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CODE OF ETHICS
MARK ALYSON B. NGINA, CPA, CMA

CODE OF ETHICS
MARK ALYSON B. NGINA, CPA, CMA

1. The following are the attributes of a profession. Which is not?

a. Systematic body of theory and professional authority
b. Regulative code and culture

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c. Maintenance of high integrity and infallible performance
d. Community sanction
2. This refers to the difference between the provisions of ethical and other practice standards with public expectations

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a. Expectation gap b. Remoteness c. Deviation d. Variance
3. Normative ethics focuses on
a. How people normally behave

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b. How people have been observed to behave, based on one or more empirical studies
c. How people should behave
d. The conduct of accountants that is more prevalent in their profession
4. Which of the following statements is not true in relation to the International Code of Ethics for Professional Accountants?
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a. The code is subdivided into four parts – Part A, B, C and D
b. Parts 1, 2 and 3 will be effective as of June 15, 2019.
c. Part 4A relating to independence for audit and review engagements will be effective for audits and reviews of
financial statements for periods beginning on or after June 15, 2019.
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d. Part 4B relating to independence for assurance engagements with respect to subject matter covering periods will
be effective for periods beginning on or after June 15, 2019; otherwise, it will be effective as of June 15, 2019.
5. Close family include the following, except
a. Parent c. Non-dependent child
b. Sibling d. Spouse
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6. Which of the following individuals is not considered a "close family member" as defined by the Code of Ethics?
a. Sibling. c. Parent.
b. Nondependent child. d. Dependent child.
7. Professional accountant, as defined in the Code of Ethics, means
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a. An individual who holds a valid Certificate of Registration and current Professional Identification Card issued by the
Board of Accountancy and the Commission, whether he/she be in public practice, industry or commerce, the public
sector, or education.
b. An individual in public practice who is considering accepting an audit appointment or an engagement to perform
accounting, tax, consulting or similar professional services for a prospective client (or in some cases, an existing
client)
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c. An individual accountant in public practice who most recently held an audit appointment or carried out accounting,
tax, consulting or similar professional services for a client, where there is no existing accountant.
d. An individual in public practice currently holding an audit appointment or carrying out accounting, tax, consulting or
similar professional services for a client.
8. A public interest entity is
I. An entity whose shares, stock or debt are quoted or listed on a recognized stock exchange, or are marketed under
the regulations of a recognized stock exchange or other equivalent body

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MARK ALYSON B. NGINA, CPA, CMA

CODE OF ETHICS

II. An entity defined by regulation or legislation as a public interest entity; or for which the audit is required by regulation
or legislation to be conducted in compliance with the same independence requirements that apply to the audit of
listed entities.
a. I only b. II only c. Either I or II d. Neither I nor II
9. Which of the following statements best describes why the profession of certified public accountants has deemed it
essential to promulgate a Code of Ethics and to establish a mechanism for enforcing observation of the Code?
a. A pre-requisite to success is the establishment of an ethical code that primarily defines the professional’s
responsibility to clients and colleagues.
b. A distinguishing mark of a profession is its acceptance of responsibility to the public.
c. A requirement of most state laws calls for the profession to establish a code of ethics.

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d. An essential means of self-protection for the profession is the establishment of flexible ethical standards by the
profession.

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10. The principle of objectivity imposes an obligation on all professional accountants
a. To be straightforward and honest in professional and business relationships.
b. Not to compromise their professional or business judgment because of bias, conflict of interest or the undue
influence of others.

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c. To act diligently and in accordance with applicable technical and professional standards when providing
professional services.
d. To refrain from using confidential information acquired as a result of professional and business relationships to their
personal advantage or the advantage of third parties.

I. A period of work experience.

II. High standard of general education.
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11. Indicate the normal pattern of development for a professional accountant.

