Code of Ethics for Professional Accountants

Question 1

A director of the client has been a member of the assurance team or partner of the firm. This situation least likely creates which threat

Answer 1

Advocacy Threat

Question 2

Does having custody of the client’s assets threaten independence

Answer 2

Yes, The PA shall not take custody of the client’s assets unless required by the law

Question 3

Professional authority in the context of public accounting simply means

Answer 3

Trust and reliance of the public to the accounting profession on matters involving accounting and auditing

Question 4

Types of threats identified in the Conceptual Framework

Answer 4

1. Self-Interest Threat: threat that a financial or other interest will inappropriately influence a judgement
2. Self-Review Threat: threat the PA will not appropriately evaluate the results of a previous judgement made
3. Advocacy Threat: threat that PA will promote a clients position to the point objectivity is compromised
4. Familiarity Threat: threat due to a long or close relationship with client that sympathy will cloud their judgement.
5. Intimidation Threat: threat that PA will be deterred from acting objectively because of actual or perceived pressures

Question 5

A threat to objectivity may be created when a professional accountant in public practice performs services for clients whose interest are in conflict with each other. In addition, this could also pose a threat to

Answer 5

Confidentiality

Question 6

The essence of due care is that the auditor should not be guilty of

Answer 6

Negligence

Question 7

A CPAs retention of client records as a means of enforcing payment of an overdue audit fee is an action that is

Answer 7

Discreditable to the profession

Question 8

Independence of Mind

Answer 8

State of mind that permits the expression of conclusion without being affected by influences that compromise professional judgement. Also known as Internal Independence

Question 9

What are the Fundamental Principles of Ethics for Professional Accountants

Answer 9

1. Confidentiality
2. Objectivity
3. Professional Behavior
4. Integrity
5. Competence and Due Care

Question 10

Which parties are included in an Assurance team

Answer 10

1. All members of the engagement team for the assurance engagement
2. All others within a firm who can directly influence the outcome of the assurance engagement
3. All those within a network firm who can directly influence the outcome of the engagement

Question 11

Fundamental Principles: INTEGRITY

Answer 11

To be straightforward and honest in all professional judgement and business relationships

Question 12

Three Step Approach of the Conceptual Framework

Answer 12

1. Identify the Threats
2. Evaluate the Threats
3. Addressing the Threats

Question 13

The objectives of the accountancy of profession could be attained if the following basic needs are met

Answer 13

1. Credibility
2. Professionalism
3. Quality of Services
4. Confidence

Question 14

A combination of impartiality, intellectual honesty and a freedom from conflict of interest

Answer 14

Objectivity

Question 15

Does the Code of Ethics prohibit professional accountants from accepting gifts

Answer 15

No, gifts which are clearly insignificant and will not affect the professional accountant’s judgement may be accepted

Question 16

Which parties when committed are considered as noncompliance with laws and regulations

Answer 16

1. Client
2. Those charged with governance of the client
3. Management of a client
4. Other individuals working for under the direction of a client

Question 17

Which of the following is the least required in attaining professional competence?
a. High Standard of general education
b. Period of meaningful experience
c. Continuing awareness of development in accountancy profession
d. specific education

Answer 17

C. Continuing awareness of development in accountancy profession.

Question 18

Advertising as defined in the Code of Ethics

Answer 18

The communication to the public of information as to the services or skills provided by professional accountants in public practice with a view to procuring professional business

Question 19

What is inducement

Answer 19

Improperly influencing an individual’s behaviour if it causes the individual to act in an unethical manner.

Question 20

How does the Code of Ethics define public interest

Answer 20

The collective well being of the community of people and institutions the professional accountant serves

Question 21

What is an Engagement Partner

Answer 21

The partner or other person in the firm who is responsible for the engagement and its performance and for the report that is issued on behalf of the firm and who, were required has the appropriate authority from a professional, legal, or regulatory body

Question 22

Fundamental Principle: COMPETENCE & DUE CARE

Answer 22

To attain and maintain a knowledge and skill at the level required to ensure that client receives competent service and act diligently in accordance with standards

Question 23

Structure of the Code of Ethics

Answer 23

PART 1- Applies to all professional accountants
PART 2- Applies to all professional accountants in business (PAIBs)
PART 3- Applies to all professional Accountants in Public Practice (PAPPs)
PART 4A- Applies to all PAPPs performing audit or review engagements
PART 4B- Applies to all PAPPs performing assurance engagements that are not audit or review engagements

Question 24

Fundamental Principles: OBJECTIVITY

Answer 24

Not to compromise business judgements because of bias, conflict of interest, or undue influence of othes

Question 25

Independence of Appearance

Answer 25

Avoidance of facts and circumstances that are so significant that a reasonable and informed third party would be likely to conclude that a firms or an audit or assurance team member’s integrity, objectivity, or skepticism has been compromised

Question 26

Family and personal relationships between members of the assurance team and a director of the assurance will least likely create which threat

Answer 26

Self-Review Threat

Question 27

Fundamental Principles: PROFESSIONAL BEHAVIOR

Answer 27

Comply with relevant laws and regulations and avoid any conduct that will discredit the profession

Question 28

Fundamental Principles: CONFIDENTIALITY

Answer 28

To respect the confidentiality of information acquired as a result of professional and business relationships. Must be complied with even after the relationship ends

Question 29

Sources of Safeguards include

Answer 29

1. Safeguards provided by the profession
2. Safeguards within the client’s systems, processes, and procedures
3. Safeguards in the work environment

Question 30

The Code of Ethics for Professional Accountants in the Philippines is approved by ___ recommended for adoption by the ___

Answer 30

BOA, PICPA

Question 31

General Characteristics of a Profession

Answer 31

1. Mastery of a particular intellectual skill acquired by training and education
2. Acceptance of a duty to society as a whole
3. Adherence by its members to a common code of values and conduct established by its administrating body, including maintaining an outlook which is essentially objective

Question 32

When addressing threats to fundamental principles, what are the basic safeguards that may be applied by the professional accountant

Answer 32

1. Eliminate the threat
2. Reduce the threat to an acceptably low level
3. In case of professional engagement, decline or withdraw from the engagement

Question 33

When audit client becomes a listed entity in the length of time the lead engagement has served the audit client in that capacity should be considered in determining when the partner should be rotated. However, the partner may continue to serve as the lead engagement partner before rotating off the engagement fo:

Answer 33

Two Additional Years