~J~~A

'fhe Review School of Accountanr.y .

WTcl. No. 735-CJSG' & 734-~geg •

AUDI'IING TI:£0~Y 2 o J·u 1 y 2 a13 (Saturday)

F'irst Pre-Board Examinatiu.1 3:30 P.~L 5:00 P.M.
Jose M. Ireneo/Gevrge R. J~es

MULTIPLE CaOICE
•
INST--<..TJC':'ICNS: SPlec:tanswer for e::J.ch __,f the following
the ".11Tect
one {o.r- each item bv shading U1e box
"- .c -:C' · to cr. ~L c. ,.21. :): '.! ~Tr chni ce che sheet provided.
STRICTI. Y NC i-:T.ASVRF:.3 AI<E LT.LOTiED. Use penc:.:.l 1~0. 2 cnly.
-----------
~ :-·. "= ' s reporl: lS
cl·U--11 . . :) . . __ the ;nedlUJ,t tt:r.uugh ch he expresseo;:
vJ!ti
Hie· c-,p inion 1ES His disclaimer uf opinion 1: E:S
b. I lis up inion \TC...., ,--.
"~~ His di.sclaine.t of opinion t:o
c. L::.s opini-:>n No !-:is dio:c;lalmer of opinivn YI:S
c1. Hi :o opi:-tion tb
" hi.3 disclaimer of opinion No

t~,e f-:>llowing is not an nndcrlying condition tha~ creates a

\~. DL"C.L'-'ions are nc:>t t1Jr.e~:c,,nsic,;.ve.

F1: anc~al dec~sion~ that Jre lmportant to investors and users.
d. l::;c [ ·3 sep~d.raceJ from acccc:nting records by distance a:-1d time.

3. Sl; Ir~fornati0n risk .refeLs to the rj s:: thac: the auditoL may express
an •Jnqt...all i:ied opinion on the [i.no.r.cial. statements ;..rhen iiJ fact the
financial sta'::.ernent.s uLe ma.ter-'-a}ly rd.SS"Cated.
:32: ThE' ulCJ.ses and rncti ve.s of the in::orrnation pro·;ider m'3.y be a cause
of infcrT2tion risk.
33: TL'- "s,.;u.;-nptlO:l un~ier~Lyi,l~i ,itl 3.Ud~.t: o<=_ fjr.lr.cial St2t~ments is
ch<c"y vnJ L l.Je Lded l~_;' diffen.cnC CjJOlCpS ior similar purpose:
tne ~0ove st::tlements i~i2re incorrect?
-------
a. ·J ~ i!ld 52. . . 71 and S3.
31 onl:,r. d. S2 and S3.

4. Prcfes:..ion::tl audit:inu st'l.nda~ds ~cguire that th·.= auditor pertorm the

audi c: ~·
a. Witn the aim of de~ectinc; fr2ud·committ:ed hy 'che -::iient.
t. using Pr.ilippine s·,_;,l.lldards en Auditing r;ithout .:my e.hr:epti.on.
c. Tu provide a~~o]Lte assur1nce that all material errors are
de:.ected and· co::r,2cted.
u. \•l;_._ll an attitt.de Ol ru feJSj_Ona:!._ skepticism.

~. s::,~ CjDlr:::al objectlve oi an cperatlonal audit is for the auditor to

ci·.cteL!l\l.:l2 wr,ethe,r the financir.l statt:mt:nts" fairly present the
entltj's finar1cial ~osittun, rescl~s cf operatio~s and ca3h flows.
S::C: Ir. per:for:::ling comol.i.ance i'iUr:L'_t£9, a: c;;PA issues e1 report on the
de•]ree of comr.·llanr::e ·,..rich ~ht: -~~r.i.teria U8ed for the engagement
( fc'r e'xample.• le1ws, rules or re;-Tulations Hh:i.ch have been set by
tl1 ~ auditor) .
s::Ind~pend2nc ~udltors eLe expecced by ~anagement Lo be e~pe~t~ :)ho
ctct~v' 1.y part1.r:i_p3.te in cnanaqem<:nt decision-maki:-'g.
V.!:_i_-=:h ct 1~he al.Jove:: stut, :-~:'.t:;ilts 2_~/r...rP 2r1correc:t?
------
:3 anc1 .::' 2.
L c. S 1 ii.nd S 3 .
b. .':' and S3. d. Sl, 32 and 32.

6. A. basi..: tool used by the o.udltor 'co control the c.udit ;..ork and
revi..;~-,· t!1e p;ogress of ti1e audic:
a. Audi~ prog~arn. c. Engagement lette.t.
b. P!ogress flowchart C.. Time "tnd e.{pense summary.
 l l J1f' ...::•'• .. C·l•:l ~- J nu
(11~d J. I_ rJ .( J.f\ {,' \1' [ L-r::"'

b; C1 ; i ::: }_. ..::• r\.,

a. Compl J.drr f:'~ t5. I c. S~~St6nt1~~ tesL~
;_). In t (~ L l1d . .~. c:· :..) n t r o -~ :~; .• d. ~~tat is t j_ c Lll t t s k .: ~-:a J ·; :-- -~ ~- •

-·.,
!-' .. ....1.. ; '. '-·: J ·. e ! ......
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·· ~ 1 ·=- r1 · .! (; T_! I _,l•

II

rl'};~-~ !,'•-'' :,:,\~ d<""l>)ll!)\'_ :L f'1<1 i.. C;: l.!!··_, i (,' ·.: t :Ci oi t fJ c r: hun·; <e·
:.j_: i !.h \-;:.:ru:= r. u lJ y ·rc•J,Itl i ;q ;• r j fl c q; l ,_. c;
!'-'1...::; ,-t ~_ 1r.-:~;nt.:. 1 l ' 1 uo;, l.t.i,:,tti.on .-. h ~-: l ;_ ~~

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'- ,_I : ~ cl.t.her.

I:::; ahc;•,l t ''d

, I r:: r ~C(·_l "-'<.J J.J 1 (_- ..

nt=·t \/ci.l. u~.

.. Nc · ·-~ s l- . ...J. \ ,__,_ ._: lt... ·
the c: r•.:. ; ·. ·;.
j, ?r<)D-~:r\-\' o:.:t (_·; r t : 0 pr l. . l t -·

1 .s pu L!1 t- il . t:-~ ;:r•

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1
I.' l_ \. lo ~ I >,' ~:. :1 i -, -· '-' -'-· '
.._ ._l -~ l~ L ... ce . Ln I '· .=i (~ r ._,: f

; ) l-. '~ ~J s;: (\

;.:pt::·· Ct:.lSt- t h~.. ,_· r.··J_..,

llrnitaticn::; _1 fl t- ~--.:· l_ :l Cl J
...~, ~/ -~ t. ern._, .
'i'h<c
c· ·.) r: ; 'j L~i·:.·eC on tlJd'
.l. (_ t j t,-__ , t_ :..r.

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:j ~; ' : rr't
cl J.Cr' l.
T "" ... c-r.; .. _

1:._' ~~: v j_,:_: . ,; ·'Pl·' rov,ll 01

"'' "J u.:·: t pr:or to·:c;Jqnirtlj ,t,~

· ,_ ~-~ r". : ~ f Ler the \.) L

J_ r1 t: c.:q'r I;_, · :nr · · '

{ 0 1 l · •,,...r: r·: ! .s :.) ~--c..:.. . '•]'

st~ff aua;tor's ~ork

f J i,, -~ ~ r j IJ

v.· · t ; ,··I

• 1 •L h e:
~-,' CJ ;__· L l :1 q ,_ ,, ~J '-~ t 5 r\ i-' ~l C' ~.l r C1 n c f·
ft: j fi ~ J rn~Tl L (J t -'L"E:<tuj rt.::nter"': ~ J l ·?: t.1 c~. i t .
\'lh; ·-.:ll ~. t· ' d

•• :1 -·~ ,~ e n t .-j 11 e v.; ~ ·uc J.

:t . _l l1 .l q : l 1~.:.- ./ c· J ') 1 ,-. l _i P n c h \l :.; 1 ~ . c-· -~-
n ~/ ~. ll \.:_ I
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.... J.~::::-ll, th:.- .,_\ ... · r:·:·,r· 1 :;~touJ.(j foc.u:.~ Ut_:'~·:·

• •
 First Pre-boaril- Batck 26 fOctober 2013)

the stat2rr.ent.; have aclequat~ suppor~ting

docc :. ,_·nts and rc:cc'J::... • •·
b. f:t:. thr· au::!i~cr ha.s adh~uate ;.:esources 'c<' ac.cornpU.sh the

c"tl•- 0£ rj sk the 2.uu;....t r?!Jl:'e~encs and the audi..t fee which

c:rl-,:J·u.rlt
r:a1: collPcted.
})<·

:i . ·.-;!;,· the cl .. ent' s ar::courtir.c, personnel are well ':r<J.ined and

:> .sicmally qua12.fiec1 .
.
15. ~:-:e
qu'l.city of perfo..:rr•• nce of auditing ' ~:1gagements is eval.latud
;__.y <::hese stan.:iil.rds .. Tr,e'_,' r~la~e t_o personal. qua.lificat.:.ons c.f tt,e
audi. tor and tche eJ:erci3e of his ;udgn:ent in pertcrming the auc!it and
l:: : ~.1oer ing his ·report. T;1ey .indicate levels of perfcrm:i,1Ce which
rnusr: t~· :.talncd for the .:0rnrleLion •):~ a s'l.tisfactory auc<it:.
• ~~ L ,. :. 1 cd o .L t ;._ e l d •,...;c r
__ u:·.(;'_: :JJ ::_:;i_ repo r-L-~.:1._--:j

,_·. ·~ _al re~or~ ng s=anoard~.

