ASSURANCE ENGAGEMENTS
QUESTIONS:
1. It is the risk that the practitioner expresses an
inappropriate conclusion when the subject matter
information is materially misstated
a. Business risk
b. Assurance engagement risk
c. Detection risk
d. Audit risk
2. The following are assurance engagements,
except a. Reasonable assurance engagement
b. Other assurance engagements
c. Review engagement
d. Tax services
3. Unlike consulting services, assurance services a.
Make recommendations to management
b. Report on how to use information
c. Report on the quality of information
d. Are two-party contracts
4. Auditing is a systematic process that includes all of the
following except:
a. Systematic process
b. Assertions about economic actions and events
c. Objectively obtaining and evaluating assurance
d. Degree of correspondence between assertions
and GAAP
5. The definition of auditing includes both a(an( a.
Documentation process and an evaluation process
b. Evaluation process and a reporting process
c. Investigative process and a reporting process
d. Documentation process and a reporting process
6. Broadly defined, the subject matter of any audit
consists of
a. Financial statements
b. Economic data
c. Assertions
d. Operating data
7. Which of the following refers to an assertion-based
reporting engagement type of assurance engagement?
a. The objective is a reduction in assurance engagement risk
to an acceptable low level as the basis for a positive form of
expression of the practitioner’s conclusion
b. The objective is a reduction in assurance
engagement risk to a level that is acceptable in
the circumstances of the engagement, but
where that risk is greater than for a reasonable
assurance engagement, as the basis for a
negative form of expression of the
practitioner’s conclusion
c. In this type of engagement, the evaluation or
measurement of the subject matter is
performed by the responsible party, and the
subject matter information is in the form of
assertion by the responsible party that is made
available to the intended users
d. In this type of engagement, the practitioner
either directly performs the evaluation or
measurement of the subject matter, or obtains
a representation from the responsible party
that
has performed the evaluation or
measurement that is not available to the
intended users. The
subject matter
information is provided to the intended users
in the assurance report
8. Which of the following statements best describes the
logical relationship among audits, attest engagements,
and assurance engagements?
a. All attest engagements are audits, but not all
audits are attest engagements
b. All assurance engagements, including audits,
involve attestation
c. An audit provides assurance but does not involve
attestation
d. All audits are attest engagements, but not all
attest engagements are audits
9. Which of the following refers to criteria element of
assurance engagement?
a. Benchmarks used to evaluate or measure the
subject matter
b. Information obtained by the practitioner in
arriving at the conclusion on which the opinion
is based
c. Contains a conclusion that conveys the
assurance about the subject matter information
d. The subject matter, and subject matter
information (assertion), of an assurance
engagement
10. Which of the following statements is incorrect regarding
the three party relationship element of assurance
engagement?
a. The intended user is generally, and may not be,
the addressee of the professional accountant’s
report
b. The responsible party and the intended user will
be often be from separate organizations
c. The responsible party may also be one of the
intended users
d. The intended user (s) is (are) always limited to the
addressee of the professional accountant’s
report
11. The subject matter of an assurance engagement may
take many forms, including:
I. Nonfinancial performance or condition II.
Behavior
III. Financial performance or condition
IV. Physical Characteristics
V. Systems and Processes
a. All of the statements
b. I, II and III only
c. III, IV and V only
d. I and III only
12. The characteristics for determining whether criteria are
suitable include:
I. Relevance
II. Reliability
III. Completeness
IV. Neutrality
V. Comparability
VI. Feedback Value
a. All of the statements
b. I, II, III and IV only
c. I and III only
d. I, II, III, IV and V only
13. Which of the professional accountant has obtained
sufficient appropriate evidence to conclude that the
subject matter conforms in all material respects with
identified suitable criteria, he or she can provide what
level of assurance?
a. None
b. High
c. Moderate
d. Absolute
14. It is the risk that the practitioner expresses an
inappropriate conclusion when the subject matter
information is materially misstated
a. Business risk
b. Assurance engagement risk
c. Detection risk
d. Audit risk
15. The following are assurance engagements,
except a. Reasonable assurance engagements
b. Review engagement
c. Other assurance engagements
d. Tax services
16. Unlike consulting services, assurance services a.
Make recommendations to management
b. Report on how to use information
c. Report on how the quality of information
d. Are two-party contracts
17. The word auditing from the Latin audire, which
means: a. To see
b. To detect
c. To hear
d. To test
18. Which of the following is an incorrect
phrase? a. Auditing is a systematic process
b. Auditing objectively obtains evidence and
evaluate evidence
c. Auditing evaluates evidence regarding assurance
d. Auditing ascertains the degree of
correspondence between assertions and
established criteria
e. Auditing communicates results to interested
users
19. Representations by management, explicit or otherwise,
that are embodied in the financial statements, as used by
the auditor to consider the different types of potential
misstatements that may occur.
a. Financial statement assertions
b. Audit evidence
c. Notes to the financial statements
d. Disclosure requirements
20. Financial statements need to be prepared in accordance
with one, or a combination of both
a. PFRS
b. IFRS
c. Other authoritative basis
d. All of the answers
21. The term is used to refer to person or persons conducting
the audit, usually the engagement partner or other
members of the engagement team, or, as applicable, the
firm:
a. Users of the financial statements
b. Those charged with governance
c. Auditor
d. Management
22. Attestation is any service that requires a CPA firm to issue
a report about the reliability of an assertion that is made
by another party. Which of the following elements is the
component that distinguishes an attest engagement
from other forms of assurance engagements?
a. An accountable party
b. A written assertion
c. A subject matter
d. An accountability relationship
23. In performing an attestation engagement, a CPA
typically a. Supplies litigation support services
b. Assesses control risk at a low level
c. Expresses a conclusion about an assertion
d. Provides management consulting advice
24. The auditor communicates the results of his or her work
through the medium of the
a. Audit engagement letter
b. Audit report
c. Management letter
d. Notes to the financial statements
25. The type of audit of financial statements is to: a. Enhance
understanding of the stakeholders of the company
b. Provide government agencies, such as BIR with
basis for assessments
c. Enhance the degree of confidence of intended
users of the financial statements
d. Enhance the knowledge and skills of external
auditors
26. The overall objectives of the independent auditor in
conducting financial statement audits is:
a. To prove accuracy and reliability of financial
statements
b. To prepare and present financial statements in
accordance with PFRS
c. To obtain reasonable assurance about whether
the financial statements are free from material
misstatements, due to fraud and error
d. To report on the financial statements and
communicate as required by PAS
27. A difference between the amount, classification,
presentation, or disclosure of a reported financial
statement item and the amount, classification,
presentation, or disclosure that is required for the item
to be in accordance with the applicable financial
reporting framework
a. Non-compliance
b. Fraud
c. Misstatement
d. Error
28. An unintentional misstatement in financial statements,
including omission of an amount or disclosure
a. Non-compliance
b. Fraud
c. Misstatement
d. Error
29. Which of the following is (are) correct regarding
assurance engagements?
a. It is an engagement in which a practitioner
expresses a conclusion designed to enhance
the degree of confidence of the intended users
other than the responsible party about the
outcome of
the evaluation or measurement of a subject
matter against criteria
b. All engagements performed by professional
accountants are assurance engagements
c. Whether a particular engagement is an assurance
engagement will depend upon whether it
exhibits all the following elements: a three
party relationship, a subject matter, and
suitable criteria
d. All of the above
30. Assurance services least likely involve
a. Improving the quality of information for decision
purposes
b. Improving the quality of the decision model
used c. Improving the relevance of information
d. Implementing a system that improves the
processing of information
31. Which of the statement(s) is (are) correct?
I. CPAs are the exclusive providers of assurance
engagements as the subject matter of
assurance engagements is limited only to
financial information of a business entity
II. Assurance engagements may be classified either as
to level of assurance provided by the
practitioner or as to structure of the
engagement
a. Only statement I is correct
b. Only statement II is correct
c. Both statements are correct
d. Neither of the statements are correct
32. When the professional accountant has obtained sufficient
appropriate evidence to conclude that the subject matter
conforms in all material respects with identified suitable
criteria, he or she can provide what level of assurance?
a. None
b. High
c. Moderate
d. Absolute
33. An intentional act by one or more individuals among
management, those charged with governance,
employees, or third parties, involving the use of
deception to obtain an unjust or illegal advantage
a. Non-compliance
b. Fraud
c. Misstatement
d. Error
34. The primary responsibility for the prevention and
detection of fraud and error rests with
a. The external auditor, the company’s
management, and those with charged
governance
b. The company’s management
c. Those charged with governance
d. The company’s management and those charged
with governance
35. This type of audit involves a review of an organization’s
procedures to determine whether the organization has
adhered to specific procedures, rules or regulations set
down by some higher authority
a. Financial statement audit
b. Operational audit
c. Compliance audit
d. Internal audit
36. This type of audit involves a review of an organization’s
procedures to determine whether the organization has
adhered to specific procedures, rules or regulations set
down by some higher authority
a. Financial statement audit
b. Operational audit
c. Compliance audit
d. Internal audit
37. Which of the following types of audits are most
similar? a. Operational audits and compliance audits
b. Independent financial statement audits and
operational audits
c. Compliance audits and independent financial
statement audits
d. Internal audits and independent financial
statement audits
38. This is an independent appraisal activity established
within an entity as a service to the entity
a. External or independent auditing
b. Internal audit function
c. Government auditing
d. Compliance auditing
39. Auditing is important in a free market society because a.
The public requires CPAs functioning as divisions of
regulatory bodies
b. Auditors detect all errors and fraud made by
company employees
c. It provides reliable information based upon
which to judge economic performance
d. The auditor is an amiable insurance policy for
investors
40. Which of the following statements is false?
a. In an audit of financial statements, in an
assurance engagement, the auditor is engaged
for purposes of expressing an opinion designed
to enhance the degree of confidence of
intended users in the financial statements
b. The overall objective of the independent auditor
is to obtain reasonable assurance about
whether the financial statements as a whole
are free from material misstatement, whether
due to fraud or error, and to report on the
financial statements in accordance with the
auditor’s findings
c. In order to obtain reasonable assurance, the
auditor shall obtain sufficient appropriate audit
evidence to be able to draw reasonable
assurance conclusions on which to base the
audit opinion. Reasonable assurance is
obtained when the auditor has thereby
reduced audit risk to an acceptably high level
d. The objective of an audit cannot be fulfilled
unless the auditor achieves the overall
objective of the auditor. In all cases when the
overall objective of the auditor cannot be
achieved, the PSAs require that the auditor
modifies the auditor’s opinion accordingly of
withdraws from the engagement
41. The concept of reasonable assurance indicates that the
auditor is
a. Not an insurer of the correctness of the financial
statements
b. Not responsible for the fairness of the financial
statements
c. Responsible only for issuing an opinion of the
financial statements
d. Responsible for finding all misstatements
42. Absolute assurance is generally not attainable as a result
of such factors because of:
I. Use of testing
II. Inherent limitations of internal control
III. Use of judgment
IV. Most audit are persuasive rather than conclusive
a. All of the statements
b. I, II and III only
c. II, III and IV only
d. I and III only
43. An operational audit has as one of its objectives to a.
Determine whether the financial statements b. Evaluate the
feasibility of attaining the entity’s operational objectives
c. Make recommendations for improving
performance
d. Report on the entity’s relative success in
attaining profit maximization
44. Which of the following types of auditing is performed most
commonly by CPAs for more than one client and on a
contractual basis?