III. Specific education, training and examination in professionally relevant subjects.

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a. I, II, III b. II, III, I c. III, II, I d. II, I, III
12. Which of the following is not included in professional competence and due care principle?
a. A professional accountant shall take reasonable steps to ensure that those working in a professional capacity under
the accountant’s authority have appropriate training and supervision.
b. A professional accountant shall make clients, the employing organization, or other users of the accountant’s
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professional services or activities, aware of the limitations inherent in the services or activities.
c. A professional accountant shall act diligently and in accordance with applicable technical and professional
standards.
d. A professional accountant shall comply with relevant laws and regulations.
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13. Which of the following is incorrect regarding confidentiality?

a. Professional accountants have an obligation to respect the confidentiality of information about a client’s or
employer’s affairs acquired in the course of professional services.
b. The duty of confidentiality ceases after the end of the relationship between the professional accountant and the
client or employer.
c. Confidentiality should always be observed by a professional accountant unless specific authority has been given to
disclose information or there is a legal or professional duty to disclose.
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d. Confidentiality requires that a professional accountant acquiring information in the course of performing professional
services neither uses nor appear to use that information for personal advantage or for the advantage of a third
party.
14. In marketing and promoting themselves and their work, professional accountants should not bring the profession into
disrepute. Professional accountants shall be honest and truthful and should make:
I. Exaggerated claims for the services offered by, or the qualifications, of the accountant
II. Disparaging references or unsubstantiated comparisons to the work of others
a. I only b. II only c. Either I or II d. Neither I nor II

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MARK ALYSON B. NGINA, CPA, CMA

CODE OF ETHICS

15. Professional accountants may encounter problems in identifying unethical behavior or in resolving an ethical conflict.
When faced with significant ethical issues, professional accountants should do the following, except
a. Follow the established policies of the employing organization to seek a resolution of such conflict.
b. Review the conflict problem with the immediate superior if the organization’s policies do not resolve the ethical
conflict.
c. If the problem is not resolved with the immediate superior and the professional accountant determines to go to the
next higher managerial level, the immediate superior need not be notified of the decision.
d. Seek counseling and advice on a confidential basis with an independent advisor or the applicable professional
accountancy body or regulatory body to obtain an understanding of possible courses of action.
16. When applying the conceptual framework of the International Code of Ethics for Professional Accountants, the

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professional accountant shall:
I. Exercise professional judgment
II. Remain alert for new information and to changes in facts and circumstances

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III. Use the reasonable and informed third party test
a. I and II b. III only c. II and III d. I, II and III

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17. These are actions individually or in combination that the accountant takes that effectively reduce threats to an
acceptable level.
a. Materiality b. Safeguards c. Quality controls d. Mr. Clean
18. This refer to the consideration by the professional accountant about whether the same conclusions would likely be
reached by another party
a. Reasonable and informed third party test
b. Liability adequacy test
c. Materiality level test
d. COVID-19 test
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19. If the professional accountant determines that the identified threats to compliance with the fundamental principles are
not at an acceptable level, the accountant shall address the threats by eliminating them or reducing them to an
acceptable level. The accountant shall do so by:
I. Eliminating the circumstances, including interests or relationships, that are creating the threats;
II. Applying safeguards, where available and capable of being applied, to reduce the threats to an acceptable level;
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III. Declining or ending the specific professional activity.

a. I and II b. II only c. I, II or III d. III only
20. Examples of circumstances that may create self-interest threat to professional accountants in business (PAIBs) least
likely include
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a. A professional accountant holding a financial interest in, or receiving a loan or guarantee from, the employing
organization.
b. A professional accountant participating in incentive compensation arrangements offered by the employing
organization.
c. A professional accountant having access to corporate assets for personal use.
d. A professional accountant determining the appropriate accounting treatment for a business combination after
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performing the feasibility study supporting the purchase decision.

