COLEGIO DE DAGUPAN

Arellano Street, Dagupan City

School of Business and Accountancy

PRELIMINARY EXAMINATION
AUDITING THEORY

1. Which of the following is most likely to be unique to the audit work of CPAs as
compared to work performed by practitioners of other professions?
a. Due professional care.
b. Competence.
c. Independence.
d. Complex body of knowledge.

2. The risk that an auditor will conclude, based on substantive tests, that a material
misstatement does not exist in an account balance when, in fact, such misstatement does
exist is referred to as
a. Sampling risk.
b. Detection risk.
c. Nonsampling risk.
d. Inherent risk.

3. As the acceptable level of detection risk decreases, the assurance directly provided from
a. Substantive tests should increase.
b. Substantive tests should decrease.
c. Tests of controls should increase.
d. Tests of controls should decrease.

4. On the basis of the audit evidence gathered and evaluated, an auditor decides to increase
the assessed level of control risk from that originally planned. To achieve an overall audit
risk level that is substantially the same as the planned audit risk level, the auditor would
a. Decrease substantive testing.
b. Decrease detection risk.
c. Increase inherent risk.
d. Increase materiality levels.
5. Which of the following would an auditor most likely use in determining the auditor’s
preliminary judgment about materiality?
a. The anticipated sample size of the planned substantive tests.
b. The entity’s annualized interim financial statements.
c. The results of the internal control questionnaire.
d. The contents of the management representation letter

6. Which of the following statements is not correct about materiality?

a. The concept of materiality recognizes that some matters are important for fair
presentation of financial statements in conformity with GAAP, while other
matters are not important.
b. An auditor considers materiality for planning purposes in terms of the
largest aggregate level of misstatements that could be material to any one of
the financial statements.
c. Materiality judgments are made in light of surrounding circumstances and
necessarily involve both quantitative and qualitative judgments.
d. An auditor’s consideration of materiality is influenced by the auditor’s
perception of the needs of a reasonable person who will rely on the financial
statements.

7. Holding other planning considerations equal, a decrease in the amount of misstatement in

a class of transactions that an auditor could tolerate most likely would cause the auditor
to
a. Apply the planned substantive tests prior to the balance sheet date.
b. Perform the planned auditing procedures closer to the balance sheet date.
c. Increase the assessed level of control risk for relevant financial statement
assertions.
d. Decrease the extent of auditing procedures to be applied to the class of
transactions.

8. An attitude that includes a questioning mind and a critical assessment of audit evidence is
referred to as
a. Due professional care.
b. Professional skepticism.
c. Reasonable assurance.
d. Supervision
9. Which of the following is an example of fraudulent financial reporting?
a. Company management changes inventory count tags and overstates
ending inventory, while understating cost of goods sold.
b. The treasurer diverts customer payments to his personal due, concealing his
actions by debiting an expense account, thus overstating expenses.
c. An employee steals inventory and the “shrinkage” is recorded in cost of goods
sold.
d. An employee steals small tools from the company and neglects to return them;
the cost is reported as a miscellaneous operating expense.

10. An auditor is unable to obtain absolute assurance that misstatements due to fraud will be
detected for all of the following except
a. Employee collusion.
b. Falsified documentation.
c. Need to apply professional judgment in evaluating fraud risk factors.
d. Professional skepticism

11. Which of the following is most likely to be a response to the auditor’s assessment that the
risk of material misstatement due to fraud for the existence of inventory is high?
a. Observe test counts of inventory at certain locations on an unannounced
basis.
b. Perform analytical procedures rather than taking test counts.
c. Request that inventories be counted prior to year-end.
d. Request that inventory counts at the various locations be counted on different
dates so as to allow the same auditor to be present at every count.

12. Which of the following would be least likely to be considered an audit planning
procedure?
a. Use an engagement letter.
b. Develop the overall audit strategy.
c. Perform risk assessment.
d. Develop the audit plan.