a. Internal auditing
b. Income tax auditing
c. External auditing
d. Government auditing
45. A primary purpose of an operational audit is to provide a.
A means of assurance that internal accounting controls are
functioning as planned
b. The results of internal examination of financial
c. A measure of management performance in
meeting organizational goals
d. Aid to the independent auditor, who is
conducting the examination of the financial
statements
46. This type of audit goes beyond the usual financial
statement audit, to include audits of compliance with
laws and regulations, operations of governmental
entities, and the proper disbursement and management
of public funds
a. External or independent auditing
b. Internal audit function
c. Government auditing
d. Compliance auditing
47. In government auditing, the three elements of expanded
scope auditing are:
a. Goal analysis, audit of operations, audit of
systems
b. Financial and compliance, economy and
efficiency, program results
c. Pre-audit, post-audit, internal audit
d. National government audit, local government
audit, corporation audit
48. An audit designed to determine the extent to which the
desired results of an activity established by the legislative
or other authorizing body are being achieved
a. Economy audit
b. Efficiency audit
c. Program results audit
d. Financial-related audit
49. A structured representation of historical financial
information, including related notes, intended to
communicate an entity’s economic resources or
obligations at a point in time or the changes therein for a
period of time in accordance with a financial reporting
framework
a. Annual report
b. Engagement education
c. Accounting records
d. Financial statements
50. Which of the following parties is responsible for an
entity’s financial statements?
a. Those charged with governance and entity
management
b. The external audit team
c. The partner who signs the audit report
d. The Philippine Securities and Exchange
Commission
51. This term describes the role of a person(s) or
organization(s) with responsibility for overseeing the
strategic direction of the entity
a. Governance
b. Audit committee
c. Control environment
d. Management
52. This comprises officers and others who also perform
senior managerial functions, and includes directors and
the audit committee only in those instances when they
perform such functions
a. Top rank personnel
b. Those charged with governance
c. Board of directors
d. Management
53. An operating committee of a company’s board of directors
that is in charge of overseeing financial reporting
financial disclosure
a. Governance
b. Audit committee
c. Control environment
d. Management
54. An external auditor is conducting an audit of the financial
statements JYC Corporation under PSAs. The external
auditor is expected to
a. Express an opinion as to the fairness of JYC
Corporation’s financial statements
b. Express an opinion as to the attractiveness of
JYC investments
c. Certify to the correctness of JYC financial
statements
d. Critique the wisdom and legality of JYC’s
business decisions
55. The auditor’s opinion
a. Guarantees the credibility of the financial
statements
b. Is an assurance as to the future viability of the
entity
c. Certifies the correctness of the financial
statements
d. Is not an assurance as to the efficiency with which
management has conducted the affairs of the
entity
56. Which of the following statements is an example of an
assertion made by management in an entity’s financial
statements?
a. The financial statements were prepared in an
unbiased manner
b. All information requested by the auditor has
been provided by the management
c. The scope of the auditors’ investigation was not
limited in any way by management
d. Reported inventory balances reflect all related
transactions for the period
57. The best statement of the responsibility of the auditor
with respect to audited financial statements is
a. The auditors responsibility on fair presentation of
financial statements is limited only up to the
date up the audit report
b. The auditor’s responsibility is confined to his
expressions of opinion about the audited
financial statements
c. The responsibility over the financial statements
rests with the management and the auditor
assumes the responsibility with respect to the
notes of financial statements
d. The auditor is responsible only to his qualified
opinion but not for any other type opinion
58. The general principles for conducting financial statement
audits include which of the following?
a. Compliance with the code of ethics for CPAs b.
Compliance with Philippine Standards on Auditing
c. Planning and performing the audit with
professional skepticism
d. All of the choices
59. Philippine Standards on Auditing (PSAs) should be looked
upon by practitioners as:
a. Ideals to strive for, but for which are not
achievable
b. Maximum standards which denote excellent
work
c. Benchmark to be used on al audits, reviews and
compilations
d. Minimum standards of performance which must
be achieved on each audit engagement
60. An attitude that includes a questioning mind, being alert
to conditions which may indicate possible misstatement
due to error or fraud, and a critical assessment of
evidence
a. Professional skepticism
b. Materiality
c. Conservative advocacy
d. Reasonable assurance
61. The phrase used to express the auditor’s opinion:
a. “absence of material and pervasive
misstatements in the financial statements”
b. “present fairly, in all material respects”
c. “provides reasonable, but not absolute
assurance”
d. All of these statements are used
62. This means the gathering of the audit evidence necessary
for the auditor to conclude that there are no material
misstatements in the financial statements, taken as a
whole
a. Professional judgment
b. Conservatism
c. Audit risk
d. Reasonable assurance
63. This term refers to the possibility of harm or loss or
danger. It can also refer to a factor, thing, or element or
course involving uncertain danger; or a hazard
a. Materiality
b. Jeopardy
c. Contingency
d. Risk
64. Identify what type of risk is being identified
a. The susceptibility of an account balance or class
of transactions to misstatement that could be
material, individually or when aggregated with
misstatements in other balances of classes,
before consideration of any related controls INHERENT RISK
b. The risk that a misstatement that could occur in
an account balance or class of transactions
detected and corrected on a timely basis by the
company’s internal control – CONTROL RISK
c. The risk that an auditor’s substantive procedures
will not detect a misstatement that exists in an
account balance or class of transactions that
could be material, individually or when
aggregated with misstatements in other
balances or classes – DETECTION RISK
d. The risk that the auditor gives an inappropriate
audit opinion when the financial statements
are materially misstated – AUDIT RISK
65. Inherent risk and control risk are collectively known
as a. Dual risk
b. Risk of information dissemination
c. The risk of material misstatement
d. The dependent variables of risk
66. This term refers to the application of relevant training,
knowledge and experience, within the context provided
by auditing, accounting and ethical standards, in making
informed decisions about the courses of action that are
appropriate in the circumstances of the audit
engagement
a. Professionalism
b. Conservatism
c. Professional judgment
d. Materiality
67. An audit has inherent limitations that affect the auditor’s
responsibility to detect material misstatements. Which of
the following is among the factors that result to these
inherent limitations?
a. Use of testing
b. Inherent limitations of accounting and internal
control system
c. Evidence that is basically persuasive rather than
conclusive
d. All of the choices properly describe factors that
result to inherent limitations of audits
68. Which statement is (are) correct regarding assurance
engagements?
a. It is an engagement in which a practitioner
expresses a conclusion designed to enhance
the degree of confidence of the intended users
other than the responsible party about the
outcome of the evaluation or measurement of
a subject matter against criteria
b. All engagements performed by professional
accountants are assurance engagements
c. Whether a particular engagement is an assurance
engagement will depend upon whether it
exhibits all the following elements: a three
party relationship, a subject matter, and
suitable criteria
d. All of the above
69. Assurance services least likely involve
a. Improving the quality of information for decision
purposes
b. Improving the quality of the decision model
used c. Improving the relevance of information
d. Implementing a system that improves the
processing of information
70. Which of the following statements is (are) true? I. CPAs
are the exclusive providers of assurance engagements as the
subject matter of assurance engagements is limited only to
financial information of a business entity
II. Assurance engagements may be classified either as to
level of assurance provided by the practitioner
or as to structure of the engagement
a. Both statements are true
b. I only
c. II only
d. None of the statements
71. Which of the following refers to an assertion-based
reporting engagement type of assurance engagement? a. The
objective is a reduction in assurance engagement risk to an
acceptably low level as the basis for a positive form of
expression of the practitioner’s conclusion
b. The objective is a reduction in assurance
engagement risk to a level that is acceptable in
the circumstances of the engagement, but
where that risk is greater than for a reasonable
assurance engagement, as the basis for a
negative form of expression of the
practitioner’s conclusion
c. In this type of engagement, the evaluation or
measurement of the subject matter is
performed by the reasonable party, and the
subject matter information is in the form of
assertion by the
responsible party that is made available to the
intended users
d. In this type of engagement, the practitioner
either directly performs the evaluation or
measurement of the subject matter, or obtains
a representation from the responsible party
that
has performed the evaluation or
measurement that is not available to the
intended users. The
subject matter
information is provided to the intended users
in the assurance report
72. Which of the following statements best describes the
logical relationship among audits, attest engagements,
and assurance engagements?
a. All attest engagements are audits, but not all
audits are attest engagements
b. All assurance engagements, including audits,
involve attestation
c. An audit providers assurance but does not
involve attestation
d. All audits are attest engagements, but not all
attest engagements are audits
73. Attestation is any service that requires a CPA firm to issue
a report about the reliability of an assertion that is made
by another party. Which of the following elements is the
critical component that distinguishes an attest
engagement from other forms of assurance
engagements?
a. An accountable party
b. A written assertion
c. A subject matter
d. An accountability relationship
74. In performing an attestation engagement, a CPA
typically a. Supplies litigation support services
b. Assesses control risk at low level
c. Expresses a conclusion about an assertion
d. Provides management consulting advice
75. Which of the following refers to criteria element of
assurance engagement?
a. Benchmarks used to evaluate or measure the
subject matter
b. Information obtained by the practitioner in
arriving at the conclusions on which the
opinion is based
c. Contains a conclusion that conveys the assurance
obtained about the subject matter information
d. The subject matter, and subject matter
information of an assurance engagement
76. Which of the following statements is incorrect regarding
the three party relationship element of assurance
engagement?
a. The intended user is generally, and may not be,
the addressee of the professional accountant’s
report
b. The responsible party and the intended user will
often be from separate organizations
c. The responsible party may also be one of the
intended users
d. The intended user(s) is (are) always limited to the
addressee of the professional accountant’s
report
77. A client’s financial statements may be materially false
and/or misleading
a. Business risk
b. Information risk
c. Client risk
d. Risk assessment
78. Which of the following methods is most commonly used
to reduce information risk?
a. Allow users to verify information
b. Users share information risk management
c. Have the financial statements audited
d. Allow all users to prepare statements
79. The following are conditions that create a demand from
users for assurance on reliability of financial information a.
Transactions that are numerous and complex b. Users
separated from accounting records by distance and time
c. Financial decisions that are important to
investors and users
d. All of the choices are examples of the said
conditions
80. Which of the following best describes the reason why
independent auditors report on financial statements? a. A
management fraud may exist and it is more likely to be
detected by independent auditors
b. A poorly designed internal control structure may
be in existence
c. A misstatement of account balances may exist
and is generally corrected as the result of the
independent auditor’s work
d. Different interests may exist between the
company preparing the statements and the
persons using the statements
81. The subject matter of an assurance engagement may
take many forms. Which of the following are included? I.
Nonfinancial performance or condition II. Financial
performance or condition
III. Behavior
IV. Physical characteristics
V. Systems and processes
a. All of the statements
b. I, II, III and IV only
c. I, II and III only
d. I, II, III and V only
82. Which of the following are the characteristics in
determining whether a criteria is suitable?
