Name: Erving Argawanon
Course: Accounting 401
Date: April 10, 2025
1. Define an assurance engagement, and discuss the elements in its framework.
An assurance engagement is a professional service where a practitioner evaluates a subject
matter (e.g., financial statements) to provide an opinion that enhances user confidence in the
information’s reliability. It ensures credibility through an independent assessment.
The framework of an assurance engagement consists of the following elements:
1. Three-party relationship: Involves the practitioner (e.g., auditor), the responsible party
(e.g., management), and the intended users (e.g., investors).
2. Subject matter: The information under review, such as financial statements or
compliance reports.
3. Criteria: The standards used for evaluation, like International Financial Reporting
Standards (IFRS).
4. Evidence: The practitioner collects sufficient and appropriate evidence to support their
conclusion.
5. Assurance report: A formal report presenting the practitioner’s opinion, such as an
audit opinion.
2. When can a practitioner accept an assurance engagement? When can he/she not accept
it?
A practitioner can accept an assurance engagement under these conditions:
1. They are independent and free from conflicts of interest.
2. They possess the necessary skills and expertise for the engagement.
3. The subject matter and criteria are appropriate, and evidence is obtainable.
4. Ethical standards (e.g., IESBA Code of Ethics) are met.
A practitioner cannot accept an assurance engagement if:
5. Independence is compromised (e.g., financial ties to the client).
6. They lack the required competence or resources.
7. Ethical threats (e.g., self-review or advocacy) cannot be mitigated.
8. The subject matter is unsuitable, or evidence cannot be gathered.
3. Enumerate the elements of an assurance engagement.
The elements of an assurance engagement are:
1. Three-party relationship (practitioner, responsible party, intended users).
2. Subject matter.
3. Criteria.
4. Evidence.
5. Assurance report.
4. Give some examples of subject matters in assurance engagements.
Examples of subject matters in assurance engagements include:
1. Financial statements (e.g., auditing a company’s annual financial reports).
2. Internal controls (e.g., assessing controls over financial reporting).
3. Regulatory compliance (e.g., verifying adherence to tax or environmental laws).
4. Sustainability reports (e.g., validating a company’s environmental impact claims).
5. Performance metrics (e.g., evaluating key financial indicators).
5. Explain what is professional skepticism. How relevant is this attitude to your job as an
accountant and finance professional?
Professional skepticism is an attitude where a practitioner maintains a questioning mindset,
critically evaluating evidence and not accepting information at face value. It involves being alert to
potential misstatements due to errors or fraud and questioning the reliability of evidence.
This attitude is highly relevant to an accountant and finance professional because:
1. It ensures the accuracy and reliability of financial information, which stakeholders rely
on.
2. It helps detect fraud or errors, safeguarding the public interest and trust in the
profession.
3. It promotes independence and objectivity, which are essential in accounting roles.
4. In assurance engagements, professional skepticism enhances the quality of the
practitioner’s opinion, ensuring it is credible and trustworthy.
Name: Erving Argawanon
Course: Accounting 401
Date: April 10, 2025
1. Discuss how the practice of accountancy differs across the sectors of Public
Accountancy, Commerce and Industry, Education/Academe, and Government.
The practice of accountancy varies across sectors due to differences in objectives, responsibilities,
and stakeholders:
1. Public Accountancy: Focuses on providing independent services like auditing, tax
preparation, and consulting to clients. Practitioners (e.g., CPAs in public firms) ensure
financial statements comply with standards and serve external stakeholders like
investors.
2. Commerce and Industry: Accountants work within organizations, managing internal
financial processes such as budgeting, cost accounting, and financial reporting. Their
focus is on supporting management decisions and operational efficiency.
3. Education/Academe: Accountants in this sector are educators or researchers,
teaching accounting principles, conducting research, and developing future
professionals. They contribute to the profession by advancing knowledge and training.
4. Government: Accountants ensure public funds are managed transparently, focusing on
compliance with laws, budgeting, and financial reporting for government entities. They
serve the public interest by promoting accountability.
2. State some of the powers and functions of the members of the Professional Regulatory
Board of Accountancy.
The Professional Regulatory Board of Accountancy (e.g., in the Philippines, as per the slide
context) has several powers and functions:
1. Regulates the accountancy profession by setting standards for practice and ethics.
2. Administers the CPA licensure examination, including developing and grading the tests.
3. Issues, suspends, or revokes CPA licenses based on compliance with regulations.
4. Monitors the quality of accountancy education and ensures it meets professional
standards.
5. Investigates violations of professional standards and imposes disciplinary actions.
6. Promotes continuing professional development (CPD) for CPAs to maintain
competence.
3. Enumerate the qualifications of the application for the CPA licensure examinations.
The qualifications for applying to the CPA licensure examination typically include:
1. A Bachelor’s degree in Accountancy or a related field from an accredited institution.
2. Completion of the required accounting, auditing, taxation, and business law courses.
3. Good moral character, with no convictions involving moral turpitude.
4. Citizenship requirements (e.g., in the Philippines, the applicant must be a Filipino
citizen).
5. Compliance with any additional requirements set by the regulatory board, such as preexamination reviews or certifications.
4. Explain how the rating in the CPA Licensure Examination is determined.
The rating in the CPA Licensure Examination is determined as follows:
1. The exam consists of multiple subjects (e.g., Financial Accounting, Auditing, Taxation,
etc.), each with a specific weight.
2. A candidate must achieve a general weighted average of at least 75% across all
subjects.
3. No subject score should be below 65%; otherwise, the candidate fails, even if the
average is met.
4. Scores are calculated based on the number of correct answers, often using a
standardized grading system.
5. Some boards may apply conditional passing rules, allowing candidates to retake failed
subjects under specific conditions.
5. Discuss the limitation of the practice of Public Accountancy.
The practice of Public Accountancy has several limitations:
1. Independence requirements: Public accountants must remain independent, avoiding
financial or personal relationships with clients that could impair objectivity.
2. Scope of services: They are restricted from performing certain non-audit services (e.g.,
management functions) for audit clients to prevent conflicts of interest.
3. Regulatory compliance: They must adhere to strict standards (e.g., GAAP, GAAS)
and face penalties for non-compliance.
4. Liability risks: Public accountants face legal and professional liability for errors or
negligence in their work, such as issuing an incorrect audit opinion.
5. Continuing education: They are required to complete ongoing professional
development to maintain their license, which can be time-intensive.