,j: _:-_j~ :.._-,: q'.J'-~li_ty c.Jnlr'-~l.

tl1e follc·v.·i:1g topccs l:; not: nor_rnall:~ incLJOed in an

2r1yay·2rrtcr~ t:. let.. te r~?

a. ·::1e zwdi~::;r's_;::>reli,nina:cy assess;·?flt

of internal contr0l.
b. ·~·j,e ,•,udi_ tor'::; estimate o::: ':he fee r.he P.ngage:rnent. ·lnr
c. Ll,L:l L H lens on t·he scc,pe ,;.( the eng•,gement.
c. ;c, ci~·scrl~ 1:ion 0·~ rc:~p0n~i.bi..li'cy :':or the detectioll r,f i:.r;o~uc!.

to t:hF: IR:-<, the ncc..:.edi ted national prGfesfional

of CPAs shall be :-:-epresented in the Quality Review

f'l• .. mb e .r s .
?
' c. Six members.
b. ~"""'r)'ll rrternbcrs. d. SA\ren members.

lB. hneL rer~orm!nganalytical tests, a CPA is least like~ to

cornps .:e the cur~ent year's balan~es cr ratios to expec.t3.tions
cierivc·d IJ()m:
l ;:.:_ ~; :o ,,c' ; udgTr,ent· c c. illd:1stry C:ata
d. •Jc1auditer:l data

-I~..._~- • r:~ ;Ji.cii:r·i;,g ph.c::c.'· ·v~hen L.he c~u.ditor ~S e,;,;r;ur.ing the

client, the pr.':nco.ry .J'~~entj_()n should focus c;

.r:~· t:-r.>ecr·. of the agT·ee!'lent affecting ~L~nancic.l disclcsure.

· •,: ~-a,::"n:_, t:.e infurmatlGn to verify correct journal entries.
d. the ~Lscovery of re~2ted party transactions.

2•]. l 1urinq cr.P initial plannL·,q for an audit, c CPJI. obtains n. level
Knc.·J.edrr>.c: of the c:li..ent' S b1.1 Siness t:O r.elp him eva} uate:
a. 1·hE-- 'easonabl,=ne~s of e.st:Lma.t:e.o;, s·.1ch as v.::} uation of
Jn.·/_.:;t:Jrir;~ a.nci c_ll-Jwar..cc:s for dou~tful ,-1ccou11t~s.
n >.Jhc' '.cc: C [0 accep~ t:-Je .:Ol!CJdCJI"illef'L Ol f'::>t.
t:-1e r..c,t'.!I:e of t:he audit: reoort te .,..,ill iss'Je.
ht~' · ,___.f,_ ~..--abil_i ~~Y :>£ t_Le bus1_ness.

"-.:.. .L. pre] l ollinary cr ent ri'.nCP conference wi. th thP audj l:ee .i_:o; a usP~ul
step a~oidi~g misunder~t~ndinqs. Which o~ the fol!owing items is
us cc 3.lly fl(l_C covered ir, ,-:: pre.1 .iMinary conference?
a. Spe 1a: ?roblems known to be rele~~nt tc the audit.
a. 2xce:,·~ t ') which the .independent auditcr wil:l need assistance and
~-c.. c: ·:.Jtion fcc:n t: 1 1e o,··ani~:atio:-1's perso'"lnel .
.. _JL 'c'.)fi of Jccou:it.lrc'., recc. cis ar,r: u.~hPr date. snur<·:es which ~tay
:_nt:=: ;_-cor.~e c~ t\1L' ~·~ .J_t ar1c: ci~tri,:..ulcy oL comnletior..
ci. to~rarr :o tc follo~~d.

/-.u.:_i.~ c · ._,grzm.s nE~ 1 be ei L:b.er p redete.rmin~d or p.rogressi ve. All vf

,_ [tc ~-ol~e;-.,-;.L.ng are adva~1Layes of rJ. pr-=det:2rmined aL·d.' t program,
~X:L?p~ ~ht·t
a. it rP.&ponsibjlity for eacn audit p~dcedure.
p~aces
b. ~t E:l!C)urages iT:>de~endent, .:::onstructive thinking.
c. i t res~J.ts in prope~ aucti~ routir~ and saves time.
d. it ass'J>::es adhc=rence t') c:udit.ing stanc!ards :1nd the i1pplication
r) ~ (~f.J\ ~-J •
 .~ .J r"! j .i .l.:J k
In £ j_ n :· n c .i.. 11 .l

probabilitv tha\ ~> • ·, • , ~~ de t c c :. c rl -~-

a i n 1.:t:::='1. i:c: J
dudit-··r:' procedu1:es. on
the ,. uc: l.l.:_;L lli!KllO'-''-''l;.L V
tc
b. •
rrtZ"1 ter1.~1 L:~ L-. 1/ nti.s~;tdte(_i firlo.n(~·i_c.t.: :::; l_ .... lt~~rn'·:~t~~-.
j_cllc'Lc~r:. ar -~ contruJ cj_:;:k CdU:.•:c e·.t:r'H·s ~;Ht -couJd be •nact- •
the statE.IIlt:n~~.
,,,,~{ -L~; f:cn~:ncJ..tl
tJ.!l,_,:JCl-J.J
cl. r.hc: 'c; nol ret21.Lt"lt.. d tu c·cnd1,_c.r: sL.atemc:r:. ,1uC:it.

i '' t· fl• 0

::-i ' 1L d r1 i :
held C:Cllll!jl:\/, U:e auditc>L'3 :.ollCJ;I.d
a. nc:.:L t., U,c: r~guJ.atory a.uthc.r! \'.i "~'".
b. dl::'tr: :·r; tn~--- \',lJO ·wa.s re~:;pvn ~-~bl j_(Jl. t!~E i . .i 1_·:~qaJ. L-tr..:t.
i:-:terj_;· r.v :_he t:~;-..~arr,jnati--Jl'. t-_.- ;~.h-rl' 1 ty l Ll_euaL a(:t3
·...)j_ t.I1ir1 n ~' ·-=:.

: ,c-po, lc

.-. :~au.d '..:. l .:-: ..

.L-t·.;J.lt.ir'g to
i cl0> ri il.\l
U:E: Cull 11o1 i r.t) :5 _l-'=~J s ~- __l ~_l<:e_~:..Y.

c. t l ·-,I. n. I- l ii\• !
:·cnC: 1 t. .i.ons
(}. .4.i -' l.' c.:_; r rec 1_

b.
b:lS ~
!~or1-· ~.~E.LJJ( .t.c:.l F\co.fl<;.gem:.:'lt s pr·,,,c,ccUf·•----:.c·l
• vJi'.\' the sr:le•:t· :>n
?rincipJ e~;. ed y,''
cu::np~nS~i Lion --J
._ c: [: j ! i_' :t
t:poc ~ ("'l \ .L c-·v• J._ • I·~:
:); l.

~l,, \'Jh.\ ch C t :he tollowinq JoC ~1_<?~\C: _:'_:_!--_::~~_d. l('

1
J·esp0!15e :~1'-:: t<. ti-!2
dUd:i.cc)t''c; dS ... '.'S::O.tn8flC, thatCh·· rJ r,,,'J.t.•::tiE1
1-: C):( Jnisstater-.<·::nt cue tcJ
.... n . . .:cnt.or)' :Ls ~~ 1.. 0 h 'l
on
u f . . n ve r. r c ;__· \·' ol c~r.tain
- t:;; s t. c () 1
..r) t s
un . . Jr tl:)\lfJ.\:..:~rJ bds:.s. ,.- t"'
P·.::>' ~~~·'CUI 1r.·1J.\i~ iCa·\ r_:,·o, ... -:-:c~1'~· ~s J<,thr-:-r l;1drl t.ok_~n.g tf:>st

:<r-== l~ \._;,' ' :. (_ C I(._] '

t<t~ C.l-~l · ~~ t -(')

t.\.)

the :Col.:.cwing :":.>lt:ern·::Lt:: ;Je:;t: _c'·<:>~::cr·:Lbes the

7. v.J! •. L·-'· o c ·-)' c.o detect ~:cJrHJi.t.'L'1D3 rel:ttinq LO fiDancia.'
~e:..-:p~,.·:lS ~ t:.1. company
a
2rnp l_ u '-/ l: ._:_·
err.[] j_ o y e c· ,: 'J<ii t to t-hese
the 2
a, The· a ·,H.J.l . c L. is

f fi'tUOL' j cnt ti'!a.ncial .,_ repor::lng, dl'd

to
b. auJ.j_t to aetecc these

to di:ccov ,..
:L>l.Lt ..Jr J.S n~~~ .:.equtred tc~ t:J.-:tn LLe dUC_it
r_· 5 h~ l:. C (_ ()1-:-cc ~:
._.;, but~ :.;houl.i ,_:'~"~;_id('C·r l.1:E'III ; f he or
·;~ , ~'~~ i,'lq tl-:e au . . l; ~..
pl ,'t.:dl t t ~)
to ,1f\
d.
c·.:JrK!.i' tun:, whenever th•oj' rna] L>:'."iULt LI' nusst:.::t·•ome'ltc·.
"'
:"G. ln a ce\'t.(·W ::;:-~gage1,1ent ',·he ;::>ul·lic ac,oc:ntz"nt pro·r:dQs ;Jcqa··:cv>"
assu. -;nc· Ln t:l,c r>':Dort wh:'..~;1 is lsc-.ueJ.. Th~ s can
• ·,)est C"le:c;.:rir eoJ

;1,

,_·! t-Ll_ L l_ () n
d. ·~ :-< c 1-:. ;:1 r f 9 r t ht·
b. the
~a.i.rJ\

~·n Cand·i I~ed, C:l'.A, was rec,ue:.tc':C tr: pC"rfc-r:r, a review c:l'l<'~gernent foL
Seauc.y, [;;c., a non-pt~bJ.i c .-ntit:y. :>L:dy h'iS an :'..mm;c.' ·:tJCJl dlre.:-'::
financ l·\L l'1te,:es•.. I11 t.h1::, c:.'~udi . J_,-.n, •.:a:~dy i~c:

•
 Fi~rst Pre-l;i):trd- Batch 26 (Oct.)ber ~013)

\c,t: 1:''--.:,_·.)·'n~..l~~lt, :l.It':i ther::-.:::fcre, U1U.'! n")t h2 n.~;socla~ed ~-J~i.Lh the

·l a ::erncn:: "; t-
•
·~,~:cJ1:-, a~:' n·~r~~f·c-·:-::t..-:. Il,~l/ !10t. i.':Jsu-=: a Leview repor:.
ru n:-, t'nd the:rc:iurf~, rnay J..s.suc ~ev~_ew r~pcrt, but
·,.,ut::: ,_:rt d~:Ci C·)r' s l~port.