I. Relevance
II. Reliability
III. Completeness
IV. Neutrality
V. Comparability
VI. Feedback value
a. All of the statements
b. I, II, III and IV only
c. I, II, III, IV and V only
d. I, II and III only
83. The objective of on operational audit is to
a. Evaluate fairness of presentation of financial
statements
b. Evaluate the effectiveness and efficiency with
which resources are employed and identifying
areas for improvement
c. Evaluate whether laws have been broken by
management
d. Evaluate compliances with company rules and
regulations
84. The auditor’s judgment concerning the entity’s
operations in an operational audit should be based on
a. GAAP
b. Effectiveness and Efficiency
c. Rules and Regulations
d. Company policies
85. Which type of auditor would typically perform an
operation audit?
a. External audit
b. Governmental auditor
c. Internal auditor
d. Both B and C
86. Results of compliance audits are typically reported to
someone within the organizational unit being audited
rather than to a broad spectrum of outside users. Which
of the following audits can be regarded as generally
being a compliance audit?
a. BIR agents examination of taxpayer returns
b. COA auditor’s evaluation of the computer
operations of governmental units
c. An internal auditor’s review of a company’s
payroll authorization procedures
d. A CPA firm’s audit of the local school district
87. This is an independent appraisal activity established
within an entity as a service to the entity
a. Internal audit function
b. Independent auditing
c. Government auditing
d. Compliance audit function
88. The overall objective of internal is to:
a. Attest to the efficiency with which resources are
employed
b. Ascertain that controls are costs justified
c. Provide assurance that financial data have been
accurately recorded
d. Assist the members of the organization in the
effective discharge of their responsibilities
89. Internal auditors may perform all of the following types
of audits, except
a. Operational audits
b. Compliance audits
c. FS audit
d. All of the above may be performed by internal
auditors
90. To provide for the greatest degree of independence in
performing internal auditing functions, an internal
auditor most likely should report to the
a. Financial vice president
b. Corporate controller
c. Those charged with governance
d. Corporate stockholders
91. For an internal auditor to render impartial and unbiased
judgments, he or she must be independent of the entity’s
a. Stockholders
b. Personnel and operating activities
c. Independent auditors
d. Board of directors
92. Which of the following statements relating to internal
and external audits is false?
a. The execution of solutions to issues brought to
light by internal auditors are the responsibility
of management of the organization
b. The objectives of internal auditors are
considerably broader than the objectives of
external auditors
c. For financial auditing, the audit report typically
goes to many users of financial statements,
whereas operational audit reports are intended
primarily for management
d. Independence is a fundamental ethical principle
for internal auditors
93. Government auditing often extends beyond expressing an
opinion on the fairness of the financial presentation and
includes audits of efficiency, effectiveness and
a. Internal control
b. Efficiency
c. Accuracy
d. Compliance
94. Which type of auditor may perform FSs
audit? a. Internal control
b. Efficiency
c. Accuracy
d. Compliance
95. Which type of auditor may perform a FSs
audit? a. External auditor
b. Internal auditor
c. Government auditor
d. All of the three
96. Which of the following is true?
a. The criteria for any audit are GAAP
b. Both external and internal auditors can provide
management advice to the company
c. A financial audit is designed to determine if the
company is acquiring resources at the lowest
cost
d. External auditors may perform financial audits
97. Which of the following statements comparing
external auditing to internal auditing is true?
a. Both produce reports are addressed to the
company’s management and board of directors
b. They have the same concern with the company’s
day-to-day operations
c. They are paid in the same way
d. They have different scopes of work
98. Which of the following types of audits are most
similar? a. Operational and compliance audits
b. Independent financial audits and operational
audits
c. Compliance audits and independent financial
statement audits
d. Internal audits and independent financial
statement audits
99. Which one of the following is most difficult to evaluate
objectively?
a. Presentation of financial statements in
accordance with GAAP
b. Compliance with government regulations
c. Efficiency and effectiveness of operations
d. All three of the above are equally
important e.
100. Which of the following best describes the operational
audit?
a. It requires the constant review by internal
auditors of the administrative controls as they
relate to operations of the company
b. It concentrates on implementing financial and
accounting control in a newly organized
company
c. It attempts and is designed to verify the fair
presentation of a company’s result of operations
d. It concentrates on seeking out aspects of
operations in which waste would be reduced by
the introduction of controls
CODE OF ETHICS
Questions:
1. The fundamental principle of integrity requires a CPA to
a. Be straightforward and honest in performing
professional services
b. Be fair 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 manner consistent with the good
reputation of the profession and refrain
from any conduct which might bring
discredit to the profession
2. This fundamental principle requires a CPA not to use of
disclose information acquired during the course of
performing professional services without proper and
specific authority
a. Objectivity
b. Professional competence and due care
c. Professional behavior
d. Confidentiality
3. An inadvertent violation of the Code of Ethics, depending
on the nature and significance of the matter, may not
compromise compliance with
the fundamental
principles provided, once the violation is discovered,
a. The CPA withdraws from the specific
professional service involved
b. A disclaimer of opinion is issued to the client
as a result of the violation
c. The violation is corrected promptly and any
necessary safeguards are applied
d. The engagement is promptly transferred to
another, non-violating
professional accountant
4. Compliance with fundamental principles may potentially
be threatened by a broad range of circumstances.
These are known as:
a. Fraud risk factors
b. Threats to fundamental principles
c. Threats to independence
d. Safeguards to threats
5. These are policies and procedures designed to eliminate
or to reduce threats to fundamental principles to an
acceptable level
a. Internal controls
b. Control activities
c. Safeguards
d. Segregation of duties
6. Certain safeguards may increase the likelihood of
identifying or deterring unethical behavior. Such
safeguards, which may be created by the accounting
profession, legislation, regulation or an employing
organization, include but are not restricted to:
I. Effective, well publicized complaints systems
operated by the employing organization, the
professional or a regulator, which enable
colleagues, employers and members of the
public to draw attention to unprofessional
or unethical behavior
II. An explicitly stated duty to report breaches of
ethical requirements
a. I only
b. II only
c. Both statements
d. Neither of the statements
7. When initiating either a formal or informal conflict
resolution process, a CPA should consider the
following, either individually or together with others,
as part of the resolution process:
a. Relevant Facts
b. Ethical issues involved
c. Fundamental principles related to the matter
in question
d. Established internal procedures
e. Alternative courses of action
f. All of the statements above
8. Objectivity in the Code refers to a CPA’s ability: a. To
maintain an impartial attitude on all matters
which come under the CPA’s review
b. To independently distinguish between
accounting practices that are acceptable
and those that are not
c. To be unyielding in all matters dealing with
auditing procedures
d. To independently choose between alternate
accounting principles and
auditing
standards
9. A CPA should maintain objectivity and free of conflicts
of interest when performing:
a. Audits, but not any other professional services
b. All attestation services, but not other
professional services
c. All attestation and tax services, but not other
professional services
d. All professional services
10. Which of these phrases describe attainment of
professional competence?
a. A high standard of general education followed by
specific education, training and examination in
professionally relevant subjects, and whether
prescribed or not, a period of work experience
b. A continuing awareness and an understanding of
relevant technical professional and business
developments
c. The responsibility to act in accordance with the
requirements of an assignment carefully,
thoroughly and on a timely basis
d. Making clients, employers or other users of the
professional services aware of limitations
inherent in the services to
avoid the
misinterpretation of an expression of opinion
as an assertion of fact
11. Competence as a CPA include all of 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
12. After beginning an audit of a new client, a CPA discovers
that the professional competence necessary for the
engagement is lacking. The
CPA informs the
management of the situation and recommends another
CPA, and management engages the other CPA. Under
these circumstances:
a. The CPA’s lack of competence should be
considered to be a violation of generally
accepted auditing standards
b. The CPA may request compensation from the
client for any professional services rendered to
it in connection with the audit
c. The CPA’s request for a commission from the
other CPA is permitted because a more
competent audit can now be performed
d. The CPA may be indebted to the other CPA since
the other CPA can collect from the client only
the amount the client originally agreed to pay
the CPA
13. Which of the following statements best described why the
CPA professions has deemed it essential to promulgate a
code of professional ethics and to establish a mechanism
for enforcing observation of the Code?
a. A distinguishing mark of a profession is its
acceptance of responsibility to the public
b. A pre-requisite to success is the establishment of
an ethical code that primarily defines the
professional’s responsibility to clients and
colleagues
c. A requirement of most state 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
14. Which of the following statements is/are correct?
I. Professional accountants refer to persons who are
registered in the PRC as CPAs and who hold a
valid certificate issued by the BOA, whether
they be in
any sector of practice of
accountancy
II. The Code of Ethics for Professional Accountants in the
Philippines is mandatory for all CPAs
a. I only
b. II only
c. Both statements
d. Neither of the statements
15. In ethical conflict resolution, if the matter remains
unresolved, the CPA should
a. Consult with other appropriate persons within
the firm or employing
organization for help in obtaining resolution
b. Consider consulting with those charged with
governance of the organization, such as the
board of directors or the audit committee
c. Document the substance of the issue and details
of any discussions held or decisions taken,
concerning that issue, as necessary
d. All of the statements above
16. Which of the following steps should be taken when
resolving a conflict?
I. Refuse to remain associated with the matter creating
the conflict
II. Withdraw from the engagement team or specific
engagement
III. Resign from the engagement
IV. Resign from the firm or the employing organization
a. All of the statements
b. I only
c. II, III, and IV only
d. I, II, and III only
17. A CPA should not be associated with reports, returns,
communications or other information where they
believe that the information:
a. Contains a materiality false or misleading
statement
b. Contains statements or information furnished
recklessly
c. Omits or obscures information required to be
included where such omission or obscurity
would be misleading
d. All of the statements above
18. In the few instances where the domestic laws are in
conflict with the IFAC Code,
a. Both are applied simultaneously
b. The IFAC Code requirement prevails c. The
local law prevails
d. There will be no ruling for that particular
requirement
19. A CPA should maintain objectivity and free of conflicts of
interest when performing:
a. Audits, but not any other professional services
b. All attestation services, but not other
professional services
c. All attestation and tax services, but not other
professional services
d. All professional services
20. A CPA has an overbearing superior, and the superior is
suppressing the recording of certain transactions of the
company. The CPA is being asked to act contrary to
technical and professional standards. The first remedy in
case of ethical conflict is:
a. Follow the established policies of the employing
organization to seek a resolution of such
conflict
b. Review the conflict problem with the superior
c. Review the conflict with the next higher
managerial level, after giving notice to the
immediate superior of the intention to do so
d. Seek counseling and advice on a confidential basis
with an independent advisor or the applicable
professional accountancy body or regulatory
body
21. Prior to beginning the field work on a new audit
engagement in which a CPA does not possess expertise
in the industry in which the client operates, the CPA
should:
a. Reduce audit risk by lowering the preliminary
levels of materiality
b. Design special substantive tests to compensate
for the lack of industry expertise
c. Engage financial experts familiar with the nature
of the industry
d. Obtain a knowledge of matters that relate to the
nature of the entity’s business
22. In which of the situations given below would disclosure
by a CPA be in violation of the Code? a. Disclosing
confidential information in order to properly discharge the
CPA’s responsibilities in accordance with his profession’s
standards
b. Disclosing confidential information in compliance
with a subpoena issued by a court
c. Disclosing confidential information to another
accountant interested in purchasing the CPA’s
practice
d. Disclosing confidential information in a review of
the CPA’s professional practice by the Quality
Review Committee
23. The Code of Ethics for Professional Accountants in the
Philippines is
a. Mandatory for all CPAs
b. Mandatory for CPAs in public practice c.
Mandatory for CPAs in government
d. Not mandatory
24. IFAC stands for
a. International Foundation of Accountants
b. Integrated Federation for Assurance c.
International Federation of Accountants d.