13. Which of the following factors would most likely cause a CPA to decide not to accept a
new audit engagement?
a. The CPA’s lack of understanding of the prospective client’s internal auditor’s
computer-assisted audit techniques.
b. Management’s disregard of its responsibility to maintain an adequate
internal control environment.
c. The CPA’s inability to determine whether related-party transactions were
consummated on terms equivalent to arm’s-length transactions.
d. Management’s refusal to permit the CPA to perform substantive tests before
the year-end.
14. Before accepting an audit engagement, a successor auditor should make specific inquiries
of the predecessor auditor regarding
a. Disagreements the predecessor had with the client concerning auditing
procedures and accounting principles.
b. The predecessor’s evaluation of matters of continuing accounting significance.
c. The degree of cooperation the predecessor received concerning the inquiry of
the client’s lawyer.
d. The predecessor’s assessments of inherent risk and judgments about
materiality.

15. Which of the following matters is generally included in an auditor’s engagement letter?
a. Management’s responsibility for the entity’s compliance with laws and
regulations.
b. The factors to be considered in setting preliminary judgments about materiality.
c. Management’s vicarious liability for illegal acts committed by its employees.
d. The auditor’s responsibility to search for significant internal control
deficiencies.

16. During the initial planning phase of an audit, a CPA most likely would
a. Identify specific internal control activities that are likely to prevent fraud.
b. Evaluate the reasonableness of the client’s accounting estimates.
c. Discuss the timing of the audit procedures with the client’s management.
d. Inquire of the client’s attorney as to whether any unrecorded claims are
probable of assertion

17. Which of the following statements would least likely appear in an auditor’s engagement
letter?
a. Fees for our services are based on our regular per diem rates, plus travel and
other out-of-pocket expenses.
b. During the course of our audit we may observe opportunities for economy in,
or improved controls over, your operations.
c. Our engagement is subject to the risk that material misstatements or fraud, if
they exist, will not be detected.
d. After performing our preliminary analytical procedures we will discuss
with you the other procedures we consider necessary to complete the
engagement.
18. The auditor should document the understanding established with a client through a(n)
a. Oral communication with the client.
b. Written communication with the client.
c. Written or oral communication with the client.
d. Completely detailed audit plan.

19. To obtain an understanding of a continuing client’s business, an auditor most likely

would
a. Perform tests of details of transactions and balances.
b. Review prior year working papers and the permanent file for the client.
c. Read current issues of specialized industry journals.
d. Reevaluate the client’s internal control environment.

20. An auditor obtains knowledge about a new client’s business and its industry to
a. Make constructive suggestions concerning improvements to the client’s internal
control.
b. Develop an attitude of professional skepticism concerning management’s
financial statement assertions.
c. Evaluate whether the aggregation of known misstatements causes the financial
statements taken as a whole to be materially misstated.
d. Understand the events and transactions that may have an effect on the
client’s financial statements

21. Which of the following procedures would an auditor least likely perform while obtaining
an understanding of a client in a financial statement audit?
a. Coordinating the assistance of entity personnel in data preparation.
b. Discussing matters that may affect the audit with firm personnel responsible for
nonaudit services to the entity.
c. Selecting a sample of vendors’ invoices for comparison to receiving
reports.
d. Reading the current year’s interim financial statements.

22. Which of the following procedures would an auditor most likely perform in planning a
financial statement audit?
a. Inquiring of the client’s legal counsel concerning pending litigation.
b. Comparing the financial statements to anticipated results.
c. Examining computer generated exception reports to verify the effectiveness of
internal control.
d. Searching for unauthorized transactions that may aid in detecting unrecorded
liabilities.
23. Analytical procedures used during risk assessment in an audit should focus on
a. Reducing the scope of tests of controls and substantive tests.
b. Providing assurance that potential material misstatements will be identified.
c. Enhancing the auditor’s understanding of the client’s business.
d. Assessing the adequacy of the available evidence.