.... -;t bPcaus,~ th'6 f:t.nc:ncid] interest is irnma t.e.: ial, and
•c·:-~;_. ___ ,_., may J.ss.e c1 ;:_ev:,.ew rRport.

.:C. pL.bL c::ccu'J.ntin.J firm would le-:'ISJ:_ J i.i::eJ:x be consi iered in

violati)ll o1 th-:! indeper.deonce rules in which of tne iollcwing

3.. A r a:~I""L' s checking aCC0UDt, whir_h ia fully insured by the

DC'iJCsit l'lS'Jr.·cnce CCHi->OrC<tj on, is held at 3 finatlcial
.•:Jr v..hi -:h ~:~·E: ;:>ublLc accou•Jting finr1 perfo -·ns a1:.test

c,f Ulc: !:~. .::.n rl·;na~·-':5 Si·•r:vice ac; vice-r:...:.e.:;i.c ·~nt <·f a 1

rgani 2 ~l. t ~.on t~ut i :] .'Ll auC:it cLi.en':: of the f:_r,n.

:: ll '.0!1 t 01-120. i he :i:J r:rn fe::..;s for this and la ~" L year's
..)agRme:Jts.
d . .'!\ en•; ·rc<J merrber' s depenaer:t so!1 owns s':ock in an attest clie>:1t.

···cla t 1.onshif• that c:an develop bet~.-,:=en d.n auditor a.:1d a

Sl~ld _l_ l corcez,1s e:u.10ng .;-cc:ounting •..:ritics.
·~:he~l the a udi ::or prov1oes both
:_(.p cl:e11t. T'le m2.cT" conce:-n

[il.~y .10t the sufficient e·:pertis2 to provide

,,Jvic:''2 tc c_l_ien~~s

n1aj not be ".ble o ~&intain client confioentiality with

r~_·3:=ect to inforn 1ac:;.on 'Le •riled duxirg the course of the
C:OI!Sdl ~i:1'} e:Jgage~E,•1t •
cj_ ~- <:n t i n £ o rma. tio:'1 1' Cl rnec clur7ny the corisult~ng engagement
t].i.Ves tne 21uditor J.r·. ur.fair advc.nta(je in a coinpeti ti ve bid for
the a udi c.
C. :J.t.rJitors ~lc.y net be ab_~f? to IrairJtcti_n their ~,1bjectivi':y wl1en

.L~J·=::·easer::l
5 UCJ9'"'S C.edl<:o,, ::ompet-'-ci..on .:or .1udits
t:h:1t:
aUdJCOca .~f
i<Jde;:>~ncience.
less which of ::r.e
, ~ J... _! o v.; i r 1 <J s:.:t~e.r.=:ncs besc su:_::,r:-n,·ts t:,is argumeut"
"n reduces the a. uCJi to c· s ,n:J. r gin of e r .cor in es ti:n 3. t:. nc;
reqL~red to ~rlce the aud1t profitably
0n over t.ne Z~uc·_t fee may so'Jr the relatio'lship betwe•-:n
t.he auJ1tor and the cljc~~
force t~1e audi Lor t:o take sh:Jct.cuts in the
per.· f ,~ rrna :. ce of ?Uc1lL.. ng [.rOCEcC•U':'E.'=> thc:re~y ..:-educing ~he
e If .c:ct 1. 'Jc-nes s of the a·udl t:
pr1r:2 ""rnpec~ tlvn me~y res'..:l. c in t'1e auditor s ubrni t t: i.ny 21 bid
belc·,.; t11c actua] cost of an initinl engagem,;nc i..n the hope of
making .. ~J '=he loss in subseg>lent ye'?.lS

Ethj C:illy, an au~it:or scu~d: • "

a. Base hi.:; audit fee on 21 p~rccnt~ge ot the proceeds oi hi'=>
client's ~h3~~ issue. • ~
D. Advert\se only as ~o his exp~rtise ~~ pre~A':'ing ta~ retu~n~.
OwG n~efprence shares ir a curporat;un w~ich is an audit client.
Per:fo~r:1 a~1 exarr-.i:1c.ticn for a t.i.r.•nlciill distressed client 2t l.e:.;s

.. ,,
- l . ~:. , .. :.._·~q fi;:rn Da•,;.s .: ,1 anrl C.::eek, CF .1\s, .i.s r1f::g0l i.atirHJ a
·.~_:,l.._' __ ·,-:::npan y, r,•c:V>I c1JdJ. t cl1e:1t. A3C .i.s in C\ high-·risre
.,. .:: dq:ee dS l.~Jlc'wS: Cl.1ent \,.J..Lll pay:
0JV>ISO~ issJvs 3 cledn, unqu&lif.Led opinion.
PSO, u(jJ a quali£ied 0pin~on l'=> iss~ed.

P4lJ, OO:J 1.: an adverse opir.l:.;n is issu<?ci.

~

• 210,000 i E a ~lsclai~er
of op~nion~s issued.
t.her:E.. a ·.;~clat:ioq of the rJ..:..e.s on professional. fees?
·'l. No. Th~.. fees hdve b~e.J. s -~t in ac..:oraa.nc~ \lith Code uf
P c: ,. r -" ~c:· ··,]" ~ Et::1i cs .
 b. Yes. It is a contingent tee a~rangnment.
c. Yes. T'le fees are n0t C0ntir.gl'!nt, buc: thP':,'. .are i~1adey1•ate in
lic;;:.t: of the r.!.sk: invclv~d. Th~~:ce n~ight, be a risk o.: a
f'ercvpti.'Jn th3.t the quai.i•.v ·:·f wo~·k co11ld
. • ~ e
))e lmpaired.
.
d. No. ':'hE: re"'!s have ~·een s.::t : n the prnpEcr manne.r. ~lriC:~ an
·mqu.,lifierl opinion dero'\f'.us mo:·e aur:llt_ w<Jrk to detect and 1dj1..cst
misstatements, while a disclai~~r is not really an opinion, but
•
a .refusal t:) express an opinion •
•
::>5. _n an uudit situation, commu:•icat:ion between the succ~ssc·r and
fJrede;es;~or dUdi tors should b.e:
a. A'...lti:urize:i ir·. an eng:::..geTr.enT_ l.;;tt<'.r.
b. AcKnowlecqed ill a l.·eprt:.c: =ntation lelte.r.
c.;. Eit:.er: w>:itte:!l or or:al.
d. Wr:itt:en and includec1 in the hCr:king raper.s.
.., 0.
,•
J \ pec,on wro:>e C::'A c?:c•:.i.ficatE h2s he"!:-t revoked
(.1. :.=cu1 110 louger t--rdctice 0s -:: Ch'\, ur.-..Less reinsta·tE!d.
b. Is a-ttomo.L:i.cwlly reinsi:.ated ·a:s a C:Pl' after two years .'.f r.e ha:s
ac;.:t~d in an exemJ.>.::.Sary mar..Jler.
c. Mu~t ~e reinstated an a CP~ hy the bOA after twc years ii he ~as
actecl 1.n an exemplary rna!lnP.r.
d. Ma:,• be r:e.in.stated :'s a ~PA b;' t.he i30A after three year:; if he
has dCted i:1 an exemplar'/ manner.

]'7. Which r)£ the fol.::.rlWll1':] i:o incl•lded in the seal L:sed by a
Ce.rti.=.l.ed Publi·:: Acc.o•Jntdnl 'l
a. Professional taz receipt. ( t?T!:) nUll'.ber.
b. Comrr.~mit.:y tax cer:-r.ifi.c:ate ';wnbc:c
•
c. Taz. irier,tificat i-Jn Nui:tbe.:: \TIN)
d. CPA ~egis-r.ration number .

38.
.
Ramooe::o, CPA, has an <'. 1Jdi t: C;2.ienr:, P..po.J.lo Layug Inc., whlch uses
another 1~PA for m.J.na.ger-cent se:-v:..ces vic ck. ~amones s~nd:; his firm's
lilerature cove::ing its In,'3fl'J<:'emer.l sc.rvices capo.bi 1.itie.'; to Rc·ck,
Inc. or, an unsolicited Inult;:.nl.j l.)as::.s. ID add.i.tivn, Pc.mones has
;?:Covided a list c-f ::.ritlc.' .,n,s of r_;;e: ··-1o.::r: o::Jf the cJti,er CP/\.
a. Re~;nc;~,es 1.s violac;.ng the cr;de of pr:-:Jfessicn::tl E.thlcs bPcause
t:h~s .s a form of advertising.
b. R&mones is violating the rules on •promotion oE work by
pr:')feo;sional acco:...nt<:.nts.
c. Ror,lunt:.s is violatinq '::'!E: code of professJonal. etlt.i.cs unless h<;-
oLltu.i.ns the other CP.K' s p.cr:mi:i::;io:l to' mall suc:h J iteLature to
Reck, Ir7·c. , •
d. Ram')nes is not violating the code o~ p~of~ssional ethics.

39. Echical behavior requires a~ i~dividual co

c.. hct cnly wjth the law.
h. Pe,:cc:ive the ethical .i.rnpJ.ication~ of a sit-.lati.on only if i t
i n'v·c·.lves the possibili >:_y of unlaw:'ul conduct.
c. Consider a course of ~c~ion to be unlawful if it i3 u~ethical.
c. COI!.3idec that certain conduct ,nay be l.awful but net etJ- ical.