International Federation of Auditors
25. The state of mind that permits the provision of an
opinion without being affected by influences that
compromise professional judgment a. Professional skepticism
b. Integrity
c. Objectivity
d. Independence in mind
26. The avoidance of facts and circumstances that are so
significant a reasonable and informed third party, having
knowledge of all relevant information, would reasonably
conclude a CPAs integrity, objectivity or professional
skepticism had been compromised
a. Principle of segregation
b. Independence in appearance
c. Functional integrity
d. Pre-emptive estoppel
27. In which of the following situations would a CPA be in
violation of the rules of professional ethics
in
determining professional fees?
a. A fee based on appropriate rates per hour or per
day for the time of each person engaged in
performing professional services
b. A fee which is lower compared to the fee charged
in the prior year for similar services
c. A fee based on appropriate rates per hour, where
the appropriate rate is
based on the
fundamental premise that the organization
and conduct of the CPA and the services
provided to clients
are well planned, controlled and managed
d. A fee that is based on 10% of the client’s adjusted
net income for the current year
28. Which of the following statement/s is/are correct?
I. A CPA can relax the confidentiality rule when in a
social environment
II. A CPA should also maintain confidentiality of
information disclosed by a prospective client or
employer
a. Both statements
b. I only
c. II only
d. Neither of the statements
29. The nature and significance of threats may differ
depending on whether they arise in relation to the
provision of services to a client. In which of the following
types of clients would the revised code provide strictest
set of requirements regarding independence?
a. A financial statements audit client
b. A non-financial statement audit assurance client
c. A non-assurance client
d. A non-client
30. Appropriate safeguards during client acceptance may
include:
a. Obtaining knowledge and understanding of the
client
b. Obtaining knowledge and understanding of the
client’s owners,
managers, and those
responsible for its governance and business
activities
c. Securing the client’s commitment to improve
corporate governance practices of internal
controls
d. All of these
31. The rendering of two or more types of professional
services concurrently:
a. Is a violation of the code of ethics
b. Would impair integrity, objectivity, or
independence, or the good reputation of the
profession
c. Does not by itself impair integrity, objectivity or
independence
d. Is inconsistent with the practice of public
accountancy
32. Which statement is incorrect regarding custody of
client’s assets?
a. Client’s assets should not be held by the CPA if
there is reason to believe that the assets were
obtained from, or are to be used for , illegal
activities
b. A CPA in public practice should maintain one or
more bank accounts for client’s monies
c. Monies may only be drawn from the client
account on the instructions of the client
d. Fees due from a client may be drawn from client’s
monies without the need of notifying the client
33. One difference between auditors and other
professionals is that most professionals: a. Need not be
concerned about remaining independent
b. Don’t have the requirements for continuing
education beyond college
c. Don’t have to pass a rigorous examination
d. Aren’t expected to act in the public interest
34. Regarding conflicts of interest, the following safeguards
are applicable (select the exception): a. Notifying the client of
the firm’s business interest or activities that may represent
a conflict of interest, and obtaining their consent to act in
such circumstances
b. Notifying all known relevant parties that the CPA
in public practice is acting for two or more
parties in respect of a matter where their
respective interests are in conflict, and
obtaining their consent to so act
c. Notifying the client that the CPA in public practice
does not exclusively for any of the client in the
provision of proposed services and obtaining
their consent to so act
d. Clear guidelines for members of the client
personnel on issues of security
and
confidentiality
35. A client seeking a second opinion does not permit the
CPA to communicate with the
existing accountant. In such cases, the CPA should
a. Issue a disclaimer of opinion due to a significant
client-imposed scope of limitation
b. Consider whether, taking all the circumstances
into account, it is appropriate to provide an
opinion sought
c. Consider whether to issue a qualified opinion or
disclaimer of opinion due to a significant
client-imposed limitation
d. Communicate the client’s refusal directly to the
existing accountant
36. The payment or receipt or referral fees or commissions
may create threats to which fundamental principles?
I. Integrity
II. Objectivity
III. Professional competence and due care IV.
Professional behavior
a. I and III
b. I and IV
c. II, III and IV
d. II and III
37. A CPA in business or an immediate or close family
member may be offered an inducement or pressured to
offer inducements. Inducements may take various
forms, including a. Gifts and hospitality
b. Preferential treatment
c. Inappropriate appeals to friendship or loyalty
d. Any of these
38. The following steps are part of the conceptual
framework approach to the Code of Ethics. I. Address threats
which are other than
clearly insignificant through the application of
safeguards
II. Evaluate the significance of threats to compliance
with fundamental principles III. Identify threats to
compliance with the fundamental principles
a. III, II, I
b. I, II, III
c. II, III, I
d. I, III, II
39. If a CPA cannot implement appropriate safeguards, the
professional accountant should also do the following ,
except:
a. Decline the specific professional service involved
b. Discontinue the specific professional service
involved
c. Resign from the client or the employing
organization, as necessary
d. Issue an adverse opinion on the subject matter
of the engagement
40. Identify what type of threat is being identified: a. May
occur as a result of the financial or other interests
of a professional accountant or of an immediate or
close family member
b. May occur when a previous judgment needs to
be re-evaluated by the
professional
accountant responsible for that judgment
c. May occur when, because of a close relationship,
a professional accountant
becomes too
sympathetic to the interests of others
d. May occur when a professional accountant may
be deterred from acting objectively by threats,
actual or perceived
41. A violation of the professional’s ethical standards would
most likely occur when a CPA who
a. Is also admitted to the bar represents on
letterhead to be both an attorney and a CPA
b. Writes a newsletter on financial management
also permits a publishing company to solicit
subscriptions by direct mail
c. Is controller of a bank permits the bank to use the
controller’s CPA title in the listing of officers in
its publications
d. Forms a partnership for accountancy practice
with non CPAs
42. In using general model for making ethical decisions, the
CPA should do all of the following, except
a. Gather or identify all the relevant facts about
situation that raises the ethical issue
b. Consider the alternative course of action
c. Consider the possible consequences of some of
the courses of action
d. Select a course of action from among the
alternatives
43. Waste management and Enron are classic cases wherein
the media was critical that auditors: a. Were ignorant of the
existing audit and assurance standards
b. Have failed to plan the audit engagements
properly
c. Overlooked suspicion of earnings management
reported in the Wall Street Journal
d. Received significant consulting fees relative to
audit fees
44. It has been suggested that increased fee competition for
audits could lead to a loss of auditor independence.
Which of the following statements best supports
argument?
a. Competition reduces the auditor’s margin of
error in estimating the fee required to price
the audit profitably
b. Negotiation over the audit fee may sour the
relationship between the auditor and the
client
c. Lower fees force the auditor to take shortcuts in
the performance of auditing procedures
thereby reducing the effectiveness of the audit
d. Price competition may result in the auditor
submitting a bid below the actual cost of an
initial engagement in the hope of making up
the loss in subsequent years
45. This threat to independence occurs when a member of
the assurance team has recently performed services for
an assurance client that directly affect the subject matter
of the assurance engagement SELF REVIEW
46. Which of the following describes most completely how
the profession defines independence?
a. Performing an audit from the public’s point of
view
b. Avoiding the appearance of a significant interest
in an audit client’s interest
c. Resisting a client’s reluctance to reveal evidence
d. Accepting responsibility to act professionally and
in accordance with the Professional Code of
Conduct
47. The Code of Professional Ethics would most likely be
violated if an auditor
a. Owns a building and leases floor space to an
assurance client
b. Has an insured account with a brokerage firm
audit client
c. Is engaged by an audit client to identify
potential acquisitions
d. Screens candidates for an audit client’s vacant
controllership position
48. A public accounting firm would most likely be considered
in violation of the independence rules in which of the
following instances?
a. A partner’s checking account, which is fully
insured by the PDIC, is held at a financial
institution for which the public accounting firm
performs attest services
b. A manager of the firm donates service as vice
president of a charitable organization that is an
audit client of the firm
c. An attest client owes the firm fees for this and
last year’s annual engagements d. A covered
member’s dependent son owns stocks in an attest
client
49. Which of the following is not mandatory when
performing an audit in accordance with PSAs? a. Proper
supervision of assistants
b. Efficient performance of audit procedures
c. Understanding of the client’s internal controls
d. Adequate planning of work to be performed
50. Before accepting an engagement to audit a new client,
an auditor is required to
a. Make inquiries of the predecessor auditor after
obtaining the consent of the prospective client
b. Obtain the prospective client’s signature to the
engagement letter
c. Prepare a memo setting forth the staffing
requirements and documenting
the preliminary audit plan
d. Discuss the management representation letter
with the
prospective client’s audit committee
Identify what Threat to Independence is being identified. Write
A if Self Interest Threat, B if Self Review Threat, C if Advocacy
Threat, D if Familiarity Threat, and E if Intimidation Threat.
51. A professional accountant feeling pressured to agree
with the judgment E
52. 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 E
53. Being pressured to reduce inappropriately the extent of
work performed in order to reduce fees E
54. 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 D
55. Long association of senior personnel with the assurance
client D
56. Accepting gifts or preferential treatment from a client, unless
the value is clearly insignificant D
57. Entering into a contingent fee arrangement relating to
an assurance engagement A
58. Concern about the possibility of losing a client A 59.
Performing a service for a client that directly affects the
subject matter of the assurance engagement B
60. A member of the assurance team being, or having recently
been, a director or officer of that client B
SPECIAL CONSIDERATIONS AND OTHER ASSURANCE
AND NON-ASSURANCE SERVICES
1. Internal auditing can be best described as
a. An accounting function
b. A compliance function
c. An activity primarily to detect fraud
d. A control function
2. Before performing a review of a non-public entity’s
financial statements, an accountant should
a. Complete a series of inquiries concerning the
entity’s procedures for recording, classifying,
and summarizing transactions
b. Apply analytical procedures to provide limited
assurance that no material modifications
should be made to the financial statements
c. Obtain a sufficient level of knowledge of the
accounting principles and practices of the
industry in which the entity operates
d. Inquire whether management has omitted
substantially all of the disclosures required by
financial reporting standards
3. A CPA who is not independent may issue a a.
Compilation report
b. Review report
c. Comfort letter
d. Qualified opinion
4. Which of the following statement (s) is (are) correct? I.
The auditor’s report on summary FS may be dated later than
the date of the auditor’s report on audited FS
II. In case previously unidentified subsequent events
occurred between the date of the auditor’s
report on audited FS and the date of the
auditor’s report on the summary FS, the report
on the summary FS shall not be issued until the
auditor’s consideration of such subsequent
events has been completed
a. I only
b. II only
c. Both statements are correct
d. None of the statements are correct
5. Practice in connection with unaudited historical cost
financial statements is conducted by
a. International accounting firms only
b. Regional and local public accounting firms c.
Local public accounting firms only
d. All public accounting firms
6. Which of the following is a general standard of generally
accepted attestation standards but not a fundamental
auditing principle?
a. Appropriate competence and capability
b. Adequate competence and capability
c. Independence
d. Due care
7. The introductory paragraph of an auditor’s report on
summary FS shall
a. Identify the summary of FS on which the auditor
is reporting including the title of each
statement included in the summary FS
b. Identify the audited FS
c. Refers to the auditor’s report on the audited FS,
the date of that report, and the fact that an
unmodified opinion is expressed on the
audited FS
d. All of the choices
8. Which of the following statement (s) is (are) correct? I. If
the date of the auditor’s report on the summary FS is
later than the date of the auditor’s report on the
audited FS, the auditor’s report should state that the
summary FS and the audited FS do not reflect the
effects of events that occurred subsequent to the date
of the auditor’s report on the audited FS
II. Summary FS do not contain all the disclosures
required by the financial reporting framework
applied in the preparation of the audited FS
III. If done correctly, reading the summary FS is a
substitute for reading the audited FS
a. I and II only
b. I and III only
c. II only
d. All of the statements are correct
9. Accountants are permitted to express “negative
assurance” in which of the following reports? a. Standard
unqualified audit report on audited financial statements
b. Compilation report on unaudited financial
statements
c. Review report on unaudited financial
statements
d. Adverse opinion report on audited financial
statements
10. Which of the following conditions must be met before an
accountant can conduct an examination of an entity’s
internal control?
a. Management presents its assertion about the
effectiveness of its internal control in a written
report
b. Management represents that there are no
internal control deficiencies
c. The accountant represents that he/she has not
conducted an audit of the financial statements d.
The accountant has designed a significant portion
of the internal controls
11. According to auditing standards, financial statements
presented on a specific purpose framework should not a.
