SUMMATIVE ASSESSMENT

MULTIPLE CHOICE: (RA9298)Philippine Accountancy Act of 2004

(10 points)

1. The PICPA shall submit its nomination with supporting documentation

a. Within 60 days prior to the expiry of the term of an incumbent member or chairman
b. Within 90 days prior to the expiry of the term of an incumbent member or chairman
c. Not later than 60 days prior to the expiry of the term of an incumbent member or chairman
d. Not later than 90 days prior to the expiry of the term of an incumbent member or chairman

Answer: C.
(In RA9298 SECTION 5 - The APO shall submit its nominations with complete documentation to the Commission
not later than (60) days prior to the expiry of the term of an incumbent chairman or member)

2. Which of the following statements about the composition of the Board of Accountancy is incorrect?

a. The four sectors in the practice of accountancy shall as much as possible be equitably represented in the
Board.
b. The Board shall be composed of a chairman and six members.
c. The members of the Board shall be appointed by the President of the Philippines from a list of three
recommendees for each position and ranked by the Commission, from a list of five nominees for each position
submitted by Accredited Professional Organization (APO).
d. The Board shall elect a vice- chairman from among its members to serve for a term of three years.

Answer: D.
(The Board shall elect a vice-chairman from among its members for a term one (1) year.)

3. Which of the following is not among the qualifications of a member of the Board of Accountancy?

a. He/ She must have at least 10 years of experience in the practice of accountancy
b. He/ She must be a natural-born CPA and a resident; of the Philippines
c. He/ She must not be a director or officer of the accredited national professional organization at the time of
appointment.
d. He/ She must not have any direct or indirect pecuniary interest in any school offering BS Accountancy degree

Answer: B.
(SEC. 6. Qualifications of Members of the Professional Regulatory Board. – A member of the Board shall, at the
time of his/her appointment, possess the following qualifications:
(a) Must be a natural-born citizen and a resident of the Philippines; )

4. The standard setting body created by the PRC to promulgate accounting standards that will be generally
accepted in the Philippines is known as

a. Financial Reporting Standards Council (FRSC)

b. Auditing Standards and Practices Council (ASPC)
c. Accounting Standards Council (ASC)
 d. Auditing and Assurance Standards Council (AASC)

Answer: A.
(SECTION 9 (A) - Accounting and Auditing Standard Setting Council. –The Commission upon the recommendation
of the Board shall within ninety (90) days from the effectivity of this IRR, create an accounting standard setting
body to be known as the Financial Reporting Standards Council (FRSC))

5. Which of the following statements about Accounting Standard Setting Council is correct?

a. The accounting standard setting body is known as Accounting Standards Council (ASC).
b. The accounting standard setting body is composed of a chairman and fifteen members.
c. The chairman and members of the standard setting council shall be appointed by the Commission upon the
recommendation of the Board in coordination with the accredited national professional organization.
d. The public accounting practice is the sector that is most represented in the accounting standard setting
council.

Answer: C.
( The Chairman and members of the AASC shall be appointed by the Commission upon the recommendation of
the Board in coordination with the APO)

6. Which of the following best describes the function of Auditing and Assurance Standards Council?

a. To monitor full compliance by auditors to PSAs

b. To promulgate auditing standards, practices and procedures that shall be generally accepted by the
accounting profession in the Philippines
c. To assist the Board of Accountancy in conducting administrative proceedings on erring CPAs in public practice
d. To undertake continuing research on both auditing and financial accounting in order to make them responsive
to the needs of the public

Answer: B.
(To monitor the conditions affecting the practice of accountancy and adopt such measures, including
promulgation of accounting and auditing standards, rules and regulations and best practices as may be deemed
proper for the enhancement and maintenance of high professional, ethical, accounting and auditing standards:
Provided, That domestic accounting and auditing standards, rules and regulations shall include the international
accounting and auditing standards, and generally accepted best practices)

7. The following statements relate to the RA9298. Which statement is true?

a. Within two years, subject to certain conditions, the Board of Accountancy may order the reinstatement of a
CPA whose certificate of registration has been revoked.
b. The Professional Regulation Commission has the authority to remove any member of the Board of
Accountancy for negligence, incompetence, or any other just cause.
c. Insanity is not a ground for proceeding against a CPA.
d. No person shall be appointed as a member of the Board of Accountancy unless he has been in the practice of
accountancy for at least 10 years, among others.