24. A primary purpose of performing analytical procedures as risk assessment procedures is

to identify the existence of
a. Unusual transactions and events.
b. Illegal acts that went undetected because of internal control weaknesses.
c. Related-party transactions.
d. Recorded transactions that were not properly authorized

25. The audit work performed by each assistant should be reviewed to determine whether it
was adequately performed and to evaluate whether the
a. Auditor’s system of quality control has been maintained at a high level.
b. Results are consistent with the conclusions to be presented in the auditor’s
report.
c. Audit procedures performed are approved in the professional standards.
d. Audit has been performed by persons having adequate technical training and
proficiency as auditors.

26. While assessing the risks of material misstatement auditors identify risks, relate risk to
what could go wrong, consider the magnitude of risks and
a. Assess the risk of misstatements due to illegal acts.
b. Consider the complexity of the transactions involved.
c. Consider the likelihood that the risks could result in material
misstatements.
d. Determine materiality levels.

27. Which of the following is least likely to be considered a risk assessment procedure?
a. Analytical procedures.
b. Confirmation of ending accounts receivable.
c. Inspection of documents.
d. Observation of the performance of certain accounting procedures.

28. In an audit of a nonissuer (nonpublic) company, the auditors identify significant risks.
These risks often
a. Involve routine, high-volume transactions.
b. Do not require special audit attention.
c. Involve items with lower levels of inherent risk.
d. Involve judgmental matters.
29. Prior to the acceptance of an audit engagement with a client who has terminated the
services of the predecessor auditor, the CPA should
a. Contact the predecessor auditor without advising the prospective client and
request a complete report of the circumstance leading to the termination with the
understanding that all information disclosed will be kept confidential.
b. Accept the engagement without contacting the predecessor auditor since the
CPA can include audit procedures to verify the reason given by the client for the
termination.
c. Not communicate with the predecessor auditor because this would in effect be
asking the auditor to violate the confidential relationship between auditor and
client.
d. Advise the client of the intention to contact the predecessor auditor and
request permission for the contact

30. Which of the following should an auditor obtain from the predecessor auditor prior to
accepting an audit engagement?
a. Analysis of balance sheet accounts
b. Analysis of income statement accounts
c. All matters of continuing accounting significance
d. Facts that might bear on the integrity of management

31. Which of the following is a NOT valid reason for a change of the engagement to a lower
“level of assurance”?
a. Change in circumstances affecting the need for the service.
b. Restriction on the scope of the engagement.
c. Misunderstanding as to the nature of the engagement originally requested.
d. The client’s need is satisfied by an engagement that provides lower level of
assurance.

32. Which of the following actions may be appropriate if the auditor is unable to agree to a
change of the engagement and is not permitted to continue the original engagement
I. Issue a qualified opinion due to a significant scope limitation.
II. Auditor should withdraw from the engagement.
III. Consider whether there is any obligation to report to the board of
directors or shareholders the circumstances necessitating
withdrawal

a. I only
b. I and II
c. II and III
d. I, II, and III
33. The development of a general strategy and a detailed approach for the expected nature,
timing, and extent of audit refers to :
a. Supervision
b. Audit procedures
c. Directing
d. Planning

34. When a company has changed auditors, according to the Professional Standards:
a. The successor auditor has the responsibility to initiate contact with the
predecessor auditor to ask about the client before the engagement is
accepted; the predecessor has no responsibility to initiate this contact, even
when aware of matters bearing on the integrity of management.
b. The predecessor must respond fully to all inquiries made by the successor auditor.
c. The successor must discuss with the predecessor matters bearing on the
engagement prior to accepting the engagement.
d. The successor may choose not to attempt any communication with the
predecessor auditor

35. Which of the following procedures is not performed as a part of planning an audit
engagement?
a. Reviewing the working papers of the prior year.
b. Performing analytical procedures.
c. Confirmation of all major accounts.
d. Designing an audit program.