Contain a note describing the SPF
b. Describe in general how the SPG differs from
financial reporting standards
c. Be accompanied by an audit report that gives an
unqualified opinion with references to the SPF
d. Contain a note with quantified peso
reconciliation based on the SPF with the assets
based on financial reporting standards
12. To be useful, an audit of a service organization’s controls
should cover a minimum of
a. A quarter
b. Six months
c. A year
d. The user entity’s fiscal period
13. Which of the following statement (s) is (are) correct? I.
The auditor shall not express an unmodified on a single
FS of a complete set of FS if the auditor has expressed
an adverse opinion or disclaimed an opinion on the
complete set of FS as a whole
II. Expressing an unmodified opinion on a single FS which
came from a complete set of FS that was given
adverse opinion or disclaimer of opinion, is
allowed only if such unmodified opinion is
published separately from the auditor’s report
containing the adverse opinion or disclaimer of
opinion
III. A single FS is always deemed to constitute a major
portion of a complete set of FS
a. I and II only
b. I and III only
c. I only
d. III only
14. The criteria applied by management in the preparation
of the summary FS in known as
a. Applied criteria
b. Summary criteria
c. Financial reporting framework
d. Summary reporting framework
15. If the addressee of the summary FS is not the same as the
addressee of the auditor’s report on the audited FS, the
auditor shall
a. Withdraw from engagement and issue a letter to
management detailing the reasons thereto
b. Issue a disclaimer of opinion
c. Mention the difference in other matter paragraph
after then opinion and emphasis of a matter
paragraph
d. Evaluate the appropriateness of using a different
addressee
16. The auditor shall date the auditor’s report on the
summary FS no earlier than
I. The date on which the auditor has obtained sufficient
appropriate evidence on which to base the
opinion, including evidence that the summary
FS have been prepared and those with the
recognized authority have asserted that they
have taken responsibility for them
II. The date of the auditor’s report on the audited FS
a. I only
b. II only
c. Both statements
d. None of the statements
17. When the auditor’s report on the audited FS contains a
qualified opinion, an Emphasis of Matter Paragraph, or
an Other Matter paragraph, but the auditor is satisfied
that the summary FS are consistent, in all material
respects, with or are a fair summary of the audited FS, in
accordance with the applied criteria, the auditor’s report
on the summary FS shall
a. State that the auditor’s report on the audited FS
contains a qualified opinion, an Emphasis
Matter Paragraph, or an Other Matter
Paragraph
b. Describe the basis for the qualified opinion of the
audited FS, and that the qualified opinion, of
the Emphasis of Matter or the Other Matter
Paragraph in the auditor’s report on the
audited FS
c. Describes the effect thereof on the summary FS,
if any, of the reasons for qualified opinion, or
Emphasis of a Matter, of Other Matter
Paragraph in the auditor’s report on the
audited FS
d. All of the answers
18. When the auditor’s report on the audited FS contains an
adverse opinion or a disclaimer of opinion, the auditor’s
report on the summary FS shall
a. State that the auditor’s report on the audited FS
contains an adverse opinion or disclaimer of
opinion
b. Describe the basis for that adverse opinion or
disclaimer or opinion
c. State that, as a result of the adverse opinion or
disclaimer of opinion, it is inappropriate to
express an opinion on the summary FS
d. All of the above answers
19. If the summary FS are not consistent, in all material
respects, with or are not a fair summary of the audited
FS, in accordance with the applied criteria, and
management does not agree to make the necessary
changes, the auditor shall
a. Express an unqualified opinion on the summary
FS, with an Emphasis of a Matter Paragraph
describing the lack of consistency
b. Express a qualified opinion on the summary FS,
with a basis for modification paragraph
describing the lack of consistency
c. Express an adverse opinion on the summary FS
d. Withdraw from engagement since management
refuses to make amendments to the summary
FS
20. These are financial statements prepared in accordance
with a special purpose framework
a. Modified financial statements
b. Particular use financial statements
c. Special purpose financial statements
d. Specialized reporting statements
21. The auditor should determine the acceptability of the
financial reporting framework applied in the preparation
of FS. In an audit of special-purpose FS, the auditor shall
obtain an understanding of
a. The purpose for which the financial statements
are prepared
b. The intended users
c. The steps taken by management to determine
that the applicable financial reporting framework is
acceptable in the circumstances d. All of these
22. In determining the acceptability of the special-purpose
financial reporting framework applied, the key factor is
a. Cost-benefit considerations in applying the
framework
b. Global acceptance of the special purpose
framework
c. Ease in auditing the FS produced under the
special-purpose framework
d. The financial information needs of the intended
users
23. A financial reporting framework designed to meet the
financial information needs of specific users
a. Philippine standards on special reports
b. Special purpose framework
c. Particular purpose framework
d. Customized financial reporting standards 24. When
audited single FS or audited specific element of FS are
presented together with the audited complete set of FS, the
following must be differentiated a. The single FS or specific
element of FS must be differentiated from the complete set
of FS
b. The opinion for the single FS or specific element
of FS must be differentiated from the opinion
on the complete set of FS
c. Both a and b
d. Neither a nor b
25. Carlo, CPA, was asked by Jude Company to audit the
company’s loans and receivables, in conjunction with the
audit of Jude’s complete FS. Carlo issued a report with
unqualified opinion and with emphasis of a matter
paragraph on the complete set of FS for Jude Company.
Accordingly, Carlo should
a. Issue a qualified opinion on the loans and
receivables account
b. Issue a disclaimer of opinion on the loans and
receivables account
c. Consider the effect of the emphasis of a matter
on the auditor’s report for loans and
receivables
d. Issue also an unqualified opinion with emphasis
of a matter paragraph for loans and receivables
26. A paragraph in auditor’s report, placed after the opinion
paragraph, reads as follows:
Without modifying our opinion, we draw attention to
Note X to the financial statements, which describes the
basis of accounting. The financial statements are
prepared to assist ABC Company to comply with the
financial reporting provisions of the contract referred to
above. As a result, the financial statements may not be
suitable for another purpose. Our report is intended solely
for ABC Company and DEF Company and should not be
distributed to or used by parties other than ABC Company
or DEF Company.
This paragraph
a. Refers to the basis of accounting by mention of a
note to the FS
b. Describes the purpose of the special-purpose FS c.
Restricts the distribution or use of the report d. All of
the answers
27. These are FS audited by the auditor in accordance with
PSAs and from which the summary FS are derived
a. Source of financial statements
b. Audited financial statements
c. Original financial statements
d. Uncut financial statements
28. Historical financial information that is derived from FS but
that contains less detail than the FS, while still providing
a structured representation consistent with
that
provided by the FS of the entity’s economic resources or
obligations at a point in time or the changes therein for
a period of time, are known as
a. Simplified financial statements
b. Compressed financial statements
c. Summary financial statements
d. Abridged financial statements
29. This PSA covers special considerations in audit
engagements, except
a. PSA 850
b. PSA 800
c. PSA 805
d. PSA 810
30. The objective of the auditor, when applying PSAs in an
audit of financial statements prepared in accordance
with a special purpose framework, is to address
appropriately the special considerations that
are
relevant to
a. The acceptance of the engagement
b. The planning and performance of that
engagement
c. Forming an opinion and reporting on the
financial statements
d. All of the answers
31. PSA 800 (Redrafted) requires that the auditor’s report
should include an alert on the special purpose for which
the FS have been prepared. In addition to this alert, the
auditor may consider it appropriate to
indicate that the auditor’s report is solely for the specific
users. Depending on the law or regulations of the
particular jurisdiction, how is this normally achieved?
a. By restricting the distribution or use of the
auditor’s report
b. By issuing a qualified opinion or adverse opinion
on the financial statements
c. By requiring the entity to add a paragraph in the
notes to the financial statements to indicate
the restriction
d. By modifying the title of the auditor’s report, such
as “Restricted Report of Independent Report”
32. The statement that “nothing came to our attention
which would indicate that this statement are not fairly
presented” expresses which of the following? a.
Disclaimer of opinion
b. Negative assurance
c. Negative confirmation
d. Piecemeal opinion
33. In the context of PSA 810 (redrafted), management should
agree with the auditor and acknowledges its
responsibilities
a. For the preparation of the summary FS in
accordance with the applied criteria
b. To make the audited FS available to the intended
users of the summary FS without undue
difficulty
c. To include the auditor’s report on the summary
FS in any document that contains the summary
FS and that indicates that the auditor has
reported on them
d. All of the choices
34. Which of the following procedures are least likely to be
performed in relation to an engagement to report on
summary FS?
a. Evaluate whether the summary FS adequately
disclose their summarized nature and identify
the audited FS
b. When summary FS are not accompanied by the
audited FS, evaluate whether they describe
clearly from whom or where the audited FS are
available
c. Evaluate whether the summary FS adequately
disclose the applied criteria
d. Compare the summary FS with the related
information in the audited FS to determine
whether the audited FS agree with, or can be
recalculated from, the related information in
the summary FS
35. An accountant who reviews the financial statements of
nonpublic entity should issue a report stating that a
review
a. Is substantially less in scope than an audit b.
Provides negative assurance that the internal
control structure is functioning as designed
c. Provides only a limited assurance that the
financial statements are fairly presented
d. Is substantially more in scope than a compilation
36. When making a review of interim financial information,
the auditor’s work consists primarily of a. Studying and
evaluating limited amount of documentation supporting the
interim financial information
b. Scanning and reviewing client-prepared internal
financial information
c. Making inquiries and analytical procedures
concerning significant accounting matters
d. Confirming and verifying significant account
balances at interim date
37. Jose, CPA, is requested to report on summary FS of Juan
Books, Inc. Jose has not expressed an audit opinion on
the FS from which the summary FS were derived. Based
solely on this information, should Jose accept the
engagement?
a. Yes, because a report on summary FS is a
separate engagement
b. No, because PSA 810 (redrafted) mandates that
the auditor should only accept an engagement
to report on summary FS only when the auditor
has been engaged to conduct an audit of the FS
from which the summary FS are derived
c. Yes, because an audit of summary FS is
comparable to the audit of FS from which such
summary FS are derived
d. None of the above choices can be selected
because of lack of information
38. Before accepting an engagement to audit summary FS,
the auditor shall
a. Determine whether the applied criteria are
acceptable
b. Obtain the agreement of management that it
acknowledges
and
understands
its
responsibilities regarding the summary FS
c. Agree with management the form of opinion to
be expressed on the summary FS
d. All of the choices
39. In the review of ABC Co. financial statements, evidence
came to the CPA’s attention that indicated substantial
doubt as to ABC’s ability to continue as a going concern.
The principal conditions and events that caused the
substantial doubt have been fully disclosed in the noted
to the financial statements. Which of the following best
describes the CPA’s reporting responsibility?