40. fhi~ rAfers to Lhe garhering of professionals which .3hal.l lnclude

arwJng o~:llers, warkshops,~ 'cer_hnic<:l }eC;tur:es ·ll.. subject IT'.O>tter
rreetiDC'S, non -deg.:::ee :: ta.ln.i.ng coc;.::oes' a'ld sc.:.-3nC'_iic mceti:1; s .
a. Seminars. ~:.
• ~eelings.
b. Conventions. d. Professional gatherina.

4] Hilorie, CP.'\, is plaw1_;_rq 7:bE.C c-ud..i.t o.~ ABC Manu[actur:ing, Inc., a

rn:diu.:n--sL:ed manufactt..rj_ng ce>n:-.:8rn w.i.Lf' less t:h·in. one "Jucdred (100)
sha.:eholt1eLs, which one ol: tl,e _2c,ll.ovJing drc;as ;;ou,;.d .ceq1;i.::e t~e
least a~0~Lt 0f audit time?
a. R0venu2. c. Liabil_;_ties.
b. Assets. rl. uwne.cs' Equity.

42. Gina D., CPA, is p~.;rfo.cn1ing pre-'?.ngageinent ac:-.ivities, l>i'hich of

the follo\li.ng mu~t G::.n,,_ obtai•; ~:rom her predece~sor.- prior to the
• 3CCf'pt:ance of tbe enaas;e;n.crt·~
 • Finl: Pre-board- ilat!:h 16 (Octouer 2013) .
.
•
! .,
'·. . 1 i f .

'J . . . rL,.J'''·' cf b2.lancc .:;j· et ac:coGnts.

,o·,,,·:~s ~.r1at ~t·ighl l..Jcar: on _::he .lrLec;rit;o of m<::nagemeut.
d. "- ;;·J' t:ers o[ cor:tinuin~ c.ccour,ting :oiqnifica.1ce.

.] J. In <:tc•:ordance "' with tile PSA Glo.ssa:cy of Terrrs, w!uc!l. of th<i:

tollol,'inc stac-=r11E:.nts is co.cJ..ect-'
P.cl oc cour.tin~ eotl..ntatc .is ar: a0pr:oximc.tion of the amvc.:nc of an
.t~m e~en in the presence of a precise means cf measurement~
u·r engagement to r•;:or:l'vnJ aqr:eed-upoll proced•1res, an auditor
l3 er:c 1ge'1 to carr:; "Jut those procedures oi a nm1-audit nntdre
~u '"'L. c~h che u.udltor ~r.cJ the e>ttitv an<l any approt=Jriate third
p.'tL Ll•c:; have agr.:ed a,1d to report on tne. fc.ctual finctings, af"Ler
',.JI1lC~J the l..ec~.p_i_ents G E the report must form their own
:anc~usio~s fT~n the repo1:ts uf th~ auditor .
•1\.11 c1u•iit: pLClgram sets out the • n~ture, tim_2_ng and exter.t of
[)idJtnt·d aud.lt procedures ::equ~rf'<l t;> impJ eme!1t the 0ve...:a.1.1 audit
,,::: C:t•e audit pro() ram aJ:;) st..rves 2-s a set: of instruct.Lon::; tc
"',.; '"t nts lnvol•Jed in tl-1e a.t.:d.rt 2t11d as 2 rr.ee~ns to co.1trol c~he
(:/.t=~CLltlOl1 U' t ~. _· w c1 r l·~ .
.~,
'· ,:, co c;o!'sls ~.o c f .• c:lWJ f..l.C'O::;erlt dcu:ing al.L 01. j)a rt of a
'·:;:c:; per+'c....::meu :JY th:" a1,;ditor, f0r ex·c.mple, atter.ding
ln·Jen'~a·ry '.ak.i!,q >:ill ·~f'abl:.: the auditor to .'.:15pect
, ·1 "c·::· .!:y, to ousc::cJe c.JmJl'.ar~ce ·of manage,nent' s procedures to
.1:. ;uunL:i_ties :1na r<"corL 1 such cou:Jt.s and c:o test.·-::oc:nt

·::ru ch nf the followif'g sLn.c..wer,ts is ~~correct?

d. /l, com~·or,ent is a divi::.;io.n, br&!)ch, subsidiary, j::>irt ver,ture,
,,::so=iulc:•1 •:omparly or ot:1e:: E·.t~: t:1 whose fi:•ancial in.:.'ormation
"'--' HtC '.1aed in finJilClal st.::Jteme.<ts cll..:c:!ited by the princlpal

b. I\. (·:r::~:. ~s e~n c:nintenti.Jnal fr:::Jud ln th<:.: financial statemf'nts,

Lrv ~.caua .l'. an c'Jt_"':ntiona.l. e::ror by one or mClre _cnclividuals,
.:m:crt•: ::art.LJf·rr.ent, em;)loyees, or third part.:i.es, w;1ich results in
a r .J cd ,- ;;re."entation ur fir.ancial staterr.er.ts.
{'_!1 r:::..xi ,f~-: ct is a firm possess~ng special !;kill,
K nc ,-; t:~ ~led r::' n.nd expe _e j en-:..:: . in a p~rtlcula~ fielti oth~r than
.'J,::c:·),L: Lr,g a:ld c.L.di ting.
:.:-i. _,cedu re .:1n aJclitor considers t.:s~ng is inqujry, which
r-:.f_ ~e~kl'!C, infr.rm~~ic~ of knowleaaeable pe.':SO!!S lDSide

'1e corrl::r:t state.nen~(o):

)lr:~l.lcltion
'"r,qauen><':nt, the 1cc:ountant is eng2c;ed to use •
a:: c;;j. ~:1c, exper:tis<c· aci np_[:.osed to auditing exp2rtise to coller:t,
::l-:1.s~i1 , i\nrl surrnCJ.r:.ze financial information.
52 U 3e;::s o~ the compilP:>: info.::matioil derive: some benefit as d result
cf th·= ac:coc:nto.nt' s invoJ.v.,ment hecause the service i1as b~en
per .::::·1:.,\<:d ,..;i th due profP-ssiona2. care. •
."3 The nccec'ures re~·lired to c:or.duct an ~udi {_ in accorrl.ance with
PSAt~ st auld be cietermine, by the 2uditor·· having rega.cd to the
cequj,'. 1ents uf PS.ll.:;, ::e.tev:Jnt p::o'=2ssionc:J bocies, lec::islati:ld,
r<;gLJ.,·. _ons, and, whe.:-e ..1~propria'::e, the terms of Lh~ audit
e:>(JCJ.U• ;·,r-r•t ar.;i repor'-'-~'g requirements.
~s _;_ ,~ l ,',i c. 31, S?. and S3.
~. d. ~:2 and S3.

eitqarJement:. tec:rn tr.e 201 audit of

state::me:.l.:: o[ DAYl\.G COl'~EANY are com;Jnsed of the following:
Jose Mc.rquez
Antonio ~aramil~in
:ChirLey :::uru.ova.
.n. :.1 d J •. , ~oc i a t e s :

fnl.'Cl'vl.ing PilillppinP ::. _andar•.::!s on Au::ht_;_ng, wt,o a.mung the above

·,;au' j ·:Gnsidereci i.lti th::" ill!d_;tor?
 .r J,.-:Sl r • e-aua ru - D!lTC£1 ..GO • \ UCtO'Jel'" .lU l,j}

A B c ::::,
Jose l1a~quec Y..::s Y_;s Ye<> ·fe<>
Shirle.f Cordova Yes No No 'lo •
Antonio ..:.raramillo No 'fes No Ye"
Jdmes De~ Rosario No No . No No
•
"
47. Use the same information <.s ·number 16. Wr.o among the· ;;,.bo'!A tAa.m
members are considEred "assist:ant::/'?
A o c L
Josr= Marque." No No• Nc No
ShirL:>y Coraov& No Nr_• No Y~-~

.
.. .>

J,nlonio Jarami.l.lo No No Ye!' Y"..s

James Uel K.osario No Yes Yes Yes

48. Bamboo Bt.endia, CP.A, has :ius:: finished drafting the '-lUdit
engagernenC.. let!~er which will document the ter;ns of engagemPnt fnr:
the 2013 u.ud.i.l nf Grace ttanufacturing Company. Which of the
following ;,tat·pft1ents i::. least- ll_ke}.f t0 appear· ir. M.c.' Buendia's
audit engagement letter?
a.. .'\fter perfornu.ng our prelimj nary analyci.:::al procedt'res, we will
discuss wi ti1 you the other p1:occd'..lres w~ CC'InsidE>r necess2.ry to
comp}.ete the ~ngagement.
b. Durin~ th~ course of our audit w~ m3y cbs~cve ~pportuniti0s for
economy .LD, o.:: improvec control~cov'c'r, yvc.1r o~erations.
c_ Our engagement is subject to the risk t:·,at mat.erial errors o.c
irrequl~rities, including fr~~d.and defalra~ioris, if they exist,
will nLt be detected.
u. fees tor our !:>E>rvices a.cc b::~-:ed on our re:gC~lar per djem rates,
plus travel and uther out- o::-pccket C}:p~ll:.es.

49.
·'
Ir. forming an 3.Ud.i l opinion, th::> :tudil:o.::
a. Obtains sufL_cien~.. ap~ropn3tc e:mdi t evidence tQ be o.ble ':o
draw an o0inion•
on which to bJ.~e lhat conclusivn.
G
b. Obtai..-ls suffl~~iE.r,t, appropriate au,;i.t evidc;nce t<) be a·0:e tu
draw COllClU3lOnS OL '.•:1ich to '-Jc~SC t!ut O:?il1:'LC;1.
.3tudJ.es c>nd evaluates the ~:~t~!:nal cor.trol structure o£ the
company to b.=_ able to c!raw ':<.'l\C}l_;::>ions on which to oase an
audit
r:l. EvrJ..:.uat:es ;::h(~ risK of mater-ial misstatements for various account
• balances and r:-ero.r:t:s the rnisstatE:rcents to rn<tn:J.gement .

