QUIZ 1

Question 1:

Examples of actions that might be safeguards to address threats created by offering or accepting such
an inducement include

On the wishes of the auditor, returning the inducement, such as a gift, after it was initially accepted.

Not being transparent with senior management of the firm or of the client about offering or accepting
an inducement.

Reimbursing the cost of the inducement, such as hospitality, received.

Having an appropriate reviewer, who is involved in providing the professional service.

Question 2

Examples of circumstances that might create a conflict of interest include:

Not being responsible for selecting a vendor for the employing organization when an immediate family
member of the accountant might benefit financially from the transaction.

Not preparing financial information for certain members of management of the accountant’s employing
organization who are seeking to undertake a management buy-out.

Serving in a governance capacity in an employing organization that is approving certain investments for
the company where one of those investments will decrease the value of the investment portfolio of the
accountant or an immediate family member.

Undertaking a professional activity for each of two parties in a partnership, where both parties are
employing the accountant to assist them to dissolve their partnership.

Question 3

Which of the following is least likely an example of an inducement?

Appeals to friendship and loyalty

Preferential treatment, rights or privileges

Entertainment

Moderate gifts

Question 4

A professional accountant which requires an accountant to respect the flow of information acquired
as a result of professional and business relationships.

Professional behavior

Objectivity

Professional competence and due care

Confidentiality

Question 5

CPAs must not market their profession because this is a violation of Code of Professional Ethics for
CPAs in the Philippines.
 True

False

Question 6

Occurs when any product or judgment of a previous assurance engagement or non-assurance

engagement needs to be re-evaluated in reaching conclusions on the assurance engagement or when
a member of the assurance team was previously a director or officer of the assurance client, or was an
employee in a position to exert direct and significant influence over the subject matter of the
assurance engagement.

Self-review threat

Self-interest threat

Familiarity threat

Advocacy threat

Question 7

The accountant complies with the principle of objectivity is least likely exemplified by:

Recognizing circumstances or relationships such as familiarity with the client, that might compromise
the accountant’s professional or business judgment

Applying knowledge that is relevant to a particular client’s industry and business activities in order to
properly identify risks of material misstatement

Considering the impact of such circumstances and relationships on the accountant’s judgment when
evaluating the sufficiency and appropriateness of audit evidence related to a matter material to the
client’s financial statements

Question 8

Which of the following is incorrect regarding integrity and objectivity?

The principle of objectivity imposes the obligation on all professional accountants to be fair,
intellectually honest and free of conflicts of interest.

Integrity implies not merely honesty but fair dealing and truthfulness.

Professional accountants should neither accept nor offer any gifts or entertainment.

Professional accountants serve in many different capacities and should demonstrate their objectivity in
varying circumstances.

Question 9

The International Code of Ethics for Professional Accountants (including International Independence
Standards) (“the Code”) sets out

principles establish the standard of behavior expected of a CPAs only.

 fundamental principles of ethics for professional accountants, not reflecting the profession’s
recognition of its public interest responsibility.

fundamental principles of ethics for professional accountants, reflecting the profession’s recognition
of its public interest responsibility.

conceptual framework that professional accountants are to apply in order to identify, evaluate and
address all threats to compliance with the fundamental principles.

Question 10

Which of the following is not likely to create a threat to independence?

The total fees generated by an assurance client represent a large proportion of a firm’s total fees.

A court or other public authority established fees.

A firm obtains an assurance engagement at a significantly lower fee level than that charged by the
predecessor firm, or quoted by other firms.

Fees due from an assurance client for professional services remain unpaid for a long time.

Question 11

Which of the following statements is incorrect?

Conceptual framework accommodates various situations that creates threat to the profession.

Using the conceptual framework, a CPA can possibly define every situation that creates threats to
compliance with the fundamental principles.

The Code establishes a conceptual framework that requires a professional accountant to identify,
evaluate and address threats to compliance with the fundamental principles.

The conceptual framework assist the professional accountants in complying with the fundamental
principles.

Question 12

In order to achieve the objectives of the accountancy profession, professional accountants have to
observe a number of prerequisites or fundamental principles. The fundamental principles include the
following, except

Technical Standards

Confidence

Objectivity

Professional Competence and due Care

Question 13

If a CPA cannot implement appropriate safeguards, the professional accountant should do the
following, except:

Resign from the client or the employing organization, as necessary

Decline the specific professional service involved

Discontinue the specific professional service involved

Issue an adverse opinion on the subject matter of the engagement

Question 14

Which of the following is the least required in attaining professional competence?

Specific education, training and examination in professionally relevant subjects.