a. The CPA is not required to modify the
accountant’s review report
b. The CPA is not permitted to modify the
accountant’s review report
c. The CPA should issue an accountant’s
compilation report instead of a review report
d. The CPA should issue an unqualified opinion
with explanatory paragraph
40. Carlo, CPA, was asked by Jude Company to audit the
company’s loans and receivables account, in conjunction
with the audit of Jude’s complete FS. Carlo issued a
report with a modified opinion on the complete set of FS
of Jude Company. Accordingly, Carlo should
a. Issue a qualified opinion on the loans and
receivables account
b. Issue a disclaimer opinion on the loans and
receivables account
c. Consider the effect of the emphasis of a matter
on the auditor’s report for loans and
receivables
d. Issue also an unqualified opinion with emphasis
of a matter paragraph for loans and
receivables
41. If the auditor concludes that it is necessary to express an
adverse opinion or disclaim an opinion on the entity’s
complete set of FS as a whole but, in the context of a
separate audit of a specific element that is included in
those FS, the auditor nevertheless
considers it
appropriate to express an unmodified on that element,
the auditor shall only do so if
a. The auditor is not prohibited by law or
regulation from doing so
b. That opinion is expressed in an auditor’s report
that is not published together with the
auditor’s report containing the adverse
opinion or disclaimer of opinion
c. The specific element does not constitute a major
portion of the entity’s complete set of FS
d. All of these
42. Which of the following statement (s) is (are) correct? I.
When auditing a single FS or an element of FS, it is not
necessary to examine evidence pertaining accounts that are
related to the single FS or element of FS being audited
II. The materiality determined for a single FS or an
element of FS may be lower than the
materiality determined for the entity’s
complete set of FS
a. I only
b. II only
c. Both statements
d. None of the statements
43. If the auditor undertakes an engagement to report on a
single FS or on a specific element of FS in conjunction
with an engagement to audit the entity’s complete set
of FS, the auditor shall express
a. An opinion on the single FS or on the specific
element of the FS only
b. An opinion on the complete set of FS only c. A
single opinion covering both the single FS or
specific element of FS and the complete set of FS
d. A separate opinion for each engagement
44. If requested to perform a review engagement for an entity
for which the accountant has direct immaterial financial
interest, the accountant is
a. Not 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 not be
associated with the financial statements
d. Independent because the financial interest is
immaterial
45. These refer to prospective financial information prepared
on the basis of assumptions as to future events which
management expects to take place and the actions
management expects to take as of the date the
information is prepared (best-estimate assumptions)
a. Forecast
b. Projection
c. Prospective financial statements
d. Budget
46. Prospective financial information can include financial
statements or one or more elements of financial
statements and may be prepared
I. As an internal management tool
II. For distribution to third parties
a. I only
b. II only
c. Both statements
d. None of the statements
47. The use of negative assurance in audit reports of
historical financial statements is
a. A violation of the standards of reporting
b. Encouraged by PICPA
c. A help in clarifying the degree of responsibility
being assumed by the auditor
d. Properly located in the opinion paragraph of the
unqualified report
48. This refers to an element, account, or item of a financial
statement
a. Element of financial statements
b. Component
c. Part of the financial statements
d. Financial statement category
49. The following statements relate to PSA 805. Select the
incorrect statement
a. An auditor may be engaged to audit the entity’s
complete set of FS, as well as the audit of a
single financial statement or of a specific
element to the FS
b. If the auditor is not also engaged to audit the
entity’s complete set of FS, the auditor shall
determine whether the audit of a single FS or
of a specific element of those FS in accordance
with PSAs is practicable
c. In the case of an audit of a single FS or of a
specific element of FS, the auditor shall
consider whether application of the financial
reporting framework will result in a
presentation that provides adequate the
information conveyed in the FS or the element,
and the effect of material transactions and
events on the information conveyed in the FS
or the element
d. All of these are correct statements
50. The degree of certainty the practitioner has attained and
wishes to convey is
a. An assertion
b. An assurance
c. A conveyance
d. A declaration
51. The following are the considerations when planning and
performing an audit of special purpose FS. Select the
incorrect statement
a. In planning and performing an audit of special
purpose FS, the auditor shall determine
whether application of the PSAs requires
special consideration in the circumstances of
the engagement
b. In the case of FS prepared in accordance with the
provisions of a contract, the auditor shall
obtain an understanding of any significant
interpretations of the contract that
management made in the preparation of those
FS
c. An interpretation is insignificant when adoption
of another reasonable interpretation would
have produced a material difference in the
information presented in the FS
d. All of these statements are incorrect
52. Which of the following statements are correct? I. When
forming an opinion and reporting on special purpose FS, the
auditor shall apply the requirements in PSA 700 (Redrafted)
II. In the case of FS prepared in accordance with the
provisions of a contract, the auditor shall
evaluate whether the FS adequately describe
any significant interpretations of the contract
on which the FS are based
a. I only
b. II only
c. Both statements are correct
d. Neither of the statements are correct
53. The following statements refer to PSA 3400. Which one is
incorrect?
a. Prospective financial information relates to
events/actions that have not yet occurred and
may not occur
b. In connection with the auditor’s assurance
regarding prospective financial information,
the auditor is in a position to express an
opinion as to whether the results shows in the
prospective financial information will be
achieved
c. The auditor should consider the extent to which
reliance on the entity’s historical information is
justified
d. The auditor should consider the period of time
covered by the prospective financial
information
54. Which of the following procedures is not included in a
review engagement of a non-public entity?
a. Inquiries of management
b. Inquiries regarding subsequent events
c. Procedures designed identify unusual
fluctuations
d. A study and evaluation of internal control 55.
The following statements pertain to agreed-upon
procedures. Which one is incorrect?
a. Users of the report assess for themselves the
procedures and findings reported by the
auditor and draw their own conclusions from
the auditor’s report
b. The auditor should conduct an agreed-upon
procedures engagement in accordance with
PSRS 4400 and the terms of the engagement
c. The report is restricted to those parties that have
agreed to the procedures to be performed
since others, unaware of the reasons for the
procedures, may misinterpret the results
d. Independence is required when performing an
agreed-upon procedures engagement
56. The following are elements of a report on factual findings
or procedures, except
a. Identification of specific financial or non financial
information to which the agreed upon
procedures have been applied
b. A listing of the specific procedures performed
c. A description of the auditor’s factual findings
including sufficient details of errors and
exceptions found
d. A statement (when applicable) that the audit
opinion expressed relates only to the
elements, accounts, items or financial and nonfinancial information specified and that it does
not extend to the entity’s FS taken as a whole
57. Performing inquiry and analytical procedures that provide
the accountant with a reasonable assurance basis for
expressing limited assurance that there are no material
modifications that should be made to the statements in
order for them to be in conformity with GAAP if
applicable, with another comprehensive
basis of
accounting, is the definition of a (an)
a. Compilation
b. Review
c. Audit
d. Examination
58. Which of the following statement (s) is (are) correct?
I. Although evidence supporting hypothetical
assumptions need not be obtained, the auditor
would need to be satisfied that they are
consistent with the purpose of the prospective
financial information and that there is no
reason to believe that they are clearly
unrealistic
II. The auditor would assess the source and reliability of
the evidence supporting management’s best
estimate assumptions
a. I only
b. II only
c. Both statements
d. None of the statements
59. When an accountant perform more than one level of
service concerning the financial statements of nonpublic
entity, the accountant generally should issue the report
that is appropriate for
a. Lowest level of service rendered
b. The highest level of service rendered
c. A compilation engagement
d. A review engagement
60. Compilation services are intended to enable a CPA to
compete with
a. MAS firms
b. Tax preparation businesses
c. Computer service firms
d. Bookkeeping firms
61. The level of assurance that is provided by CPAs on a
compilation report is
a. None
b. Low
c. Medium
d. High
62. Prospective financial information can include financial
statements or one or more elements of financial
statements and may be prepared for distribution to third
parties in
a. A prospectus to provide potential investors with
information about future expectations
b. An annual report to provide information to
shareholders, regulatory bodies and other
interested parties
c. A document for the information of lenders which
may include, for example, cash flow forecasts
d. All of these are examples of external uses of
prospective financial information
63. Which of the following is the format of compilation that
would not be acceptable?
a. A compilation with full disclosures in accordance
with GAAP
b. A compilation that omits substantially all
disclosures, the report indicates that they are
missing, and their absence is not an intent to
mislead the users
c. A compilation with a separate paragraph
warning readers that the CPA is not
responsible for exercising due care when
performing this type of engagement
d. A compilation with a separate paragraph that
admits that the CPA is not independent with
respect to this client
64. An accountant who is not independent of the client is
precluded from issuing a
a. Report on management advisory services b.
Compilation report on historical financial
statements
c. Compilation reports on prospective financial
statements
d. Special reports on compliance with contractual
agreements
65. Which of the following procedures are most likely to be
performed in relation to an engagement to report on
summary FS?
a. Evaluate whether the summary FS are prepared
in accordance with the applied criteria
b. Evaluate, in view of the purpose of the summary
FS, whether the summary FS contain the
information necessary, and are at
an
appropriate level of aggregation, so as not to
be misleading in the circumstances
c. Evaluate whether the audited FS are available to
the intended users of the summary FS without
undue difficulty, unless law or regulation
provides that they need not be made available
and establishes the criteria for the preparation
of the summary FS
d. All of the choices
66. Which of the following phrases are acceptable forms of
unmodified opinion on the summary FS?
I. The summary FS are consistent, in all material respects,
with the audited FS, in accordance with the
applicable financial reporting framework
II. The summary FS are a fair summary of the audited FS,
in accordance with applicable financial reporting
framework
a. I only
b. II only
c. Both statements are acceptable
d. None of the statements are unacceptable
67. If law or regulation prescribes the wording of the opinion
on summary FS in terms that are different from those
prescribe in PSA 810 (redrafted, the auditor shall
a. Apply the procedures necessary to enable the
auditor to express the prescribed opinion, and b.
Evaluate whether users of the summary FS might
misunderstand the auditor’s opinion on the
summary FS and if so, whether additional
explanation in the auditor’s report on the summary
FS can mitigate possible misunderstanding
c. Both statements
d. None of the statements
68. In performing an attestation engagement on prospective
information, which of the following is not required?
a. If the basis of the reconciliation is different than
the financial statements, a reconciliation of the
two must be provided
b. Management must disclose all significant
assumptions used
c. Management must disclose significant
accounting policies and procedures used in
generating
the
prospective
financial
information
d. Management must disclose the probability of
obtaining the results included in the
prospective financial information
69. To perform an attestation engagement on prospective
information or pro forma information, accountants must
do all of the following except
a. Obtain knowledge about the entity’s business
and accounting principles
b. Understand the internal controls used in the
processes that generated the information
c. Obtain an understanding of the process through
which the information was developed
d. Evaluate the assumptions used to prepare the
information
70. When accountants are not independent, which of the
following reports can nevertheless be issued? a.
Compilation report
b. Standard unqualified audit report
c. Examination report on a forecast
d. Examination of internal control over financial
reporting
71. For a compliance engagement, three conditions must be
met. Which of the following is not one of the three
conditions?
a. Management accepts responsibility for
compliance
b. Management’s evaluation of compliance is
capable of evaluation and is measured against
reasonable criteria
c. Sufficient evidence is available to support
management’s evaluation
d. Management provides a report to the
satisfactory compliance
72. In providing assurance services to clients, public
accounting firms are building on their reputation for a.
Knowledge and integrity
b. Objectivity and integrity
c. Independence and due professional care
d. Professionalism and trust
73. An assurance service is defined as a service that a.
Provides auditing services to non-financial
information
b. Reviews unaudited financial information
c. Improves the quality of information for decision
makers
d. Reduce the risk in management decision making
74. A report on attestation engagement should a. State the
nature of the client’s control structure
b. State the practitioner’s conclusion about the
subject matter or assertion
c. Include a reasonable limitations section
pertaining to data inputs
d. Refer to auditor’s assertion concerning the
subject matter
75. When an accountant examines a financial forecast that
fails to disclose several significant assumptions used to
prepare the forecast, the accountant should describe the
assumptions in the accountant’s report and should issue
a (n)
a. Qualified opinion
b. Unqualified opinion with a separate explanatory
paragraph
c. Disclaimer of opinion
d. Adverse opinion
76. Which of the following is not an objective of a CPA’s
examination of a client’s MD&A?
a. The presentation includes, in all material
respects, the required elements of the rules
and regulations adopted by the SEC
b. The presentation is in conformity with rules and
regulations adopted by the SEC
c. The historical amounts included in the
presentation have been accurately derived, in
all material respects, from the entity’s financial
statements
d. The underlying information, determinants,
estimates, and assumptions provide a
reasonable basis for the disclosures contained
in the presentation
77. According to PSRS 4410, the following procedures are
required whenever a CPA performs a compilation
agreement, except
a. Agreement with the client regarding the terms
of engagement
b. Planning for the engagement
c. Use of audit procedures
d. Issuance of a report
78. In a review service when client has failed to follow GAAP
a. The accountant is not required to determine the
effect of a departure if management has not
done so, but that fact must be disclosed in the
report
b. The accountant is required to determine the
effect of a departure if management has not
done so, and that fact must be disclosed in the
report
c. The accountant is not required to determine the
effect of a departure if management has
not done so, and that fact need not be
disclosed in the report
d. The accountant is required to determine the
effect of a departure if management has not
done so, and that effect need not be disclosed
in the report
79. Before performing a review of a nonpublic entity’s
financial statements, an accountant should complete a
series of inquiries concerning the entity’s procedures for
recording, classifying, and summarizing transactions and
a. Apply analytical procedures to provide limited
assurance that no material modifications
should be made to the financial statements
b. Obtain a sufficient level of knowledge of the
accounting principles and practices of the
industry in which the entity operates
c. Inquire whether management has omitted
substantially all of the disclosures required by
GAAP
80. Jose, CPA, is performing a compilation service for White
House Corporation. In the course of performing
compilation procedures, Jose became aware that some
of the information provided by White House’s
management are incomplete. Client management
refuses to comply with Jose’s requests for additional
information. In this case, Jose should
a. Issue a qualified opinion on the financial
statements compiled
b. Issue an adverse opinion on the financial
statements compiled
c. Issue a disclaimer of opinion on the financial
statements compiled
d. Withdraw from the engagement
81. On each page of the financial information in front of the
complete set of financial statements, the financial
information compiled by the accountant should contain
a reference such as
a. Compiled without audit or review
b. Unaudited
c. Refer to the compilation report
d. Any of these
82. If the special-purpose FS is not suitably titled or the basis
of accounting is not adequately disclosed, the auditor
should
a. Withdraw from engagement
b. Issue an appropriately modified report
c. Reword the title of the financial statements d.