50. ConLad, CPA, is conducting ti1~ 2 013 audit of Manlolo Co. - which
- specialiZf~s .in ':he manufacture of ce.llphone compon~nts. These
cellpnone:e ha·re Intern~t C"lld e:nail capabil.i ties anC: feature Centrir.c
Mobile techn-JJ og:J. .In t:he perf,,rz,tance of the n.udi t, t.he f:)llry,ri ng,
except one, wculc!. be conside1:cd by r:on.::-ad aE" fra11d risk: facto.::~:.
Choose the ex<::_ept io~.
a. t\ew 2CCOL'f.L.. rc;, sto.tut,Jr:' or regula+-.ory requirements t:'hat cou.:d
impajr the Lindncial stab~Jity or profit~~ili~y of the, entity.
b.. Hanay-::ment: dces no-:: engage in coimnitt.i:-:g c:o analysts, credi '.:'. ors
=tnd othe.r.· third parties to achieving wh<.tt iippears to be unduly
aggressive or ciearly u~r~alistic forecasts-
c. A sign.i..fi.cc:.r.t portion or manas~ment' s compensatior. is
represenced by nonuse~>,_ stock ~ptions, or ot:her ir:centive~, the
value of \.Jhich is conti.ngent upon the er!tity achieving unauly
aggressive <.. argets for orera~ing results, ,finar.cial position, 01.
cash flow.
Adverse cc..·nse'=tl'et.ces on siqni·f~cc>.E'lt pen.ding trans~c~ions (such
as a busin.::s s combin.::~tion or r:ontre~~t award) if poor fin<c-:.nc ial
results arc rerorted.
•

Sl. Peoter Etcet'er.:l, CPA, h3.s performed u.nal.yb.co.l pr0cedures ouring

the audit of the 2013 ~inanc:.i.al stat~ments of SQUIZ COMPANY. Which
of the followi:-tg would be a possi_b2_e reu.~on why Peter perfo.cmed
analytical proc~dures?
a. Peter bel ie,:es tho.t their use can be less effect:ive: or effi,:i..ent •
than test:5 C'f df;!tails in reducing det:ecti.on risk' for soecl .:J.c
financial scctement: asse.::tions .
•
 Fi~t P!·e-board·- Ratch
~
~6
.
(October 2013)
.

o. f:'"!te:.:: is tryiny t:c form ..1 conclusion as t:o the E..ffec:.:tive;1ess of ..

'the intern:o>.l" cont.::ol sy:::;t2m cf Squiz Company.~
c. Peter ~s abu~t to w:.::ite ~is report on the fairness of the
L1terna.L control sy.3terr. of the cumpany.
d. I'eter is cbt aining an unct~:c.standing • t~1e business and
01:
i~Anti~ying are2~ ~f potential riJk.

S2. t'arcies are cn'11sid<:!red 'Lobe r~.lat~d it:

:1. If .1. brea :::h of :::ove;-.ant.s has occurred, and if on or before balance
sheet date, one party has obtai_ned a gra-:e period of at least
twelve month::; a fteL baJ.ancf:! she~.t .. date during whL:h said party can
rc:r_·tify thE breach, and the ot.her party· has agreed not t.c• demand
paymP.nt ior the term of the g.::-acE-_period.
b. One pnrty has the ability to c<.mtrol ·::h?. other Farty and exercise
::;ig'lificant. influence over tD.e ot'.1er party in .mak:~ng financial and
opAra~ing de~isioris. •
c. Il o~e party ji.scouct~ a riote receiv~ble to a~other party dod the
discounting is without recourse.
C:. If a t~.:ans:l.:::t:ion is precessed in an vcusual ntarmer due to errors in
the accou::1ting and interr,al c0nt1:ol system.

53. Tbe a.uc'.itor' s duty r:>f c.Jnfider.tial::..ty would ordinarily pr:~..!clude

th•: reporting of. :!:ri'c;d or error to a. t2.ird party. H::n;ever, in
cercct~n circumstance:;, the duty of co::Jfidcntiality :i.s justifiably
overridcie!1 by the :ollo1d:1gr ~-xcep_t;_:
a. Law.
b. Statute.
;;
c. Courts c•f law.
d. '
Pre:..;su.t:e from a cornpe:.titor of the audit cL.. ent.

54. T:1e following mat.tcrs' are considered by the auditor in deve-loping

tn2 overall dudit ~la::1: c

Understanding of Coordination,
Under.·Qnuing the 1\ccour.ting Ne~ture, Timing, l)irection,
of t~e tll\:ity and t<.is!< es1~d and Intem31 and Extent of Supervision and
1ts Envimnmc'1t M~teria!ity Control Syttem Procedures Revrew
c.. Ye~ l>Jc.. Yes N':> Yes
b. xes Yes Ye:s No Yes
c. Yes fe!j No No Yef:>
d. ':es Yes Yes Yes"' • Yes

55. s.:.. fra..::tice of Public Acco.n'::o.ncy shall con:otitute .i.n a

perscn, be i t in· his/her indi.•.riduo.l capar::i. ty, or as a. partner or.
as a st:c:ff cnember. i!1 an .lccounting en
a•1diting :firm, hol::dng ·out
himself/herself dt't one skillt:d L1 the knowledge, sci<:·r.ce and
practice of accounti:1g. and as n. qualified person to render
professional se~~ices as a cer~ifi~d public acc0untant.
S2 A pcoies~ion is distinqu:;.shed hy certain characteris1:ics, oae of
whi cr. l s -che collectio.:~ of fees for se.::·.rices rendered an::i the fee is
based on written agreeMents with the clie.:1t •.
S3 Retair,er fe~ baslf-> in the methvd of bil.l ing clieLts whereby the
biLling is ...lone on th~e basis of actual 'time spent by the staff
mu~cipiied by the hourly rates agreed upoc.
~4 The sole p~cpri2torship acd partnership form5 of business
orgarllzu'~i.on are the on::.y allowable le-gal fo.cr.1s of public
accounti~s practice iL the Ph~lippin~s.
A ·B c. D
Stdterrent 1 T!'ue False False True:
St,"ltement 2 f'alse 'J.'rue Fa:15e False
Statement 3 false False False False
StatcwPnt t. True • • F·alse
• • True True

56. 'i'he dLditoL is likely to c::ccumulat= more evidence when the audit
is for a company:
a. \ti!"·,o!:e sh.J.res arF! P'lblic'..y held.
~. 'tile ich has ext ens:'. ve iDd•"bt~dness.
c. Wh' ch is"· to be sold .i.n the near futc~r2.
d. All of the answers. •
f ·~~- ....
~. .!
... '
"17. 'I'h J:'.:JU']bOU t. the audit engag~r:tenL, t.he auditor ~~ould consicteJ
management's assessm<=r,t of th<.: r.lient' s 3.b_;_li'::.y to c: !ntj.nue as a
gcJL':) concerr. Wh:.ch o:::: Lhe f:cllow~ng E1i'::!' cast. :·,;m:~fic3·:': doubt
ao _:, u t c h<-' Pn t i. t y' s gc iug co1 u .e ru as .s urr.IJ t _i_o:t '?
a. T:1e tntir_y hc•aviJ.y usc·ri shoL·c-term d'1bt f1nancing :'or •
i.n"•"SL:nents :;,n long·-l:..vecl ass<=cts. "
b. r·(
v ·
lGf'.Ct.2 · 1- h ~al-Jl~.~""":.
W_--_~._. ·' () L C''\~11
..... ,_ e r 5 +- ' • t- --- ... ' ' .::eqUlCClncn~-~S.
s ·---.c..'"""ll-L-.__.,_.l._:: ·

fc,vorab.l e resolutL:.m uf ].ec;.:\1 cr J:<:'gJJ a tory procef• :' rws aga.:.nst

t.h~ ~ntity.

d. Repeal of eJnst.~ll'J .leqisL'lt_;_:Jn or government pel icy which

.: dver.sely• 3.ffect.s the Pnt::i t.y.

58. )\ccu•d.LnlJ to PSQCl, by obtain.cr:.g conf.lrrnation anc taking

app::o:n:c. 'te acti·.:J;l on infoma.ti.on inJ:tcating ncncmnpLLaiJce, the firm
dernonst.r6tes the irnportc::nce .cc:.hc.t it: attaches to i.nd.cpendence and
make.:; the lSSue 'Curren~ f!0r}' ar.d visib'.e Lo, its pe;_sonnel. \!l'rit.ten
coJJ fi n-:1c~ t! or: •
d. I•lay 'Je i r, [!aper for-mat cnl::r·.
b. May be~:~ electronic fo;·mat only.
c. MJy be .in raper: fur:rn or ,•lPcl:ror.ic fcrrn.
c:. Is ctOL rec:uired since o i:il cor1f.i r.nal io'l "1ill suf :::ice :)er PSQc.:. .
..
A r·c;.L,;ter<::ci profes:::.:..on"l.~ si1aJ..l DEc pe:...-rnanentl y eYernpt.cd from C2E
r.-eyuJ. rem• :I!,::. upon re3.·-hi ng t,le c.tge o::: ·
a. :)(' year~ b. SO veur.s c. C':i years d. 7(' years
old old nld ole:

60. \·:hl c .Jt the fol.1 owil,'J ·>tCJ tentr·:1ts is inco.:: -:ect?
d. 1\n engaqem1:.nt qt.;.ali~y control r.evicw orcii:1a:-:i.l:' involves
:iiscu::; s i.cn wl th ~he er.gagement ;.;a.::tner, a rev.J'w of tlle
tinancia::. s ca tements o :- oL.her :> lWj ect rn<::t.te t: ir1 f.or.na ::.ior and the
report·, a•1cl, in particulc.r, con:>ider<Oition o.f whether +:hp report
is Rppr.opria.te. ~
b. '1'hEo extent of the --ev.i.ew rlcpends on t:hP complexity· of the
cngagerne'1t and tl:e r;_~k :h.lt t.he reporc might not be af>pt:op~·iate
in the r:i .ccums ta:1ce.s.
c. The J.:(.:VlC:W r:educes the resp8nsibiliries of the engdgen,ent
[.'d c:ner.
,:L An engac;e;·,1e'1t quo.l.i.t'/ r::uf'trol r'2vic.w ;ra:,: OC CO:Jd .. cted b,o: cc,re tne
end of t~e 2ngagernent.