Answer: D.
 (SEC. 6. Qualifications of Members of the Professional Regulatory Board. – A member of the Board shall, at the
time of his/her appointment, possess the following qualifications
(b) Must be a duly registered Certified Public Accountant with a least ten (10) years of work experience in any
scope of practice of accountancy)

8. Which of the following statements is correct?

a. Any candidate who fails in two (2) complete CPA board examinations will no longer be allowed to take
another set of examination.
b. Any candidate who fails in two (2) complete CPA board examinations shall be disqualified from taking another
set of examinations unless he/she submits evidence to the satisfaction of the Board that he/she enrolled in and
completed at least 21 units of subjects given in the licensure examination.
c. The examination in which the candidate was conditioned and the removal examination on the subject in
which he/she failed shall be counted as one complete examinations.
d. The refresher course should be completed within two (2) years from the preceding examination.

Answer: C.
(Sec. 18 Failing Candidates to Take Refresher Course- For purposes of this Act, the examination in which the
candidate was conditioned together with the removal examination on the subject in which he/she failed shall be
counted as one complete examination.)

9. Below are names of four CPA firms and pertinent facts relating to them. Unless otherwise indicated, the
individuals named are CPAs and partners and there are no other partners. Which firm name and related facts
indicate a violation of the Philippine Accountancy Act of 2004?

a. Binhi, Binti and Bigti, CPAs (Bigti died about 5 years ago; Binhi and Binti are continuing the firm.)
b. Tiu and Ramos, CPAs ( The name of R. Hermosilla, CPA, a third partner is omitted from the firm name.)
c. Bitay and Bigo, CPAs (Bitay died about three years ago; Bigo is continuing the firm as a sole practitioner.)
d. R. Hermosilla and Co., CPAs (R. Hermosa'a has ten other partners who are all CPAs)

Answer: C.
(Mentioned under Section 23 of this Act or for any unprofessional or unethical conduct, malpractice, violation of
any of the provisions of RA No. 9298 , and its implementing rules and regulations, the Certified Public
Accountant ‘s Code of Ethics and the technical and professional standards of practice for certified public
accountants. )

10. Unless otherwise exempted, registered CPAs in the practice of accountancy who have not completed the CPE
requirements shall

a. Be dropped from the roster of CPAs.

b. Not be allowed to renew their professional licenses.
c. Present evidence to the satisfaction of the Board that they have the necessary knowledge, skills and
experience to discharge their professional responsibility.
d. Submit a letter addressed to the Board indicating the reasons for not complying with the CPE requirements.

Answer: B.
(Unless otherwise exempted, registered CPAs in the practice of accountancy who have not completed the CPE
requirements provided herein shall not be allowed to renew their professional licenses.)
TRUE OR FALSE: Note: If the answer is False underline the wrong word/s and write the correct word/s. (20 points)

1. There is 1 credit units per hour that will be earned by a participant in a CPE seminar?

Ans: TRUE

2. The Board of Accountancy shall submit to the PRC the ratings obtained by each candidate within 5 days after the
examination, unless extended for just cause.

Ans: FALSE- 10 days / 10

3. Human Resources shall establish policies and procedures designed to provide it with reasonable assurance that
engagements are performed in accordance with professional standards and regulatory.

Ans: FALSE- Engagement Performance

4. One of the consideration of review was the significant matters that have been raised for further consideration?

Ans: TRUE

5. The engagement performance shall take responsibility for reviews being performed in accordance with the
firm’s review policies and procedures.

Ans: FALSE- Partner

6. The term of the office of each member of AASC and FRSC is 3 years, non-renewable

Ans: FALSE-renewable

7. Those who failed to renew professional licenses for a period of five (5) continuous years from initial registration,
or from last renewal shall be declared delinquent.

Ans: TRUE

8. The Council shall be composed of two members and a chairperson.

Ans: TRUE

9. A CPA certificate is evidence of basic competence at the time of Independence.

Ans: FALSE-certification

10. A Professional Identification Card bearing the registration number, date of issuance, expiry date, duly signed by
the chairperson of the Commission, shall be issued to every registrant renewable every two years.

Ans: FALSE- Three

CASE STUDY: EMPLOYEE ISSUES (Group yourself into five and do this)

You are a CIMA member who has recently joined a limited company that processes food. The company is effectively run
by one director. The other directors are non-executive and all have close personal relationships. As a key member of the
finance team you have discovered that some employees are being paid cash in hand and not via the formal payroll. You
also have suspicions that some of these people are being employed illegally and you have no records of their formal
employment documents or contracts. What would you do?

Integrity The situation demands that you are honest and straightforward with your concerns
with the management.
Objectivity Your objectivity could be compromised if you are unable to obtain the full facts.
Professional competence and You will be required to act competently and diligently in relation to relevant
due care legislation and professional standards.
Confidentiality If you are unable to resolve the issue internally you may need to consult externally,
particularly if legal requirements are being breached.
Professional behaviour You will need to bring to the attention of the management the risks and also the
need to act within the law and fairly with employees.