Requests for an additional representation in the
management representation letter
83. Examples of special purpose framework are I. Tax basis of
accounting for a set of FS that accompany an entity’s tax
return
II. The cash receipts and disbursements basis of
accounting for cash flow information that an
entity may be requested to prepare for
creditors
III. The financial provisions established by a regulator to
meet the requirements of that regulator
IV. The financial reporting provisions of a contract, such
as a bond indenture, a loan agreement, or a
project grant
a. I, II and III
b. I, II and IV
c. II, III and IV
d. I, II, III and IV
84. An accountant may accept an engagement to apply
agreed-upon procedures to prospective financial
statements provided that
a. Distribution of the report is to be restricted to
the specified users involved
b. The prospective financial statements are also
examined
c. Responsibility for the adequacy of the procedures
performed is taken by the accountant
d. Negative assurance is expressed on the
prospective financial statements taken as a
whole
85. PSA 700 (Redrafted) deals with the form and content of
the auditor’s report. In the case of an auditor’s report on
special purpose FS, which of the following are additional
reporting requirements mentioned by PSA 800?
I. The auditor’s report shall also describe the purpose for
which the FS are prepared and, if necessary,
the intended users, or refer to a note in the
special purpose FS that contains
that
information
II. If management has a choice of financial reporting
frameworks in the preparation of such FS, the
explanation of management’s responsibility
for the FS shall also make reference to its
responsibility for determining
that the
applicable financial reporting framework is
acceptable in the circumstances
III. The auditor’s report on special purpose FS shall
include an Emphasis of Matter Paragraph
alerting users of the auditor’s report that the
FS are prepared in accordance with a special
purpose framework and that, as a result, the
financial statements may not be suitable for
another purpose
a. I and II only
b. II and III only
c. I and III only
d. I, II and III
REPUBLIC ACT NO 9298
QUESTIONS:
1. Which organization(s) has the primary responsibility
of effectively enforcing the provisions of RA 9298?
I.
Professional Regulatory Board of
Accountancy
II.
Department of Justice
III.
Professional Regulation Commission
IV.
Philippine Institute of Certified Public
Accountants
a. I and II
b. II and III
c. I, III, and IV
2.
3.
4.
5.
6.
d. I and III
The following are among the powers and functions of
the Board of Accountancy, except:
a. To prescribe and adopt the rules and
regulations necessary for implementing RA
9298
b. To prescribe and/or adopt a Code of Ethics
for the practice of accountancy
c. To ensure, in coordination with the DECS
that all higher educational instruction and
offering of accountancy comply with
prescribed
policies,
standards
and
requirements of the course
d. To conduct an oversight into the quality of
audits of financial statements
Which of the following is correct?
a. The chairman and members of the Board
shall receive compensation and allowances
comparable to that being received by the
Chairman and the members of the existing
regulatory boards under the PRC as provided
for in the General Appropriations Act
b. No person shall serve in the Board for more
than nine years
c. The BOA Chairman has the sole power to
administer the oaths in connection with the
administration of the Accountancy Law
d. The Board shall be under the administrative
supervision of the PICPA
The following are the grounds for suspension or
removal of members of the Board of Accountancy,
except:
a. Neglect of duty or incompetence
b. Violation or tolerance of any violation of RA
9298 and its IRR, or the Code of Ethics and
technical and professional standards of
practice for CPAs
c. Pending case on a crime involving moral
turpitude
d. Manipulation or rigging of the CPA licensure
examination results
Who is the person that has authority to suspend or
remove a member of the BOA, unless he is the one
who is under investigation:
a. The President of the Republic of the
Philippines
b. The Chairman of the Professional Regulatory
Board of Accountancy, unless he is the one
who is under investigation
c. The Commissioner of the Professional
Regulation Commission
d. None of them
The organization administers, implements and
enforces the regulatory policies of the Philippine
Government with respect to the regulation and
licensing of the various profession under its
jurisdiction, one of which is accountancy
a. BOA
b. PICPA
c. COA
d. PRC
7.
8.
The following are qualification of the members of the
Board of Accountancy, except:
a. Natural-born citizen and resident of the
Philippines
b. Duly registered CPA with atleast 5 years of
working experience in the Commerce and
Industry
c. Good moral character, not convicted of
crimes involving moral turpitude
d. No direct, or indirect pecuniary interest in
any school, college, university or institution
conferring the BS Accountancy degree or
providing CPA Review Classes
The Accredited National Professional Organization
(APO) shall submit its nominations for the Board of
Accountancy (with complete documentation) to the
Commission
a. Not later than sixty (60) days prior to the
expiry of the term of an incumbent chairman
or member
b. On the date of expiry of the term of an
incumbent chairman or member
c. After the 60th day from the expiry of the term
of an incumbent chairman or member
d. Upon request by the Commission for the
submission of nominations
Statement I: The Philippine Institute of Certified Public
Accountants is registered with the SEC as a not-for-profit
corporation and recognized by the BOA, subject to the approval
of the PRC
Statement II: Membership in the PICPA shall be a bar to
membership in any other association of CPAs
9. Which statement(s) is true?
a. I only
b. II only
c. Both statements
d. Both are incorrect
10. Unless there is a valid reason to have additional
representation, the PICPA shall have how many
national directors?
a. 12
b. 14
c. 15
d. 20
11. The PICPA national directors shall be apportioned
according to four geographic are based on the ratio of
latest available number of members in good standing
from those areas. Which of the following is not a
geographic area?
a. Luzon
b. NCR/MMR
c. Mindanao
d. CAR
12. A PICPA director can only represent a sector in a
region if he/she has been a member in good standing
in such sector in the region for atleast ___ years at the
time of his/her nomination:
a. 2 years
b. 3 years
c. 4 years
d. 5 years
13. PICPA shall renew its certificate of accreditation once:
a. Annually
b. Every 3 years
c. Every 4 years
d. Every 5 years
14. According to the IRR, this council is tasked to assist
the BOA in continuously upgrading accountancy
education in the Philippines to make the Filipino CPAs
globally competitive
a. Quality Review Committee (QRC)
b. Education Technical Council (ETC)
c. CPD Council
d. CHED
15. The Educational Technical Council shall be composed
of
a. Six Members
b. Seven Members with a Chairman
c. Seven Members with a Chairman and a ViceChairman
d. Eight members with a Chairman, a vicechairman, and a secretary
16. The PRC CPD Council shall be composed of:
a. A chairperson and three members
b. A chairman, vice-chairperson and two
members
c. A chairperson and two members
d. A chairperson, vice-chairperson and three
members
17. Identify the following organizations for CPAs in each
sector:
Public Practice
Commerce and Industry
Professional
Board of
(PRBOA)
Commission
(COA)
Regulatory
Accountancy
on
Audit
Securities and Exchange
Commission (SEC)
Bangko Sentral ng Pilipinas
(BSP)
Bureau of Internal Revenue
(BIR)
Academe
Insurance Commission
Government
18. Identify what is being asked related to the Board of
Accountancy (BOA)
Composition
Nominations
1 complete term
Maximum no. of years
Vice Chairman
2 consecutive complete
terms
Agency
Professional
Regulation
Commission (PRC)
Description
Administers,
implements
and enforces the regulatory
COA shall have the
exclusive authority to define
the scope of its audit and
examination, establish the
techniques and methods
required
therefor,
and
promulgate accounting and
auditing
rules
and
regulations on the use of
government funds
Regulation of the business
registration and operations
of various business forms of
organization
in
the
Philippines
To maintain price stability
conducive to a balanced and
sustainable
economic
growth
An agency of Department of
Finance collecting more than
half of the total revenues of
the government
To regulate and supervise
the Insurance industry for
the promotion of the national
interest
Standard-Setting Bodies Affecting the Accountancy
Profession in the Philippines
Agency
Financial
Reporting
Standards Council (FRSC)
Auditing and Assurance
Standards Council (AASC)
GOVERNMENT AGENCIES RELATED TO THE PRACTICE
OF ACCOUNTANCY IN THE PHILIPPINES
policies of the Philippine
Government with respect to
the regulation and licensing
of the various professions
under its jurisdiction
See RA 9298 or the
Philippine Accountancy Act
International
Accounting
Standards Board (IASB)
International Auditing and
Assurance Standards Board
Description
Formalizes the accounting
standard-setting function in
the Philippines
Formalized the auditing
standard-setting function in
the Philippines
International counterpart of
FRSC
International counterpart of
the AASC
Composition of the FRSC and AASC
FRSC
b.
c.
d.
AASC
1 Chairman
14 Representatives
BOA
SEC
BSP
BIR
A major organization
composed of preparers
and users of financial
statements
Association of CPAs in
Public Practice
COA
APO (PICPA)
Total Representative
TOTAL per body
19. The chairpersons of the FRSC and the AASC shall be
appointed by:
a. The President of the Republic of the
Philippines
b. The Professional Regulatory Board of
Accountancy
c. The Professional Regulation Commission
d. The Philippine Institute of Certified Public
Accountants
20. This committee is created to conduct an oversight into
the quality of audits of financial statements through a
review of the quality control measures instituted by
individual CPAs, Firms, or Partnerships.
a. Quality Review Council
b. Quality Review Committee
c. Quality Review Committee
d. Engagement Quality Control Review
21. The QRC shall have the following functions:
a. Conduct quality control review on applicants
for registration to practice public
accountancy and render a report on such
quality review
b. Revoke the certificate of registration and
professional ID of an individual CPA, firm,
or partnership of CPAs who have not
observed quality control measures
c. All of the answers
d. None of the answers
22. The Constitution of the Philippines requires this Office
to keep the general accounts of the government for
such period as may be provided by law, preserve the
vouchers pertaining thereto
a. National Accounting Office
b. Ministry of Finance
c. Commission on Audit
d. Accounting Units
23. The following are the audits of the Commission on
Audit (COA), except:
a. Define the scope of its audit and examination
24.
25.
26.
27.
28.
29.
Promulgate accounting rules and regulations
Keep the general accounts of the government
Assume fiscal responsibility for the
government and its instrumentalities
As used in Republic Act No. 9298, this term refers to
the area of practice in accountancy:
a. Line
b. Section
c. Segment
d. Sector
Identify what area of practice is being identified in
each item:
a. Holds, or is 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
b. Is involved in decision-making requiring
professional knowledge in the science of
accounting, as well as the accounting aspects
of finance and taxation, or is employed in a
position that requires to be a CPA
c. Is in an educational institution which
involved teaching of accounting, auditing,
management services, accounting aspect of
finance and taxation, or is employed in a
position that requires a CPA
d. Holds out in himself/herself as one skilled in
the knowledge, science and practice of
accounting, and as someone qualified to
render professional services as CPA
This refers to those persons who hold a valid
certificate issued by the Board of Accountancy,
whether they be in public practice, industry,
commerce, the public sector, or education
a. Professional accountant
b. Professional accountant in public practice
c. Senior accounting practitioner
d. Audit associate
Regulation of the accounting profession include:
a. Public Regulation as provided in the
Philippine Accountancy Act of 2004
b. Regulation within the profession, through the
implementation of the Code of Ethics
c. Regulation within the firm, through the
implementation of the Code of Ethics
d. All of the answers
The Philippine Accountancy Act of 2004 – shall
provide for and govern:
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. All of the answers
The following are the grounds for the refusal to issue
a certificate of registration and professional
identification car, except:
a. Conviction of a criminal offense involving
moral turpitude
30.
31.
32.
33.
34.
35.