21. Compliance with the fundamental principles may potentially be threatened by
I. Self-interest threat IV. Familiarity threat
II. Self-review threat V. Imitation threat
III. Advocacy threat
a. I, II, III, IV and V c. I, II and III
b. I, II, III and IV d. I only

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MARK ALYSON B. NGINA, CPA, CMA

CODE OF ETHICS

22. Examples of circumstances that may create self-review threat least likely include
a. Preparation of original data used to generate financial statements or preparation of other records that are the subject
matter of the assurance engagement.
b. 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.
c. Performing services for an assurance client that directly affect the subject matter of the assurance engagement.
d. Potential employment with an assurance client.
23. Familiarity threat could be created under the following circumstances except
a. A professional accountant accepting gifts from a client whose value is inconsequential or trivial.
b. Senior personnel having a long association with the assurance client.

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c. A director or officer of the client or an employee in a position to exert significant influence over the subject matter
of the engagement having recently served as the engagement partner.
d. A member of the engagement team having a close or immediate family member who is a director or officer of the

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client.
24. A threat to objectivity may be created when a professional accountant in public practice performs services for clients
whose interest are in conflict with each other. In addition, this could also pose threat to

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a. Integrity c. Professional competence and due care
b. Confidentiality d. Professional behavior
25. Which of the following fundamental principles would most likely be threatened when a professional accountant accepts
new engagement?
a. Integrity or professional competence and due care
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b. Professional competence and due care or confidentiality
c. Confidentiality or integrity
d. Professional behavior or integrity
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26. A self-interest threat to compliance with the principle of professional competence and due care, might be created if the
second opinion is not based on the same facts that the existing or predecessor accountant had, or is based on
inadequate evidence. Examples of actions that might be safeguards to address such a self-interest threat does not
include?
a. With the client’s permission, obtaining information from the existing or predecessor accountant.
b. Describing the limitations surrounding any opinion in communications with the client.
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c. Providing the existing or predecessor accountant with a copy of the opinion.

d. Agreeing on a realistic time frame for the performance of the engagement. [MBN]
27. Which statement is incorrect regarding professional fees?
a. Professional fees should normally be computed on the basis of appropriate rates per hour or per day for the time
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of each person engaged in performing professional services.

b. The appropriate rates should be based on the fundamental premise that the organization and conduct of the
professional accountant in public practice and the services provided to clients are well planned, controlled and
managed.
c. It is for each professional accountant in public practice to determine the appropriate rates.
d. It is not proper for a professional accountant in public practice to charge a client a lower fee than has previously
been charged for similar services
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28. Munda, CPA, performs accounting services for Papa Zeus Corp. Papa Zeus wishes to offer shares to the public and
asks Munda to audit its financial statements. Munda refers Papa Zeus to Rexy, CPA, who is more competent in the
area of registration statements. Rexy performs the audit of Papa Zeus Corp. financial statements and subsequently
thanks Munda for the referral by giving Munda a portion of the audit fee. Munda accepts the fee. Who if anyone, has
violated the Code of Ethics?
a. Only Munda c. Only Rexy
b. Both Munda and Rexy d. Neither Munda nor Rexy

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MARK ALYSON B. NGINA, CPA, CMA

CODE OF ETHICS

29. It is an object, situation, or action that is used as a means to influence another individual’s behavior, but not necessarily
with the intent to improperly influence that individual’s behavior.
a. Inducement c. Seducement
b. Client’s monies d. Threat to independence
30. Which of the following is least likely threats to compliance with the fundamental principles as a result of offering or
accepting inducements from a client? [MBN]
a. Self-interest b. Self-review c. Intimidation d. Familiarity
31. S1: 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.
S2: Holding client assets creates a self-interest or other threat to compliance with the principles of professional behavior

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and objectivity.
a. True, True c. False, true
b. True, false d. False, false

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32. NOCLAR
a. Is an explosive device that derives its destructive force from nuclear reactions, either fission (fission bomb) or from
a combination of fission and fusion reactions (thermonuclear bomb)