36. Which of the following circumstances would an auditor most likely consider a risk factor
relating to misstatements arising from fraudulent financial reporting?
a. Several members of management have recently purchased additional shares of the
entity's stock.
b. Several members of the board of directors have recently sold shares of the entity's
stock.
c. The entity distributes financial forecasts to financial analysts that predict
conservative operating results.
d. Management is interested in maintaining the entity's earnings trend by using
aggressive accounting practices.
37. When events or conditions have been identified which may cast significant doubt on the
entity’s ability to continue as a going concern, the auditor should:
a. Review management’s plans for future actions based on its going concern
assessment.
b. Gather sufficient appropriate audit evidence to confirm or dispel whether or not a
material uncertainty exists through carrying out procedures considered necessary,
including considering the effect of any plans of management and other mitigating
factors.
c. Seek written representations from management regarding its plans for future
action.
d. All of the above

38. Which of the following is not considered to be an analytical procedure?

a. Comparisons of financial statement amounts with source documents.
b. Comparisons of financial statement amounts with nonfinancial data.
c. Comparisons of financial statement amounts with budgeted amounts.
d. Comparisons of financial statement amounts with comparable prior year amounts.

39. Analytical procedures are required at the planning stage of all audits and as:
a. Tests of internal control.
b. Substantive procedures.
c. A part of the final overall review.
d. Computer generated procedures

40. During financial statement audits, auditors seek to restrict which type of risk?
a. Control risk.
b. Detection risk.
c. Inherent risk.
d. Account risk.

41. The four major steps in conducting an audit are:

a. Testing internal controls
b. Audit report
c. Planning
d. Testing transactions and balances
The proper sequence in applying the above steps is:
a. cadb
b. cdab
c. bcda
d. adcb
42. As used in auditing, which of the following statements best describes "assertions"?
a. Assertions are the representations of management as to the reliability of the
information system.
b. Assertions are the auditor's findings to be communicated in the audit report.
c. Assertions are the representations of management as to the fairness of the
financial statements.
d. Assertions are found only in the footnotes to the financial statements.

43. Which of the following best describes the purpose of the engagement letter?
a. The engagement letter relieves the auditor of some responsibility for the
exercise of due care.
b. By clearly defining the nature of the engagement, the engagement letter
helps to avoid and resolve misunderstandings between CPA and client
regarding the precise nature of the work to be performed and the type of
report to be issued.
c. The engagement letter conveys to management the detailed steps to be applied
in the audit process.
d. The engagement letter should be signed by both the client and the CPA and
should be used only for independent audits.

44. In assessing audit risk, the CPA needs to do all of the following except
a. Gather audit evidence in support of recorded transactions.
b. Obtain an understanding of the client's system of internal control.
c. Understand the economic substance of significant transactions completed by
the client.
d. Understand the entity and the industry in which it operates.

45. As the acceptable level of detection risk decreases, an auditor may change the
a. Timing of substantive tests by performing them at an interim date rather than at
year-end.
b. Nature of substantive tests from a less effective to a more effective
procedure.
c. Timing of tests of controls by performing them at several dates rather than at
one time.
d. Assessed level of inherent risk to a higher amount

46. Audit evidence takes different forms and varies in persuasiveness. Which of the
following is the least persuasive type of evidence?
a. Vendor's invoice.
b. Bank statement obtained from the client.
c. Computations made by the auditor.
d. Canceled checks.
47. Which of the following is ordinarily designed to detect possible material dollar errors on
the financial statements?
a. Tests of controls.
b. Analytical procedures.
c. Computer controls.
d. Post audit working paper review.

48. When a CPA is approached to perform an audit for the first time, the CPA should make
inquiries of the predecessor auditor. This is a necessary procedure because the
predecessor may be able to provide the successor with information that will assist the
successor in determining
a. Whether the predecessor's work should be utilized.
b. Whether the company follows the policy of rotating its auditors.
c. Whether, in the predecessor's opinion, internal control of the company has been
satisfactory.
d. Whether the engagement should be accepted.