36.
b. Guilty of immoral or dishonorable conduct
c. Unsound mind
d. Conviction for a political offense
Any candidate who fails in ____ complete CPA Board
Examinations shall be disqualified from taking
another set examinations unless he/she submits an
evidence to the satisfaction of the BOA that he/she
enrolled in and completed at least _____ units of
subjects given in the licensure examination
The Board of Accountancy, subject to the approval of
the PRC, mar revise or exclude any of the subject and
their syllabi, and new ones as the need arises, provided
that change shall not be more than:
a. Every two years
b. Every three years
c. Every four years
d. Every five years
A certificate under seal, bearing a registration number,
issued to an individual, by the PRC, upon
recommendation by the Board of Accountancy,
signifying that the individual has complied with all the
legal and procedural requirements for such license,
including, in appropriate cases, having successfully
passed the CPA licensure examination
a. Certificate of Registration
b. Certificate of Accreditation
c. Certificate of identification
d. Certificate of quality review
A professional identification card has a validity of:
a. 1 year
b. 2 years
c. 3 years
d. 4 years
The CPD programs for accountancy shall have a these
objectives:
I.
To raise and maintain the professional’s
capability for delivering professional
services
II.
To attain and maintain the highest standards
and quality in the practice of his profession
III.
To make the profession globally competitive
a. I, II and III
b. I and II only
c. I and III only
d. II and III only
A CPA is regarded as in public practice if offered or
rendered on a fee basis and to more than one client:
I.
Preparation and signing of audit reports
II.
Professional assistance on accounting
procedures
III.
Representation
of
clients
before
governmental agencies on tax and other
matters regardless of its relation to
accounting
a. I, II and III
b. I and II only
c. I and III only
d. III only
The position in area of Commerce and Industry must
be occupied by a CPA provided that:
I.
Paid up capital must be at least P 10,000,000
II.
Annual Revenue of P 5,000,000
37.
38.
39.
40.
41.
a. I and II
b. I only
c. II only
d. None of the statements
Abraham James, CPA is the dean of University of
Abraham in Manila.
I.
Abraham is considered to be in the practice
of his profession
II.
The position of the dean or the department
chair or its equivalent that supervises the BS
Accountancy program of an educational
institution must be a duly registered CPA
III.
Abraham is practicing in the education sector
a. I, II and III
b. I and III only
c. II only
d. II and III only
According to the IRR, the following can teach
business law:
I.
CPAs
II.
Members of the IBP
a. I and II
b. I only
c. II only
d. Neither I nor II
The policy for accreditation covers CPAs involved in
teaching of accounting and related subjects in the:
a. Primary level only
b. Primary and secondary levels only
c. Secondary and tertiary levels only
d. Primary, Secondary, Tertiary and graduate
level
Which of the following statements are correct:
I.
A BS Accountancy graduate who takes and
successfully passes the CPA Board
Examination shall not be required to take the
CIVIL SERVICE EXAMINATION prior to
holding an entry level government position
II.
Practice in government shall constitute in a
person who holds, or is appointed to a
position in an accounting professional group
in government or in a government owned
and/or controlled corporation, including
those performing proprietary function, where
decision making requires professional
knowledge in the science of accounting or
where a civil service eligibility as a CPA is a
prerequisite
a. I and II
b. I only
c. II only
d. Neither I nor II
The following are the requirements for accreditation
of Accounting Teachers, except:
a. Possession of relevant Master’s Degree
b. Completion of 12 units of relevant education
subjects from CHED recognized schools
c. A total of two years meaningful experience in
actual accounting work
d. Proof that the CPA has undergone continuing
professional development, totaling 60 units
42. The accreditation granted for accounting teachers is
valid for:
a. 1 year
b. 2 years
c. 3 years
d. 4 years
43. The certificate of a CPA who has been revoked:
I.
Is required to take the CPA Board Licensure
Examinations before reinstatement
II.
May be reinstated by the BOA after the
expiration of 2 years from the date of
revocation
III.
Can no longer be reinstated as a CPA
IV.
Has committed a crime involving moral
turpitude
a. II only
b. All of the statements
c. None of the statements
d. II, III and IV only
44. Which of the following statement(s) is (are) correct?
I.
Upon passing the CPA Board Examination,
he(she) is allowed to practice public
accountancy in his/her own name
II.
The certificate of accreditation to practice
public accountancy is granted only once and
remains in effect until withdrawn, suspended,
or revoked in accordance with RA 9298
a. Both statements are correct
b. I only
c. II only
d. Neither of the statements are correct
45. The following are grounds for the suspension or
revocation of certificate of registration and
professional identification card:
I.
Possession of an unsound mind
II.
Practice in more than one field of
accountancy
III.
Conviction of a criminal offense involving
moral turpitude
IV.
Unprofessional or unethical conduct,
malpractice, or violation of RA 9298
a. All of the statements
b. I, II, and IV only
c. I, III, and IV only
d. I and IV only
46. The punishment, upon conviction, for any reason who
has violated any of the provisions of this Act, or any
of its Implementing Rules and Regulations as
promulgated by the Board of Accountancy:
a. A fine of not less than fifty thousand pesos
and imprisonment for a period of not
exceeding two years
b. A fine of not less than fifty thousand pesos
but not an imprisonment
c. No fine but an imprisonment for a period not
exceeding 2 years
d. A fine not less than fifty thousand pesos or
imprisonment for a period not exceeding two
years
47. Which of the following statements is incorrect?
a. Single practitioners and partnerships for the
practice of public accountancy shall be
48.
49.
50.
51.
52.
53.
registered certified public accountants in the
Philippines
b. A certificate of accreditation shall be issued
to CPAs in public practice only upon
showing, that such registrant has acquired a
maximum of 3 years meaningful experience
in any of the areas of public practice
including taxation
c. Meaningful experience, as mentioned by RA
9298 are explained in detail under Section
28A of the Implementing Rules and
Regulations
d. The SEC shall not register any corporation
organized for the practice of public
accountancy
Individual CPAs, Firms, or Partnerships of CPAs,
including partners and staff members thereof shall
register with the Board of Accountancy and the
Professional Regulation Commission. If the
application for registration of Juan and Pedro, CPAs,
was approved last August 10, 2017
a. August 10, 2020
b. October 30, 2019
c. October 30, 2020
d. December 31, 2019
CPAs may practice public accountancy under the
following forms of organization except:
a. Sole proprietorships
b. General Partnerships
c. Limited Liability Partnerships
d. Corporations
Which of the following names illustrates a firm name,
as contrasted to the name of an individual CPA and a
partnership name?
a. Jude Caponpon, CPA
b. Jude Caponpon, and Associates, CPAs
c. Caponpon & Asano, CPAs
d. Caponpon, Asano & Dancel, CPAs
Which of the following indicates a violation of the IRR
of RA 9298?
a. A, B and C, CPAs (A died 7 years ago; B and
C are continuing the firm)
b. G and H, CPAs (G died 3 years ago, and H is
continuing the firm as a sole proprietor)
c. D and E, CPAs (the name of F, a third active
partner is omitted from the firm name)
d. K and L, CPA (K died 3 years ago, L was
admitted into the partnership two months
after K’s death. There are seven other active
partners, all of whom have their names
omitted from the firm name)
Which of the following should a CPA indicate upon
signing, use or issuance in connection with the practice
on profession?
I.
CPA Certificate of Registration Number
II.
Professional Identification Card
III.
Professional Tax Receipt
a. All of the above
b. I and II only
c. II and III only
d. I and III only
The amount of audit fees depend largely on the:
a.
54.
55.
56.
57.
58.
59.
Size and capitalization of the company under
audit
b. Amount of profit for the year
c. Availability of cash
d. Volume of audit work and degree of
competence and responsibilities involved
Under this method of billing a client, the external
auditors charges on the basis of actual time spent by
principals/partners, supervisors, seniors and juniors at
predetermined rates agreed upon with the client
a. Per diem basis
b. Retainer basis
c. Flat fee or flat sum basis
d. Maximum fee basis
All licensed CPAs shall obtain and use a seal of design
prescribed by the:
a. AASC
b. PICPA
c. BOA
d. PRC
Any advertising by professional accountants beyond
their name, address, telephone number and
membership in professional organizations has been
traditionally considered unethical in the Accountancy
Profession, due to the following reasons, except:
a. Advertising could lead to undue competition
between and among practitioners, causing a
decline in quality of service
b. Advertising would encourage a more
personal approach to clients
c. The cost of advertising would outweigh any
savings that might result from competition
d. Small or new practitioners would be unlikely
to have the financial resources to match
advertising of larger or more established
practices
Which of the following is allowed under the revised
rules on advertising?
a. Self-laudatory statements
b. Discrediting, disparaging, or attacking other
firms or CPA practitioners
c. Referring to, using or citing actual or
purported testimonials by third parties
d. None of these are allowed forms of
advertising
Before advertisements are disseminated, they must be
subject to the review of:
a. Those charged with governance of the clients
of the CPA
b. Managing partner and Quality Control
partner of the firm
c. Board of Accountancy and Professional
Regulation Commission
d. Risk Management partner and Managing
partner of the firm
Which of the following cannot be mentioned by an
auditor in publicizing a book in accounting?
a. Name
b. Qualifications
c. Membership in professional organization
d. Services that the author’s firm provides
60. A professional accountant may invite the following to
attend training courses and seminars conducted for the
assistance of staff, except:
a. Clients
b. Staff of the Firm
c. Other professional accountants
d. Potential clients
61. May a CPA give a brochure to a non-client?
___________________________________________
___________________________________________
___________________________________________
_______________
62. Regarding anniversaries, a firm may undertake press
releases or other media release to commemorate their
anniversaries in public practice only every:
a. Year
b. 3 years
c. 4 years
d. 5 years
63. The death or disability of an Individual CPA and/or
the dissolution and liquidation of a Firm or Partnership
of CPAs shall be reported to the BOA not later than
________ from the date of such death, dissolution or
liquidation
a. 25 days
b. 30 days
c. 60 days
d. 90 days
64. Which of the following statements are considered
violations of the IRR of RA 9298?
I.
Engaging in public accounting practice
without first registering with the BOA and
the SEC
II.
Continuing to engage in the practice of public
accountancy after the expiration of the
registration/accreditation
III.
Continuing to engage in the practice of public
accountancy after suspension, revocation or
withdrawal of registration
IV.
Giving any false information, data, statistics,
reports or other statement which tend to
mislead, obstruct, or obscure the registration
of an individual CPA, Firm or Partnership of
CPAs under the IRR
V.
Giving any misrepresentation to the effect
that registration was secured in truth when in
fact, it was not secured
VI.
Failure or refusal to undergo quality review
65. Subjects or citizens of foreign countries:
a. May be allowed to practice accountancy in
the Philippines, regardless of the provisions
of the existing laws and international treaty
obligations, including mutual recognition
agreements entered into by the Philippine
government with other countries
b. Are not allowed to practice accountancy in
the Philippines, unless they take, and pass,
the CPA licensure examination given by the
BOA
c.
May be allowed to practice accountancy in
the Philippines, subject to the provisions of
existing laws and international treaty
obligations, including mutual recognition
agreements entered into by the Philippine
government with other countries
d. Are never allowed to practice accountancy in
the Philippines because they will jeopardize
the interests of Filipino CPAs
66. RA 9298 provides that temporary or special permits
may be issued to Foreign CPAs in the following
situations, except:
a. A foreign CPA was called for consultation
which, in the judgment of the BOA, is
essential for the development of the
Philippines in which the permit restricts the
foreign CPA’s practice to the particular
consultation work being performed provided
that no CPA was qualified for such position
b. A foreign CPA was engaged to lecture on
fields essential to accountancy education in
the Philippines. The permit restricts the CPA
to teaching only, and limited public practice
provided that such practice is conducted
outside the class hours
c. A foreign CPA, an IFRS expert, is engaged
for services deemed essential for the
advancement of accountancy in the
Philippines
d. All of the statements above are not allowed