61. PSQCl rf'c~llir.es c::Jmplai:->ts f'r.d a:.'.egal 'i.oLs ac,ainst; th,-:: f'. r.rn tc· be
dealt· wltt1 ap).Jropriately. C'.Jn1Gla'~nts anc.: c:lleg."ltions rna' C'>me f:-crn:
;\ c D

• r::.~·:;l pe:;-.sonnel y,~s tJo Yes :~s

. Cl1.en1 s Yes Yes lk

• OU.eL t 'n ,_d parties Po Yes No

Tr~E' [~hr,~s~ "the rer:ort 5'hcd1 sta~.e whethe.c the:: .financi.Jl

st3Len;enL:; d.re presenteci ir. c>cc;ordanca w.itiJ genera.L'y a:::cepted
account:.ng pr~nciples." s:wuld be :onstruf!c.~ tc requi.r;e:
a. Jv1 ~m:::>lied n.easure of' fai.r.·r.ess. c. i.\11 objec:t1ve 1ne?.sure of
CC'rnpliance .
b. A stat~nent ot fact b~ the CPA. d. .ru:. opj.nion by t!-.e auditor.

63. Which of ::he follov;ins; Des t ·Q.,escr.i.be.s d~e· c<1re?

a. Tact in <'!Voiding lega.i .'.ia>)iL ty c. :keasona.ble · ir..fal1 i bi li ty
b. Requi::;ite sk:i.ll and diligE:.H<:e c. Freedom f.::o;n undue
i r,flnence

64. C-J;ifl_:ct o~tvre-.:-n fin,)_r,c~ .11

. ~ta:e!i~~-~rt_ L~3·c.cs and nuC._·: . _n::--1 o~:~_en
arise~ bec~us~ of:
a . Hi gr-. co s ':. o f p"' r i o r.mi n g :.. l l a 'J cl :i. t .
b. F:xtr:ern<c:.Ly techn:..cal vuc:J.~>ldary ;.reacl: the auditor u'·"''' in c:he
.u pc rc:.
c. t'1 rlcer'lcnt of the audi.to;:' s reoort i.n tt1e back t.he c.-:l_1e:1t' s
.lnnual 1eport, where .i.: is har::l to :ocat~ .
• d. SxpE :to.t i_or. gap. "
 First Pre-board- Batch 26 (October 2013)
••
65. A CPA must ea.'Cn ~t 1 . .:-ast. 60 credil: '.lnits for three year.~, with a
minintllm of 15 credJ.t u:1its ea.t:ne;). p~r yec.r. Excess credit units, if
dDy, sh3.ll not· be c1rried o"er to the next three-yeAr period except:
a. Credit unit~ earn2d for autho~ing an article of rational significance.
b. Credit unitE earned for serving ~s p~ofessorial chair.
c C cedi. r. units .P.arntcd f0r an i.rr:.rention of significance to the profession.
:i. c..-e:iit-. 11nits c;a.r:n'-'d t'Jr dot..'. .:or,.tl cr masteral dF!grees

C6. The nc. ture ard

e·<t-:mt of a CPA fic:m' s CJ_uali ty control pol~_cies

a.
proce~ur~s on:
dep~nd
rhe CPA Firm!s SizE ~YES; Th~ N~ture of the CPA Firm's
. Practice
·-:ES; Cost-b<"nefit cons:i.de.ca',i.<'ns =··NO.
b. T:te C?A Firm's Size = YJ:::S; T~e Natur!c! of the CPA Firm's Practice
= NO; Cost-benefit ~~~~ideration~ = YES.
'[he CPA Fi.:-m• ~ S.Lze ·' YES; The Natu::e of the ::PA firm's Practice
= YES; Cost-benefit consideratio:1s = YES.
c. ''Le CPA Firm's 5ize c.c" NO; ':'he Nature of the CPA Firm's P.1:actice
YES; ~ost-b~ncfit con~.Lderations = YES.

67. Tnmc.,hawk Co:cp. o.=ally <::ngc.ged Ind.~_an &. Co., CPAs, to audit i-ts
final ::::.:c<-.1 statements. Tomahawk's mc1nagenent informed Ind~an that i t
'3uspec-ced that t~E:: accounts receivable were materially overstated.
!Uthou,,h the finc...nc~al ~tat:ements ~hut Indic::.n audited did, in fact,
in::::lude a :naterially oversta".:cd ac-;-.ou:1t.s rece~vable bal.ar.ce, Indian
.Lssuec " standard u;''cyualil'ied report. If l'omahawk sues IndL1n for
negJ l':)er.cc ln. f~iling to discoJer the over.-:t.atement:, InJjan' s best
defcc>!t:=:e W)uld be' '::hdt:"
a. _ndian had S.Lc:;r.ed no eHgageme.nc let.ter.
b. nuia:1 per£ormec< th~ CJ.u.ciit in c::.ccordanL:e witl:. PSJ\s.
c Indian w~s not in privity of contract with Torea~awk.
d. 1 jdia ..--1 cl.id r.ot. perfo:.:r, the au.dit recklessly or with e;n intent t0 deceive.
•
Oucu.l ty cont.r-ol policies anC: procedures a:ce designed to promote
68.
an incernal culture =ecognizing chat:
..
A. QL1.1lity is es::;entiaJ ir perfor:rni.n'1 er.gagements.
B. F·.eascnable, and net a0solute, <\Stourauce can be pro·Jided by all CPA
engagemc:nts. •
::
~- The. rirm shou.ld ~lwa.;s move .:o;..rards tne eliminat~on of audit risk.
D. T.te pro;noticn of "~ quality-o1:iented iDte'"rnal culture depends on
clear, consi·s tent c.r.rl frequent-. actions and messag-'!s ··:roJ,, all levels
c f ll-,e firm's mar.agemer.t.

69. ~aint:, CPA, i.s pl .. nninc; the audit of Theory l:'rinters, Inc.
Theoty verbally asserts r, Saiat th~t all the expenses fo~ the year
h~ve been ~e8ocded i~ thP accounts. Theory's repres0ntatiorr in this
:egaLd: ""
a. s su.:'ficient e'.ridencc fot· Sa.int to conclude thJ.t: the
cmn:Jlet;'ness asser:tio:, .is supporte,d for the exp,:nsf~S.
b. CzHl enable Sai.nt to m.i.r.irn2 ZE:: h.Ls work Oil th-= as.ses;;ment of
ccn t :-ol ris.'-<. for the .ccrr.;Jletenc-ss of expenses.
c. .,tc.llrl be di,s:::egdrded ~ccau."e i t is not in wc:iting.
cl. l." no': consiJ.c;re0 a. outficient basis ~or Saint to cr.mclude that
dl~ expense.s have 'oeeu recorded.

··o. Thi:; ref:ers to !;he a•1rlit procecl.ures deemed necessary in the

cir~u.'1lstances to ac:hieve the obje...:tL,~e of the review.
c.. Scope of E,n ·audit. c. .;,uctit program.
b. Scooe cf a review. • d, Scope limitc.ticn.

71. Th,' folloHing .:..re loqi~-~1 furoctions ot n. CPA itl put.lic acco1:nting
pract.lce:
A B r;
Attest function (l~e., audits, Yes Yes Yes Yes
revie·..;s)
• Tax praccice. !tax ~la~2in0, tax Yes Ye.s Yes No
co:npl.'.ance)
• M~nagement consulting services Yes Yes Yes
!r.t:~c:rna} audit Yes No No
 ~

-:2. In p.Lar..ning an audj_t, t:.h.e auditor shc..uld coiL~ider t•he presence of

frauc'. risk fac:tors relc.. cing to lllisst:at:ements ·arising from ( 1)
£raudul-=nt fJ.r1ancial n.,po.:t.; ~g a11d {7) mi3ilppiopria tioTJ. o-f asset. .::;.
In v>hic.:h of the folJ.ow::..ng situations would t.hf' audit0r most: likely
presume tl'.at ., high risll. of defalcati')Il e>~.ists? •
a. ABC Company i::: a multinational compar.y tha<;:. does bu:>ines.s in
~ariou~ countries in the A~i~-Pacific ri~.
b. DEF Company does business with Lelatf'd parties•
c. GHI Company has 3. ·cashi_,~r 1-1:'1o al.sc ha!1dles account.ing and
dut~orization functions. •
ct. MNO Company ic.: in an inc~ust:::~· wherE: tJ:-.e ratE:! of change is very
~
slow. •
73. An audito.L lJelieves '::.hat an u:J.derstanuinq with the clien+-. ~as not
been established. In this case, the au~itor should ordinarily:
o.. Pertonn the engagement 'll.:i.':h r~newed ,prof~ssional skeptic.!..<>n.
b. ::Jecline to accept or :2er£orm t.h.:: t>nq~.<;:em211t.
c. Asse::;.> ...:cmtr.ol risk"' at: a hiGH levt:.l ar,d rely J?rirrari:!.y on
sul:;.s·cantive nudit p..:-oce.:dcres.
d. Modify the usses::;m~nt of rlsk d~e tc traud.

74. Th~ fol.lovling stateme!1ts ;::elate to :KJI.'J298. \~hich statenent is

correct')
·">.j
-----
a. The Boa1.d o£ Acco•.mt arcy ehns the author;.ty to rem:;ve, a:I:U:!J. due.
proc-ess, 2ny member of t:.he Professional Rtgulqtion Commission
for ;-;egL.yence, in.compet<'l!C-:! or any ether ju::;t ·cause.
b. 'l'hr: .functions 0f t!-.P. Board ·cf Acc.~untancy .:tncl :1cle the
preparat~ un of th~ coPtents of the C2A l.icensu.-:e e:.<arn..:.n.'J.t:'..on and
the rati~g of ex~mination paper~.'
c. J\fter two years, st~bject·. t1) cert'lin conditivns, the Board cf
ACC('\lDcanc..:y must urde.c th-= r.ein:::tatemen'i:: of· C\ C:PA whose
c~rtificate of regiEtr~tion has be~n revoked.
Iu:>;:tnity is a g.:.-ound for iss~ing a certifica·te of registration
to a successful CPA ca~1didate.