49. Which of the following is not a factor that affects the auditor's judgment, during audit
planning, as to the quantity, type, and content of working papers?
a. The auditor's preliminary assessment of control risk.
b. The auditor's preliminary evaluation of inherent risk based on discussions with
the client.
c. The nature of the client’s business.
d. The type of report to be issued by the auditor.

50. The auditor's analytical procedures will be facilitated if the client

a. Uses a standard cost system that produces variance reports.
b. Segregates obsolete inventory before the physical inventory count.
c. Corrects material weaknesses in internal control before the beginning of the
audit.
d. Reduces inventory balances to the lower of cost or market.

51. Experience has shown that certain conditions in an organization are symptoms of possible
management fraud. Which of the following conditions would not be considered an
indicator of possible fraud?
a. Managers regularly assuming subordinates' duties.
b. Managers dealing in matters outside their profit center's scope.
c. Managers not complying with corporate directives and procedures.
d. Managers subject to formal performance reviews on a regular basis.
52. Given that an audit in accordance with generally accepted auditing standards is
influenced by the possibility of material errors and fraud, the auditor should conduct the
audit with an attitude of
a. Professional responsiveness.
b. Conservative advocacy.
c. Objective judgment.
d. Professional skepticism

53. Auditors sometimes use comparison of ratios as audit evidence. For example, an
unexplained decrease in the ratio of gross profit to sales may suggest which of the
following possibilities?
a. Unrecorded purchases.
b. Unrecorded sales.
c. Merchandise purchases being charged to selling and general expense.
d. Fictitious sales.

54. Which of the following is not a component of audit planning?

a. Observing the client's annual physical inventory taking and making test
counts of selected items.
b. Making arrangements with the client concerning the timing of audit field work
and use of the client's staff in completing certain phases of the examination.
c. Obtaining an understanding of the business.
d. Developing audit programs.

55. Audit risk consists of all but the following components:

a. Inherent risk.
b. Detection risk.
c. Substantive risk.
d. Control risk.

56. Which of the following conditions supports an increase in detection risk?

a. Internal control over cash receipts is excellent.
b. Application of analytical procedures reveals a significant increase in sales
revenue in December, the last month of the fiscal year.
c. Internal control over shipping, billing, and recording of sales revenue is weak.
d. Study of the business reveals that the client recently acquired a new company
in an unrelated industry.
57. Which of the following statements best describes the auditor's responsibility regarding
the detection of fraud?
a. The auditor is responsible for the failure to detect fraud only when such failure
clearly results from nonperformance of audit procedures specifically described in
the engagement letter.
b. The auditor should design audit procedures that will provide reasonable
assurance that the financial statements are free from material misstatement
due to errors and/or fraud.
c. The auditor must extend auditing procedures to actively search for evidence of
fraud where the examination indicates that fraud may exist.
d. The auditor is responsible for the failure to detect fraud only when an
unqualified opinion is issued.

58. Inherent risk is defined as the susceptibility of an account balance or class of transactions
to error that could be material assuming that there were no related internal controls. Of
the following conditions, which one does not increase inherent risk?
a. The client has entered into numerous related party transactions during the year
under audit.
b. Internal control over shipping, billing, and recording of sales revenue is
weak.
c. The client has lost a major customer accounting for approximately 30% of
annual revenue.
d. The board of directors approved a substantial bonus for the president and chief
executive officer, and also approved an attractive stock option plan for
themselves.

59. Certain fundamental beliefs called "postulates" underlie auditing theory. Which of the
following is not a postulate of auditing?
a. No long-term conflict exists between the auditor and the management of the
enterprise under audit.
b. Economic assertions can be verified.
c. The auditor acts exclusively as an auditor.
d. An audit has a benefit only to the owners

60. In all cases, audit reports must

a. Be signed by the individual who performed the audit procedures.
b. Certify the accuracy of the quantitative information which was audited.
c. Communicate the auditor’s finding to the general public.
d. Inform readers of the degree of correspondence between the quantifiable
information and the established criteria.
61. The expertise that distinguishes auditors from accountants is in the
a. Ability to interpret generally accepted accounting principles.
b. Requirement to possess education beyond the Bachelor’s degree.
c. Accumulation and interpretation of evidence.
d. Ability to interpret ASC Statements.