Continuing awareness of development in the accountancy profession.

Period of meaningful work experience.

High standard of general education.

Question 15

Safeguards created by the profession, legislation or regulation, include the following, except

Legislation governing the independence requirements of the firm.

Educational, training and experience requirements for entry into the profession.

Continuing education requirements.

Policies and procedures that emphasize the assurance client’s commitment to fair financial reporting.

Question 16

Richard, CPA, performs accounting services for Norton Corporation. Norton wishes to offer shares to
the public and asks Richard to audit the financial statements. Richard refers Norton to Cruz, CPA, who
is more competent in the area of registration statements. Cruz performs the audit of Norton's
financial statements and subsequently thanks Richard for the referral by giving Richard a portion of
the audit fee. Richard accepts the fee. Who, if anyone, has violated professional ethics?

Neither Richard nor Cruz.

Only Cruz.

Both Richard and Cruz.

Only Richard.

Question 17

A professional accountant shall evaluate the significance of the threat

quantitatively

quantitatively and qualitatively

qualitatively

qualitatively or quantitatively

Question 18

Occurs when a firm, or a member of the assurance team, promotes, or may be perceived to promote,
an assurance client’s position or opinion to the point that objectivity may, or may be perceived to be,
compromised. Such may be the case if a firm or a member of the assurance team were to subordinate
their judgment to that of the client.

Self-interest threat

Familiarity threat

Advocacy threat
 Self-review threat

Question 19

Factors that are relevant in evaluating the level of threats created by pressure include:

The application of laws, regulations, and professional standards to the circumstances.

The immediate or close family member and the counterparty

Internal and external audit procedures that are specific to address issues that give rise to the financial
interest.

Policies and procedures for a committee independent of management to determine the level or form
of senior management remuneration.

Question 20

Provision of internal audit services creates a self-interest threat to independence if the firm uses the
internal audit work in the course of a subsequent external audit.

True

False

Question 21

A professional accountant might quote whatever fee is considered appropriate.

True

False

Question 22

Which of the following most completely describes how independence has been defined by the
profession?

Possessing the ability to act with integrity and objectivity.

Performing an audit from the viewpoint of the public.

Accepting responsibility to act professionally and in accordance with a professional code of ethics.

Avoiding the appearance of significant interests in the affairs of an audit client.

Question 23

Fees calculated on a predetermined basis relating to the outcome or result of a transaction or the
result of the work performed.

Flat sum fees

Per diem fees

Retainer fees

Contingent fees

Question 24
A professional accountant entrusted with money or other assets belonging to others shall not:

Hold the assets even if the law requires him to be the custodian of the asset

Keep the assets separately from personal or firm assets

Use the assets only for the purpose for which they are intended

Be ready at all times to account for the assets and any income, dividends, or gains generated, to any
individuals entitled to that accounting.

Question 25

A CPA should maintain objectivity and free of conflict of interest when performing:

All attestation services, but not other professional services

Audits, but not any other professional services

All tax services not other professional services

All professional services

Question 26

A professional accountant shall not assume custody of client money or other assets unless permitted
to do so by law and in accordance with any conditions under which such custody may be taken.

True

False

Question 27

In which of the following instances would the independence of the CPA not be considered to be
impaired?

In which the CPA has a large active margin account.

In which the CPA's brother is the controller.

The CPA has been retained as the auditor of a brokerage firm

Which owes the CPA audit fees for more than one year.

Question 28

A fee received for referring a continuing client to another professional accountant or other expert
where the existing accountant does not provide the specific professional service required by the
client. This situation creates what threat?

Familiarity threat

Self-interest threat

Intimidation threat

Self-review threat
Question 29

Right-based approach in ethical decision making recognizes that decision-making involves trade-offs
between the benefits and burdens of alternative actions and focuses on the consequences and
individuals affected.

True

False

Question 30

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,

The engagement is promptly transferred to another professional accountant who has not committed
the violation

The violation is corrected promptly and any necessary safeguards are applied.

The CPA withdraws from the specific professional service involved

A disclaimer of opinion is issued to the client as a result of the violation

Question 31

A distinguishing mark of the accountancy profession is

The acceptance of the responsibility to act in the public and private interest

The acceptance of the responsibility to act in the personal interest

The acceptance of the responsibility to act in the private interest

The acceptance of the responsibility to act in the public interest

Question 32

The financial interests of which of the following parties would not be included as a “direct financial
interest” of the CPA?

Dependent child.

Relative supported by the CPA.

Sibling living in the same city as the CPA.

Spouse.