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b. Is an action that violates a law or regulation that has a direct impact on financial statements or violates laws which
address compliance matters.
c. Is an action that is concern by the auditor in an audit of public interest entities (PIE) only.
d. Is an action by the client that includes personal misconduct and clearly inconsequential matters [MBN]

a. Self-interest or advocacy threat

b. Self-interest or intimidation threat
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33. What threat to independence may be created when a professional accountant becomes aware of client’s non-
compliance or suspected noncompliance with laws and regulations? [MBN]
c. Advocacy or intimidation threat
d. Familiarity or self-review threat
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34. Which of the following is incorrect regarding independence?
a. Independence consists of independence of mind and independence in appearance.
b. Independence of mind is the state of mind that permits the provision of an opinion without being affected by
influences that compromise professional judgment, allowing an individual to act with integrity, and exercise
objectivity and professional skepticism.
c. Independence in appearance is the avoidance of facts and circumstances that are so significant that a reasonable
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and informed third party would be likely to conclude that a firm’s, or an audit or assurance team member’s, integrity,
objectivity or professional skepticism has been compromised.
d. Independence is a combination of impartiality, intellectual honesty and a freedom from conflicts of interest.
35. Independence is linked to the principles of
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a. Objectivity c. Objectivity and integrity

b. Integrity and due care d. Objectivity, integrity and confidentiality
36. Which of the following is incorrect in relation to engagement period?
a. Commencement of the engagement starts when the assurance team began to perform assurance services.
b. Culmination of non-recurring engagement is when the assurance report is issued.
c. Culmination of recurring engagement is the later of the date of notification by either party that the professional
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relationship has terminated or the issuance of the final assurance report.

d. Culmination of recurring engagement is the earlier of the date of notification by either party that the professional
relationship has terminated or the issuance of the final assurance report.
37. A self-interest threat may be created, if fees due from an assurance client for professional services remain unpaid for a
long time. Hence, professional fees for prior year’s engagements must be paid before:
a. The client engages the services of the professional accountant to audit the current year’s financial statements.
b. The professional accountant formulates an opinion on the current year’s financial statements.
c. The audit report on the current year’s financial statements is issued.

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MARK ALYSON B. NGINA, CPA, CMA

CODE OF ETHICS

d. The commencement of the current year’s audit engagement.

38. S1: A firm, network firm or an audit team member shall not accept gifts and hospitality from an audit client, unless the
value is trivial and inconsequential.
S2: Accepting gifts and hospitality from an audit client might create a self-interest, familiarity or intimidation threat.
a. True, True b. True, False c. False, False d. False, True
39. Which of the following threats to independence may be created when litigation takes place, or appears likely, between
the firm or a member of the assurance team the assurance client?
a. Self-interest or advocacy threat c. Advocacy or intimidation threat
b. Self-interest or intimidation threat d. Familiarity or self-review threat

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40. Holding a financial interest in an audit client may create a self-interest threat. The existence and significance of any
threat created depends on
I. The role of the person holding the financial interest.

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II. Whether the financial interest is direct or indirect.
III. The materiality of the financial interest.
a. I and II only. b. I and III only. c. II and III only. d. I, II, and III.

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41. A direct financial interest or a material indirect financial interest in the audit client of a member of the audit team or his
immediate family member may create a significant self-interest threat. Which of the following is a least likely action that
will eliminate the threat or safeguards to address the threat?
a. Discuss the matter with those charged with governance of the audit client.
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b. Dispose of the direct financial interest prior to the individual becoming a member of the audit team.
c. Dispose of the indirect financial interest in total or dispose of a sufficient amount of it so that the remaining interest
is no longer material prior to the individual becoming a member of the audit team.
d. Remove the member of the audit team from the audit engagement.
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42. Which of the following is least likely a threat to compliance with the fundamental principles as a result of the financial or
other interest of a professional accountant’s immediate family member?
a. Self-interest b. Self-review c. Intimidation d. Familiarity
43. S1: A loan or a guarantee of a loan with an audit client might create a self-interest threat.
S2: Materiality is not a consideration in evaluating a loan or a guarantee of a loan with an audit client.
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a. True, True b. True, False c. False, False d. False, True