62. The framework for auditing and related services as addressed by PSA excludes
a. Review
b. Compilation
c. Tax services
d. Agreed upon procedure

63. Which of the following is true of the report based on agreed-upon-procedures?

a. The report is restricted to those parties who have agreed to the procedures
to be performed.
b. The CPA provides the recipients of the report limited assurance as to
reasonableness of the assertion(s) presented in the financial information.
c. The report states that the auditor has not recognized any basis that requires
revision of financial statements.
d. The report should state that the procedures performed are limited to analytical
procedures and inquiry.

64. Which of the following is an objective of a review engagement?

a. Expressing a positive opinion that the financial information is presented in
conformity with generally accepted accounting principles.
b. Expressing a limited assurance to users who have agreed as to procedures that
will be performed by the CPA.
c. Reporting whether material modifications should be made to such
financial statements to make them conform with generally accepted
accounting principles.
d. Reporting that the financial statements, in all materials respects, fairly present
the financial position and operating results of the client.

65. According to Philippine Standard on Auditing, the procedures employed in doing

compilation are:
a. Designed to enable the accountant to express a limited assurance.
b. Designed to enable the accountant to express a negative assurance.
c. Not designed to enable the accountant to express any form of assurance.
d. Less extensive than review procedures but more extensive than agreed-upon
procedures
66. Which of the following is not primary category of attestation report?
a. Compilation report
b. Review report
c. Audit report
d. Special audit report based on a basis of accounting other than generally
accepted accounting principles.

67. Assurance engagement

a. Is an engagement in which a practitioner is engaged to issue, or does issue, a
written communication that expresses a conclusion about the reliability of a
written assertion that is the responsibility of another party.
b. Is a systematic process of objectively obtaining and evaluating evidence
regarding assertions about economic actions and events to ascertain the degree of
correspondence between those assertions and established criteria and
communicating the results to interested users.
c. Is an engagement in which the auditor provides a moderate level of assurance
that the information subject to the engagement is free of material misstatement.
d. Is an engagement intended to enhance the credibility of information about
a subject matter by evaluating whether the subject matter conforms in all
material respects with suitable criteria, thereby improving the likelihood that
the information will meet the needs of an intended user.

68. Which of the following best describes the objective of an audit of financial statements?
a. To express an opinion whether the financial statements are prepared in
accordance with prescribed criteria.
b. To express an assurance as to the future viability of the entity whose financial
statements are being audited.
c. To express an assurance about the management’s efficiency or effectiveness in
conducting the operations of entity.
d. To express an opinion whether the financial statements are prepared, in all
material respect, in accordance with an identified financial reporting
framework.

69. Which of the following best describes why an independent auditor reports on financial
statements?
a. Independent auditors are likely to detect fraud
b. Competing interests may exist between management and the users of the
statements
c. Misstated account balances are generally corrected by an independent audit.
d. Ineffective internal controls may exist.

70. Which of the following procedures ordinarily performed during an audit are also
performed in review?
 a. Assessment of accounting and internal control systems
b. Test of controls
c. Tests of records and of responses to inquiries
d. Inquiry and analytical procedures

71. The decision as to whether the criteria are suitable involves considering whether the
subject matter is capable of reasonably consistent evaluation against or measurement
using such criteria. The characteristics for determining whether criteria are suitable
include the following, except
a. Relevance
b. Reliability
c. Understandability
d. Sufficiency

72. Section 4 of the Rules and Regulations Implementing RA 9298 (IRR) provides that any
position in any business or company in the private sector which requires supervising the
recording of financial transactions, preparation of financial statements, coordinating with
the external auditors for the audit of such financial statements, and other related functions
should be occupied by a duly registered CPA. It provides further that the business or
company where such position exists has a
a. Paid-up capital of at least P5,000,000 and/or an annual revenue of at least
P10,000,000.
b. Paid-up capital of at least P10,000,000 and/or an annual revenue of at least
P5,000,000.
c. Paid-up capital and/or an annual revenue of at least P10,000,000.
d. Paid-up capital and/or an annual revenue of at least P5,000,000.