75. Which of the fullm~inq is net a ::mnponen'.::. o£ audit rl:'sk?

a. Inht:~"!nt ri::lJ.·.. c • •oet...,ction risk.
b. Credil: rl:ok. d. t C•ntrol r.isk.

76.
a.
'. .
Whiclt of the foll01~:ing sta'.:emE_,nts bes~ describes "detect.i on risk"
The ?.llditor will c::>mpt...te auuit: n1at2riality incorre;ct:ly.
b. Tile auditor wilJ faiJ. to detect materia] rr.i.s8tatemenu.. t!1at
occur.
c. The C:tudi to1.· will ap.1,1ly more audit procedures than are required
in th.: c'i.rcumst.ances.
d. The :•uc~jtor will fili.1 to modj_fy th"' and]t :;;pinion on Lnancial
stater~c.nt s that a.:::e ~Tlterially nLisst.ated.

77. Which of tl1e tcllo~o:i.ng ds not. aa information sourcE: for

developing analy~1cal p~ocedu.Le3 used in th~ audit?
a. Relat.i.on~;Li~).S among financial statent.ent eJ ements.
b. Relati•Jnshipc between fi~ancial and. relevant non-finaccial data.
• c . Cornp<!risc'),l cf financial dat-'1 with anticipated results ;.such as
budgets or forecasts).
d. Cornpar.·ison of C'lr.c~nt: .>•::ar financial d'l.ta wi t:h prc..jectioTls for
next year's financial resuits.
0

78. The follo·.-~ing c.re the n1o1::~ .. signific.ant·. powers anci :!:u"lctions of
thE. Boaru of Accou:1tancy (select:·-....~he excepU.on):
a. To pre:>cr.ib.:: and ado!)'t the Plle.s and regulations n'::!cPssary for
car.cyi.ng <)Ut the provisions of RA9293.
b. To super\·ise the regist rat Lon, lict:.nsure and pru.c'cice of
accoll.n'-·'mcy in the Philippines. •
c. To administer oaths in connect.i.on with !:he adn~nistr<.tion of
RA9290.
d. To m~te c·ut sente:1ce£ of 1mpr.i~cnrnent to violators of RA9298.

{·.
\.· \
•
•
 F:rst Pre-board - Ba~ch 26 (October 2bl3)

7 9. According tu the IP.P. to RA?298, r.~.eaningful exper~ence in commerce •

and rndustry l0cludes ~iqni~icant involvement in liaison with
while meanJnqful. e.l{pf!rience in·· qovernrr,ent includes
significant inv0l'~D~nt in liaison wit~
a. Ex~ernal ~uditcrs; Ext~rnal auditors.
-------
b. Ext.e.rna.·L audl t.o;s; Cumr.."..s.sion on J.'J.dit.
~ I:1t.=rnal auditors.! Go~er:nme~L auditors ..
d. Board of Acc~untancy; National Government Cffice.

80. 'i'he t:erm "erroL" refers tc unint.entional

•
tnistakes
• in the
financia: statements, and ~ay involve the foJlowi~g:
··-, A B C D
Mn.themat.ical or -::le1.i::al mis':ak€s 'in the
.1r.derlyin,.1 reco:r:dc; !i o.ccounting data. Yes Yes Yes Yes
::lversight o::: mi sintE. rp c:etation of facts. No Yes Yes No
"'!isapplication of a::couP-ting p.cinciples .. Yes ':'=S No No
:!upp.._eSSlOn or omission cf the effects vf
t r.:1n s ?.o.:tions ·:::rom 1 ecot·ds o.r dvcument:s No No No No

8". l..,s part of a periodic !Jlarll'li.ng exe1.·cise, F Company discovers that

;, lhudle East politicai. d~•3p\1te ma..y inte.r:tere with the company's
11
s <q[Jl y sources. This is an examp.l_e of:
T\. Control enviro-uncnt. C. Co:-,trol ac.tivit.ies.
2. Ris~ assess~en=. D. Monitor~ng ~f controls.
1
82. F-. certificate uncer_ seal, issue.:! by the C0rrmission upon the
recor.Lr:~en<.lation *'Y t!,e Boco.r:d of J.\c<.;ountancy ~ursu<:lnt to ·:he r.evised
J RR attesting · tha':: ind~vidual Cl:'As (.including the staff members
th<:..::eof), fir:ns :i::1.cludi:1g the sole proprietors anct the staf:!:
mern~>ers th~reof) a11d pa -rtnerstips of CPAs (in-::luding the partners
a1d the staff members thereof) ar:e ctuly a~credited to. practice
t.'ui-)L.c accountancy in the Philippi>1es.
a. Certificate of r~gistratiun. c. Certificate of
Identification.
C~rtifi.cate of accre~i=aLicn. Certifica~e Quality

,,.
b. a. of
Review .
.
'33. How J..::mg Wll.l be the term,_ ~f the chaiman, the vic~-chairman
(t~rm as DOA m~mb~r) .".:-H.i the m~mbers of the Professiona.l Regulatory
3oa~d of Accountancy?
Chair:mar, Vice-Chai rm•.n Members
. ., ----·
3 years yearc 3 years
·'c. 1 ye?.r
.J

1 year 3 ye1rs
c 3 years 1 yea.r 1 year
d. 3 ye:1rs l year • 3 year::>

•
tl4. The .i':ollowing are t:r.~ funct:.ons of the Eaucationa.1 Technical
Council (ETC) f.:X-::ept:
~ .
;:, . OetermL~e a !.-inimwn sta."lctard curriculum f.or t.he s':udy of
,l :..count:ancy to bP- i::t.p.l.er:.entE.d in al). schools offcrinq ;1ccountancy
a~ an undergraduate ccu~se.
j. Es taoL. sh tear.hing standards, including~ t:he qualific<n:ions of
'ne.nbe.::s c~ the facu:.ty of schools and colleges of ilCCour.·.tancy.
c. Monitor t!"le pr0gress of the program :m the stuc.y of c\Uditing and
undeL·taking Ttleas}!;ces for. the •attainment of ?. high qud.lity of
accounting educati0~1 in t.he CO'-'i"ltry.
d. Evaluate periodically the performance of educational .Lnstitut~ons
':!£ter:;.ng accountancy education.

85. vlluch of tl1e fvllo;..ti tg services wculd be most .likely ':o be

structured as an &ssert.;_vn-bascd eng~~geme~t?
' . /\cvoc."'t.ing a cljen':' s position in tax matter.
>.). .'\ COlJSUlting engi'l.;}em~nt to develOf- a neW d<tta-·ba:::e system for the
rev2ru~ cycle. ·
c. ,\n l!ngagement to issuE': a .cepor:t addi.:e::l3ing an entity's compliance
with req•.1irements of spe:cified laws.' "
d. Tl.e -::ompilat:ion o::: client's forecr>.st information.
 36. The Constitutio~ of ch~ Philippi.ne~ reqcires this Office to "keep
the general accounts cf the ,:;0verruner.t an~ for such period as may be
Fa':"O'\Iideu ty law, prese.t:ve the vouchers per~a.~n.Ln-g thereto"
~· Au~iting units to each bureau or ~. National Accounting Office
office. ·
b. Min~stry of Finance G. Cornmiesi;~ on Audit.
•
87. WJ:ich of • 1:.he follm.,ring .sitjJations best ill'us~rates the
application of profes3ional 3Xeplicism?
a. G, CPA, is f:!ngaged i1: di...;cu.s3i.orls 1.-Jith J·, t.he clie11t' s
collt::oJ.ler.. G s.)Lt.=.tJns sevezaJ. r:.,;:-al repr:·esentat:ions :::rom ,J, which
t..he : o:~mer rec..di ly ar:ceftS without £..nther work· or .suppor1: from
other audit procedures.
b. G, CPi'\ ~2 s decid~de tr; continue w:L th the · atidi t c t ABC Cmnpa.ny.
Throtigho~t the ccurse of the audit, G doe~ not believe any of the
representations.ma~e by J, controlle~.
c. G, CE'J,, j_s dis..:ilssir.g .several c.udi t issu~s with J., a member of
top m~,na.jement. T!u:ouq'lwlit the meeting with J, G n.:!ither assumes
• that J i:; di~hone:st, no1.· cSS"<lin<:::o; unq·..1e:sti•med hc:v::sty in J' s c,ra.l
representations.
d. G, CPA is engag-ed ir. ci.iscL~sions with J, -t.he cl2.ent' s controller,
regarding sever.~l audit .:.ssues. ThruU<Jhout the meeting with ,J, J
nei the1. ast.ume·> tha': C lS di.sl:onest, no.r assumes unquestioned
honescy in G's oral rep~Psentat~nns.