44. Which of the following is least likely considered to be close business relationship with the assurance client?
a. Having a material financial interest in a joint venture with the assurance client or a controlling owner, director, officer
or other individual who performs senior managerial functions for that client
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b. Arrangements to combine one or more products or services of the firm with one or more products or services of the
assurance client and to market the package with reference to both parties.
c. Distribution or marketing arrangements under which the firm acts as a distributor or marketer of the assurance
client’s products or services.
d. Purchase of goods and services from an assurance client by the firm or by a member of the assurance team.
45. The loan of personnel to an audit client will least likely create
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a. Self-interest threat c. Advocacy threat

b. Self-review threat d. Familiarity threat
46. In the FS audit of listed entities, the engagement partner, the individual responsible for the engagement quality control
review or any other key audit partner should be rotated after serving in either capacity, or a combination thereof, for a
pre-defined period (i.e., “time-on” period), normally no more than? [MBN]
a. 5 consecutive years c. 7 consecutive years
b. 5 cumulative years d. 7 cumulative years

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MARK ALYSON B. NGINA, CPA, CMA

CODE OF ETHICS

47. If the individual has served the audit client as a key audit partner for a period of five cumulative years or less when the
client becomes a public interest entity (PIE),
a. The individual shall not continue to serve the client as a key audit partner until the lapse of two consecutive years
(i.e., cooling-off period)
b. The individual may continue to serve the client as a key audit partner for seven years less the number of years
already served before rotating off the engagement
c. The individual shall not continue to serve the client for more than seven cumulative years, even due to unforeseen
circumstances outside the firm’s control
d. Any of the choices [MBN]
48. If the individual acted as the engagement partner for the maximum time-on period, the cooling-off period during the

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transition period (i.e., audits of FS for periods prior to December 15, 2023) shall be? [MBN]
a. Minimum of 5 consecutive years c. Minimum of 3 consecutive years
b. Minimum of 2 consecutive years d. Minimum of 2 cumulative years

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49. An individual has served the audit client as a key audit partner for a period of five cumulative years. The individual may
continue to serve as a key audit partner before rotating off the engagement for how many years after audit client
becomes a listed entity? [MBN]

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a. Two additional years c. Three additional years
b. Four additional years d. Five additional years
50. A CPA-lawyer, acting as a legal counsel to one of his audit clients, is an example of
a. Self-interest threat c. Advocacy threat
b. Self-review threat
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d. Familiarity threat 05.2013
51. This threat to independence occurs when a member of the assurance team has recently performed services for an
assurance client that directly affect the subject matter information of the assurance engagement (e.g., valuation
services).
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a. Self-review or advocacy threat. c. Advocacy or familiarity threat.
b. Self-interest or advocacy threat. d. Familiarity or advocacy threat.
52. Providing a non-assurance service to an audit client in which if the firm or network firm assumes a management
responsibility when performing the service will least likely create? [MBN]
a. Familiarity threat c. Self-interest threat
b. Advocacy threat d. Self-review threat
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53. S1: A firm or a network firm shall not assume a management responsibility for an audit client.
S2: Providing advice and recommendations to assist the management of an audit client in discharging its responsibilities
is not assuming a management responsibility.
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a. True, True b. True, False c. False, False d. False, True

54. An engagement to issue a restricted use and distribution report is also referred to as
a. “Eligible audit engagement” c. “Legible audit engagement”
b. “Other audit engagement” d. “Acceptable audit engagement”
"Put our heart, mind and soul into even the smallest acts. This is the secret of success." -Author Unknown
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"Dreams are like the paints of a great artist. Your dreams are your paints; the world is your canvas. Believing is the brush
that converts your dreams into a masterpiece of reality." – Unknown
"Dream big and aim your goal toward the stars. You may not be able to reach them, but for sure they will guide your way
through a satisfying successful life. Everything being built is the fruit of a dream. Dream big but above all, act upon it." -
Eduardo Dominguez
 -- END OF HANDOUT -- 

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