Question 33

Examples of circumstances that may create self-review threat least likely include

A member of the assurance team being, or having recently been, an employee of the assurance client
in a position to exert direct and significant influence over the subject matter of the assurance
engagement.

Potential employment with an assurance client.

Performing services for an assurance client that directly affect the subject matter of the assurance
engagement.

Preparation of original data used to generate financial statements or preparation of other records that
are the subject matter of the assurance engagement.
Question 34

A CPA should not accept gifts or any form or act of hospitality from clients in all circumstances.

True

False

Question 35

Procops, CPA, has an overbearing superior, and the superior is suppressing the recording of certain
transactions of the company. Procops is being asked to act contrary to technical and professional
standards. The first remedy in case of ethical conflict is

Review the conflict problem with the next higher managerial level, after giving notice to the immediate
superior of the intention to do so.

Review the conflict problem with the superior.

Seek counseling and advice on a confidential basis with an independent advisor or the applicable
professional body or regulatory board.

Follow the established policies of the employing organization to seek a resolution of such conflict.

Question 36

Match the following:

May occur as a result of the financial or other interests of a professional accountant or of an

immediate or close family member

Self-interest threat

May occur when a previous judgement to be re-evaluated by the professional accountant responsible
for that judgment

Self-review threat

May occur when a professional accountant promotes a position or opinion to the point that
subsequent objectivity may be compromised

Advocacy threat

May occur when, because of a close relationship, a professional accountant becomes too sympathetic
to the interest of others.

Familiarity threat

May occur when a professional accountant may be deterred from acting objectively by threats, actual
or perceived.

Intimidation threat

QUIZ 2
The PRBOA consists of a chairman and five representatives, all appointed by the
President of the Philippines.
True
False

The Philippine Institute of CPAs is not the highest and final authority in state accounting.
True
False
A CPA teaching accounting in a private university is not considered to be engaged in the
practice of accounting.
True
False

The PICPA CPD Council has the primary responsibility to enforce the CPD program of
the PRBOA.
True
False

The Commission on Audit adapted the International Financial Reporting Standards by

IFRS Foundation for all accounting of government entities.
True
False

International Auditing and Assurance Standards Board is under IFRS Foundation, the
primary function of which is to issue International Standards on Auditing covering
various services offered by professional accountants worldwide like auditing, review,
other assurance, quality control, and related services
True
False

The following situations constitute a practice of public accountancy, except:

Instructions of accountancy students on accounting

Holding out oneself as one skilled in the knowledge, science and practice of accounting and as a
qualified person to render professional services as a CPA.

Performance of external audit services.

Rendering services to more than one client on a fee basis.

A body that is created to assist the BOA in the attainment of the objective of
continuously upgrading the accountancy education in the Philippines to make the
Filipino CPAs globally competitive. (DO NOT supply the ACRONYM)

Education Technical Council

The members of AASC and FRSC are all appointed by

PRC Chairman

PICPA President
PR Board of Accountancy

Philippine President

Which is not a qualification of the members of the PRBOA?

Must not have any pecuniary interest, direct or material indirect, in any school, college, university or
institution conferring BS Accountancy
Must be of good character and must not have been convicted of crimes involving moral turpitude.
Must be a natural-born Filipino citizen and a resident of the Philippines.
No answer.

Must be a duly registered CPA with at least ten years of work experience in any scope of practice of
accountancy.

Members of the PRBOA shall serve for how many years?

3 years

In total, how may representative of PICPA in public practice does FRSC must have as a
minimum? (Type your answer in NUMERICAL value)
2 members

Which of the following is not a ground for suspension or removal of members of

PRBOA?
Intolerance of violations of the Philippine Accountancy Act

Rigging of the CPA licensure examination results

Negligence in the performance of duties, or lack of professional competence

Final judgment of crimes involving moral turpitude

Which of the following is not a representative of Auditing and Assurance

Standards Council?

Both Bureau of Internal Revenue and Bangko Sentral ng Pilipinas

Bureau of Internal Revenue

Neither Bureau of Internal Revenue nor Bangko Sentral ng Pilipinas

Bangko Sentral ng Pilipinas

The accredited national professional organization shall submit its nominations for
PRBOA to the PRC
After the 60th day from the expiry of the term of the incumbent chairman or member.
Not later than sixty days prior to the expiry of the term of an incumbent chairman or member.
On the date of expiry of the term of an incumbent chairman or member.
Upon request by the Commission for the submission of nominations.

Who is the person that has the authority to suspend or remove a member of the
Professional Regulatory Board of Accountancy, on valid grounds and after due process?
The Commissioner of the Professional Regulation Commission

None of these are correct.