73. Which of the following is not represented in the AASC?

a. Bangko Sentral ng Pilipinas
b. Board of Accountancy
c. Bureau of Internal Revenue
d. Securities and Exchange Commission

74. A CPA is in public accounting practice when he

a. Represents his employer before government agencies on tax and other matters
related to accounting
b. Represents his clients before government agencies on tax and other
matters related to accounting.
c. Teaches accounting aspect of finance, business law, taxation, and other
technically related subjects
d. Holds, or is appointed to, a position in an accounting professional group in
government or in a government owned and/ or controlled corporation where
decision making required professional knowledge in the science ofaccounting.
75. Section 16 of the IRR states that to be qualified as having passed the licensure
examination for accountants, a candidate must obtain a
a. General average of 75%, with no grades lower than 60% in any given subject.
b. General average of 75%, with no grades lower than 65% in any g iven
subject.
c. General average of 70%, with no grades lower than 60% in any given subject.
d. General average of 70%, with no grades lower than 65% in any given subject.

76. A member of the BOA shall, at the time of his/her appointment, possess which of the
following qualifications
a. Must be a natural-born citizen of the Philippines
b. Must be a Filipino citizen
c. Must be a citizen and a resident of the Philippines
d. Must be a natural-born citizen and a resident of the Philippines

77. A meaningful experience shall be considered as satisfactory compliance with the

requirements of Section 28 of RA 9298 if it is earned in (Choose the incorrect one)
a. Commerce and industry and shall include significant involvement in general
accounting, budgeting, tax administration, internal auditing, liaison with
external auditors, representing his/her employer before government agencies
on tax and matters related to accounting or any other related functions.
b. Academe/education and shall include teaching for at least three (3) trimesters
or two (2) semesters subjects in either financial accounting, business law and
tax, auditing problems, auditing theory, financial management and
management services.
c. Government and shall include significant involvement in general accounting,
budgeting, tax administration, internal auditing, liaison with the Commission
on Audit or any other related functions.
d. Public practice and shall include at least two years as audit assistant and
at least one year as auditor in charge of audit engagement covering full
audit functions of significant clients.

78. According to Section 7 of the IRR, no person who has served two successive complete
terms as chairman or member of the Board of Accountancy shall be eligible for
reappointment as chairman or member until the lapse of
a. 1 year
b. 3 years
c. 2 years
d. 4 years
 79. Which of the following statements is incorrect according to Section 7 of the Philippine
Accountancy Act of 2004 (RA 9298)?
a. No person who has served two(2) successive terms shall be eligible for
reappointment until the lapse of one (1) year.
b. Any vacancy occurring within the term of a member shall be filled up for the
unexpired portion of the term only.
c. Appointment to fill up an unexpired term is considered as a complete
term.
d. The Chairman and the members of the Professional Regulatory Board of
Accountancy (PRBoA) shall hold office for a term of three (3) years.

80. Which of the following is not an objective of the Philippine Accountancy Act of 2004?
a. The supervision, control, and regulation of the practice of accountancy in the
Philippines.
b. The examination for registration of certified public accountants.
c. The development and improvement of accounting standards that will be
generally accepted in the Philippines.
d. The standardization and regulation of accounting education.

Prepared by:
____________________________
KIM JOSEPH B. VISPERAS, CPA
Instructor

Noted by:
____________________________
DANIEL T. GONZALES, CPA, MDM
Dean, SBA