessary 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
B
153
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 requirsite accounting and auditing standards and rules
c. CPA's accreditation to
practice public accountancy
d. Fair presentation of financial statements audited
B
154
Special/temporary permit may be issued by the Board to the following persons except:
a. A foreign CPA called for consultation or specific purpose which is essential for the development of the country and that there are no Filipino CPAs qualified for such consultation or specific purpose
b. A foreign CPA engaged as a professor or lecturer in the fields essential to accountancy education in the Philippines
c. A foreign COA with specialization in any branch of accountancy and his/her service is essential for the advancement of accountancy in the Philippines
d. A foreign CPA who can prove that the country of which he or she is a citizen admits citizens of the Philippines to the practice of the same profession without restriction
D
Footnote
"D" is allowed to practice. However, he is not covered under Sec. 24 "Temporary/Special Permits"
155
Which of the following statements about working paper is correct?
a. Working papers prepared by a CPA including those prepared and submitted by the client are the personal property of the auditor and the client has no right to these working papers
b. Working papers may substitute the client's accounting records
c. Working papers are subject to confidentiality rules and they cannot be shown to third parties in any circumstances
d. Working papers should not serve as a reference source for the clients accounting records
A
156
The following statements relate to RA 9298. Identify the incorrect statements
a. Implementing rules and regulations shall take effect 15 days following its publication in the official gazette or in any daily newspapers of general circulation
b. Any person who shall violate any of the provisions of RA No. 9298 or the IRR shall upon conviction, be punished by a fine of not more than P50,000.00 or by imprisonment for a period not exceeding 2 years or both
c. The board may after the expiration of 2 years from the date of revocation of Certificate of registration may reinstate the revoked certificate
d. All graduates with bachelors degree major in Accounting shall be allowed to take the CPA Licensure examination within two years from the effectivity of RA 9298 or until May 2006
B
## Footnote
Any person who shall violate any of the provisions of RA No. 9298 or the IRR shall upon conviction, be punished by a fine of not LESS than P50,000.00 or by imprisonment for a period not exceeding 2 years or both
157
Which of the following functions to promulgate auditing standards?
a. national Accredited Professional Oragzation
b. Financial Reporting Standards Council
c. ACPAPP
d. Auditing and Assurance Standards Council
D
158
Rio, CPA is applying for renewal of his professional license. She is exempted from the CPE (Continuing Professional Education) requirements
a. If she is at least 65 years old
b. If she is working abroad and he has been out of the country for at least two years immediately prior to the date of renewal
c. Either A or B
d. Under no circumstances
C