The President of the Republic of the Philippines

The Chairman of the Professional Regulatory Board of Accountancy, unless he is the one who is
under investigation
This refers to those persons who hold a valid certificate issued by the Board of
Accountancy
Senior accounting practitioner

Professional accountant in public practice

Audit associate
Professional accountant

Who is not permitted by law to practice accountancy?

A corporation whose stockholders are all CPAs
An individual CPA practitioner

A partnership of CPAs
A partnership of CPAs with some non-CPA staff

Which statement is incorrect regarding the term of office of the chairman and the
members of the Board of Accountancy (BOA)?
The Chairman and members of the Board shall hold office for a term of five and three years,
respectively.
No person who has served two (2) successive complete terms shall be eligible for reappointment
until the lapse of one (1) year.
A person may serve the BOA for not more than twelve years.
The Chairman and members of the Board shall hold office for a term of three years.

The following are regarded by RA 9298 as CPA services in public practice if offered or
rendered on a fee basis and to more than one client (select the exception):
Design and installation of accounting system
Professional assistance on accounting procedures
Representation of clients before governmental agencies on tax and other matters regardless of
its relation to accounting
Preparation and signing of audit reports

Which of the following is not mentioned as a power of the PRBOA?

To monitor the conditions affecting the practice of accountancy.
To supervise the registration, licensure and practice of accountancy.
To issue, suspend, revoke, or reinstate the Certificate of Registration for the practice of the
accountancy profession.
To sentence to imprisonment CPAs who have been found guilty of violations of the
Accountancy Act.

What is the complete name of the only accredited national professional organization of
CPAs in the Philippines?
Philippine Institute of Certified Public Accountants
The government agency tasked by law of implementing and enforcing the regulatory
policies of the national government with respect to the regulation and licensing of the
various professions and occupations under its jurisdictions.
Professional Regulation Commission
Professional Regulatory Commission
Department of Finance
PRBoard of Accountancy

Regulation of the accounting professions include:

All of the choices
Regulation within the firm, through the implementation of a system of quality control.
Public regulation as provided for in the Philippine Accountancy Act of 2004.
Regulation within the profession, through the implementation of the Code of Ethics.

Which of the following is not mentioned as a power of the PRBOA?

To issue a cease or desist order to any person, association, partnership or corporation engaged
in violation of any provision of the Act.
To prescribe and/or adopt a Code of Ethics for the practice of accountancy.
To supervise the PICPA
To conduct an oversight into the quality of audits of financial statements.
All are powers of the PRBOA.

The Chairman and the members of the PRBOA shall be appointed by the:
President of the FINEX
President of the Senate
President of the Philippines
President of PICPA

No member of the PRBOA shall serve for more than? (indicate your answer in
NUMERICAL terms)
12

It the an autonomous, independent and non-political organization that operates as an

umbrella organization for the external government audit international community. (Do not
supply an acronym)
International Organization of Supreme Audit Institutions

Match the following:

sets high-quality international standards for auditing, assurance, and quality control that
strengthen public confidence in the global profession
International Auditing and Assurance Standards Board
establishes standards, in the area of professional accounting education, that prescribe
technical competence and professional skills, values, ethics, and attitudes
International Accounting Education Standards Board

sets high-quality, internationally appropriate ethics standards for professional

accountants, including auditor independence requirements
International Ethics Standards Board for Accountants

develops standards, guidance, and resources for use by public sector entities around the
world for preparation of general purpose financial statements
International Public Sector Accounting Standards Board

independent, autonomous and non-political organization operates as an umbrella

organization for the external government audit community.
International Organization of Supreme Audit Institutions

provides assurance that the IPSASB standard setting activities are in the public interest,
by providing recommendations on the terms of reference of the IPSASB
Public Interest Committee

Philippines adopted the Philippine Financial Reporting Standards when?

July 2005

monitors the technical activities of the IASB and invites comments on exposure drafts of
proposed IFRSs as these are issued by the IASB
Financial Reporting Standards Council

established by the Professional Regulatory Commission (PRC) to assist the Board of

Accountancy (BOA) in carrying out its power and function to promulgate accounting
standards in the Philippines
Financial Reporting Standards Council
was created by the PRC upon the recommendation of the BOA to assist the BOA in the
establishment and promulgation of auditing standards in the Philippines
Auditing and Assurance Standards Council

facilitate the implementation of IASs in the Philippines

Auditing and Assurance Standards Council

facilitate the implementation of state auditing standards in the Philippines

Commission on Audit