88. If the auditor co:1ci.udes tha": 'th~re l s reasonat>l~ justification

to change the engagem<.nt anti if t·he au·~~- t work t:-erformed cor<:plies
with th-= PSAs appJicable to t:he changed engagem~nt, the report
lssued would be that appro~riate for~
a. The original ~~~aqement, with0ut reference to the original
eng .... ge.nent.
b. Th~ ~evised terms f c:ngagc-ment, 0~thout reference to the
ori;Jinal en~a.geme_nt.
c. The revised terms uf en:;agcmen':., Wlth r-efereJ:.:::e to the or:i.ginal
en~ragement.
d. Tte ori~inal engagement, .re'ference to the revised
engac;emen:.:,
•
89. Wtnch :,f the fr.;llowing sc.rv:; crs prr)vides tLe hi,she~ . 1 ~vel of
assurance to thir.d paLties abcut a cm~any's financial state~ents?
a. .Z:..Ldi t!.i. • c. compH<"ti·on.
b. Reviews. c. Write-up w~rk. ·, . r.'
l
I ,~ ; . ; ·-t \

.!'
90. :n devel:::>p.i.ng the ovE=ral! <ludit plar, for a. ne"i client, a far;to·.
not to be CCJJ,sid-=red is
a. '!.'he t eriPS :>f. thr: ~ngc:.gem~nt and <>.n:t' statutory responsibj U. tieo
b. The ~l~ent's business, ioc.luding the struct~re uf t~e
orsanization and &c..:ounting'system used
c. ThP. amn~nt of estimat~d audit f~e ;
d. ~'he audit risk.::: and ;:i:roc~du:ces to be re_rfont'ed t::c achie\re e~udi t
objcct'~ves
•
91. Which state~ent is correct?
a. A review involves th-::. :.pplicat.i.on of aL•dit sl<il}s and techEiques
and the g21. ther ing of ;• v:lden.ce.
b. A re•;i:c!w co;~~p..:-ises i:-~qui';:-y, c co':lfirrnati.on, and an:ilyU_cal
proc•=dures which are • d-esignee: to revi..ew the 'r~liabili ty o{: an
assertion that is tht- 1·es:r:;o:1sinil ity of o11e party :Cor use by
another :;;arty.
c. In a compilation engaqem"!nt, thr: acc01intont is en:Jag2d to use
2udit.ir.g expert.j.se as oppos•-'!d to accounting expertise.
d. Since no as[~ural.<Ce j s expre:"sed in a <::ornp:tlation engagem2nt,
a use~s 0£ compi.leci informat).or, deri•v~ r.o benefit. even w:1e:1 the
:3e~";i.CC" has ":Jeea pe.civnn"!c vi.J.th due professional ski.:Cl auc car·~.

"
• •
 I

i •
F~rst Pre-board -Bat<:h 26 .{Or.tober 2013)
•
?2. rahich r)£ t.he following f'act::>rs ·or condition~ is an audita:::: l'tast
likeJ....:i to pi..::.n c.n :1.:1~it to disrover?
~ Financial pre~suLes aite;tlng employees.
b. Ir.ac.eqL'&t~ mor.iL.~ rin;1 o::= sig.l.ifir.ant con·t.!:ols.
!ii_ah tu.cnover of seni:::Jr manag~r:1.ent.
c:. In~bility t.o gene::at.e pos_i_tive ·cash flows from 0pe.cations.
':<3. Internationz,l Sta11dards on hudi'ting {ISAs) on whi::h the PSAs are
~as~d arc ~en~ra~ly applicahle to t~e public sector, including
government bl!si,nes3 ertterprises. · -.Hovreve:r, .the applic3bility of the
e-J.ll.::valent PSA£ on Pr;ilippinP- putll.i.c .sector en.tities has not been
aadre::.scd by tf:.e Ao...tditin<;; ~ta.nda.rds and. Practices Council· (Note:
Tl:e 1\SPC has be~n ceplaced by the Aud.i.tiug an.d A.:>st~rance Standards.
Co·.J.ncil) . It is r.r.e u.r.derst:anding ·of the ,"\Sf'C thn.t this matter will
be adc.::es~ed by.: ·
"'· The Cor:unission on Audit itsel£ in due course.
b. T!'le Asso::'iat:ion of CFAs in PubJ~i_c Practice it:=;e!.f in due course.
c. The !? r::ofessio,lc..l Rcgulat·;.on Commission of the PI-J.ilipoine<> itself
Ln due col\r~e.
d. 'II1e E roiess ional Reg.ulatO[Y i3oa rd of Accountancy i Lself in due
C0'.lrse.

9<'. :'\n au.ditor uho has been inv.:.ted to submit a prc?osal for an audit
i3 a
ei1gctg~'>mC!:Jt
a. ?.cedecessor auditor:. c. Principal nuditor.
b. S~ccessor,auditor. d. Interlrn auditor.

95. Wh.:.c~ of the following cases illustrate a violation of the

provisions of RA9298 anci its IRR regarding the rule on temporary and
special permits?
a. A, foreign CPA, is internationally· recognized as one of the
foremost expe.ct3 in corr.r::.lt~d.zed f:caud audits. In che judgment
of t~e Boa.cd of A::co~ntaPcy, obtt1ining th~ s•~rvices of A is
e3~;enLial for ~he advancer.tent :::Jt ac.:c::ountanc~' in the Philippines.
!>.. is qranterl ::. ·c-=mporary/sper::..a:t peqni': to orovide training to
~~l~p~no auditors Fegarding the finer poi~ts of his
S?F::ciali?alion, an his pet.·rnit is rest.z.:icted to this particular
engagement:.
l.J. B, foreign CPA, i!:; C;J.lled for a :;peci.fic purp0sE! Hhich, in the
jud<:,l!le'1.t of the BoaLd cf Accounta~cy, · i;:,• es3ential for the
rle';elo;,ment of t:he cc,untry. B i~ granted a temporary/ special
ve.cmit to pructict: for t.he particular work that he is being
engaged. ThP:re is nc FiJipir,0 CPA q11alified fQr such • specific
pur,;'ose.
c. C, foreiyn erA, is c~lled for consultation, wLi~h, in the
-~udgment: of the Ec::a.r:d of 1\ccour:tancy, is ess~r:tia.l. for the
dF. velopment of ·the cot.:utry. c; is gran<:~d a temporary/ special
oc.::ITLi t t:o practice for the pa t:t:i.cular cor,sul ';:ation tr.at she is
be.:.ng enga')ed. Th;::n• is no F.i.Jipim.' .fPA qualified fc.,r such
ccn~ult.at.ion.

d. D, foreign C?A, is engag~d as profe~sor in special inte1:nat:ional

-v:col!nting modules whir~b are E:ss'ent:i<"l to accountan.cy education
in tn:= Pf:i:iipP.lne<>. She was giver.. a tetnporary/ special permit
wl-.ich rest.cicts her pract:'...ce to teach:i.ng and performing
com]Jilation work tor local en~erprises.

96. . ·.n audi ':o1· has ;.;idldrawr-. f.r:om au audi<;: engagement of a pub.1.icly-
lw lCJ CCJ!,lpanj aft~r Cill~.~nCj irreg;.Ilarit:ies Which IT:Ry mat~rially
atf:ect th"! fifli'l.ncial st:atements. The auditor should set forth the
r<e:a~;cn3 ana findings in co1.·respondenc<-! to tl'>e
a. Securities anct Exchan;e Comrniss:..on.
b. CliEnt's legal counsel.
c. ~tock exchanges where. the com?a~1y':; stock is trad~d.
d. Board of 0irectnrs.
 :_.-._- y;;yr

:-;f' First Pre-board- Bateh 26 (Ot:tober 2013)

.,lf
'•f
~~~~ 97. The fo.:!.lowin~ st:c.terr.ellt~ r::ela~e t:o t.h~ Phil-ippine Inst:itut-= of •

//~'i"
Certified Pub.U c J.\ccountar.ts (PIC:? A) • Which ~ne is incorrect?
a. A direct0 r:: cc.n only rc:ptcsent a sector· in a re1d.on i.f he/ s~\e h..1s
' bten a rn<::!mbE:r i:::1 <;ood sta.rcling in such s·ector. in the re(Jion for •
'- •.-{~
I
at lea.;;t t·..:o years at thE: ~~me of. hi!</her nomination.
b. T~ere shall o:::1iy re fourteen ··ational directors, 'unless there is
\
~ valjd =eason to have additional rep~esent..1tion. ·
c. '::'!:2 n.,ticnal d:!rectors shall be a~portioned according to sectors
ir' t!te iour geograph:i_c sect-:Jrs based 0.1 the ratio of latest
a\'l.i.,able numbP-r of '"ewbers :'~11 good .. st:anding ::.rom t:hose ar~as.
<.1. It shall havE: a f·J.il-tim2 career ExecuU_ve Di.-::ec'!:or who shall.
irr:IJ2 ern,:::'_ the "?o:!.icj e~- ;Jrowulgat~d. by the' PICPA Bodrd of
Dir~:~ctcJL; a;1d shalL have d.~.rect surervi::>iui1 ove-r the ?JC.PA
_r·Qcr...=~a.":''Lar·.

98. \'a lmid, CPA and :1uman· rEosmJ::CG~' partnE;r of ABC and. Co •. auditing
firm, ,:,eri0dic3.J.1y studi~s. the CPA finr' s personnel a·dvz:ncernent
exper~ence ~o ascert~~c whether individuals•mee~ing stated criteria
are a:;sic;nc=d increas':!d c'e::Jr2•.;.s of re~ponsib 0clity. 'l'his is ev::..den-:::e
of the CPA firr.1' s adhere!l.re c.o prescribed stdndards of
a. Qual~l:y c.::Jntrol. c. Supervi.::.i'on and review.
~- Due prcfessional care. d. Fieldwock.

99. \~hich o:. tht:: follov~ing is mo:::t lii<e~yo a quality control procedure on
cliellt 2cceptance and :::onti nua.1ce? •
a. Desiynat:e indlv.idual<> as specjalist::; to serve as at.:.thoritative
sources.
b. Frcv.ide adequ~te supervision at. all• · organizational levels,
consJ.dEC.rinq trainiT',g, ability and e}:perieetce of per5onnel
2ssignP.C ir, e:1qageDents.
r::. F.:val:.F;t.,:: clients upon' thE: occurrence e>i Sfecified €VE::nt.s to
dete miiJe whet:Le;r the r2.!.at1.onships ~,J<;ht to b~ continued.
d. ?"'r.icdil<>.3.lly counseJ pP.r.:;crmeJ. as to tlleir progress and career:·
(:·~"~pc.~ :·t.un.Ltit.:-S.
•
l.OO. The. OL:Lc-om2 c•.:: ~l:e
.:cvaJ ua-t_ion or measurem2nt 0f a subject rnntter.
A. Audit ceporc C. Suhj er:t analysis
9. Suhject mattP.r inform2tion D. Criteria

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