1.

The characteristics of good governance where fair legal framework are enforced impartially
is
a. Participation
b. Rule of Law
c. Equity
d. Accountability
2. To encourage enhanced performance by the board and management, it is recommended
that the following should be adopted except
a. Disclosure of the process for performance evaluation of the board, its committees, 8
individual directors and by executives.
b. A remuneration committee
c. Distinguish between non-executive director’s remuneration from that of executives.
d. Establish policies on risks oversight and management
3. To safeguard integrity in financial reporting, the business firm should do the following
except
a. Establish an audit committee
b. Request the external auditor to attend annual general meeting
c. Disclose the functions reserved to the board and those delegated to management
d. Disclose the policy concerning trading in company securities by directors, officers and
employees.
4. Providing oversight of the internal and external audit function, the process of preparing the
annual financial statements and public reports on internal control are the responsibility of
a. Board of directors
b. Chief Executive officer
c. Chief financial officer
d. Audit committee of the board
5. Who is responsible for ensuring the accuracy, timeliness of public reporting of financial and
other information for public companies?
a. External auditors
b. Securities and exchange commission
c. Shareholders
d. Board of Accountancy
6. An independent director is expected to
a. Apply expertise and skills in the corporations best interest
b. Asset management to keep performance objectives at the top of its agenda
c. Respect the collective, cabinet nature of the board’s decision
d. Act as conduit between the board and the organization
7. Interlocking directorship can be committed by
a. Rank and file employees
 b. Members of the board of directors
c. Top executive officers
d. Middle-level managers
8. The following constitute unfair labor practices of an employer except
a. To restrain employees to form a union
b. To violate collective bargain or agreement
c. To discriminate with regard to wages, hours of work
d. To terminate employment of employees found to have violated company policy or
employment contract.
9. The following are examples of unethical practices of employees except
a. Acceptance of gifts from customer in exchange for a favor that is detrimental to its
interest of his employer
b. Engagement in the same type of business as his employer
c. Disclosure of confidential company information to someone else for personal gain
d. Application for a loan from his employer to settle personal liabilities
10. The following are examples of dishonest acts of an employee toward his employer except
a. Working overtime upon instruction of his supervisor
b. Bringing home office supplies for personal use
c. Overstating business trip expenses by submitting false receipts
d. Doing personal errands during office hours.
11. Top management’s commitment in the “Unified Code of Conduct for Business” included the
following except
a. To lead by example in conducting business with integrity
b. To communicate within the company and the general public the company’s position
against bribery, corruption and unethical business practice
c. To institute training programs or business ethics covering all levels of the organization
d. To support strategy integrity practices and efforts and allocate sufficient resources for
their implementation

12. Among the commitments of the “Finance and Accounting Section of an organization” is
a. To pay taxes in compliance with all laws
b. To have appropriate tools to receive, monitor and act on internal and external complaints
of employees
c. To communicate rules and guidelines or giving gifts, entertainment tokens of hospitality
and contributes to/ from public or private organizations
d. To prohibit contracting a third party to bribe or commit corrupt practices in behalf of the
company.
13. In the “Unified Code of Conduct for Business” the logistics department commits to do the
following, except
 a. Not to penalize employees for refusing to pay bribes of facilitation payments even if it
results in failure to meet deadlines or revenue is lost
b. Not to tolerate any breaches or violation of existing laws in exchange for undue
advantage and unethical concessions a favors
c. To pay correct duties and taxes based on transparent assessment of goods and services.
d. To protect employees from retaliation when complaints are failed against them
14. Examples of direct misrepresentation about the product include the following except
a. False advertising
b. Deceptive packaging
c. Mislabeling
d. Caveat emptor
15. Examples of indirect misrepresentation about the product include the following except
a. Caveat emptor
b. Deliberate withholding adverse information
c. Business ignorance
d. False advertising

1. Which of the following is not an inherent risk typically associated with the existence of
dividends?
a. Dividends are recorded before being declared.
b. Dividends are not properly amortized.
c. Dividends have not been approved before being declared.
d. Dividends are recorded in the wrong period.
2. Which of the following is not an inherent risk typically associated with the existence of
dividends?
a. Dividends are recorded before being declared
b. Dividends are not properly amortized
c. Dividends have not been approved before being declared.
d. Dividends are recorded in the wrong period
3. Which of the following can be used by organizations for obtaining financing?
a. Notes
 b. Mortgages
c. Bonds
d. All of the above
4. Identify the possible inventory or cost of goods sold manipulation that might occur when
inventory is sold.
a. Overstate returns
b. Over-count inventory
c. Not record cost of goods sold nor reduce inventory
d. Under-record purchases
5. Which of the following is an inherent risk relating to inventory?
a. Inventory is easily transportable.
b. Inventory may become obsolete because of technological advances even though there are
no visible signs of wear
c. Inventory is often returned by customers, so care must be taken to separately identify
returned merchandise, check it for quality, and record it at net realizable value.
d. All of the above.
6. Which of the following is not an activity associated with the acquisition and payment cycle?
a. Receive a customer purchase order.
b. Purchase of goods and services
c. Receipt of, and accounting for, gods and services
d. Approval of items for payment
7. Which of the following statements is false regarding fraud risk factors related to long-lived
assets?
a. A potential fraud scheme involves not removing sold assets from the books
b. Because long-lived assets are typically an audit area of low risk, auditors do not need
toperform brainstorming activities related to long-lived assets.
c. Management might use unreasonably long depreciable lives in an effort to reduce
expenses
d. None of the above statements is false.
8. Long-lived assets include which of the following?
a. Tangible assets such as equipment.
b. Intangible assets such as patents.
c. Natural resources.
d. All of the above.
9. With respect to an internal control measure that will ensure accountability for fixed asset
requirements, management should implement controls that include
a. Continuous analysis of miscellaneous revenue to locate any cash proceeds from sale of
plant assets
b. Periodic inquiry of plant executives by internal auditors as to whether any plant assets
have been retired.
 c. Continuous use of serially numbered retirement work orders.
d. Periodic observation of plant assets by the internal auditors.
10. For control purposes, the quantities of materials ordered may be omitted from the copy of
the purchase order that is
a. Forwarded to the accounting department.
b. Retained in the purchasing department's files.
c. Returned to the requisition-er
d. Forwarded to the receiving department
11. Which of the following accounts would not typically be included in the audit of debt
obligations?
a. Interest income
b. Interest expense
c. Bonds payable
d. Notes payable
12. Which of the following is an example of fraud in the acquisition and payment cycle?
a. Theft of inventory by an employee.
b. Employee schemes involving fictitious vendors as means to transfer payments to
themselves.
c. Executives recording fictious inventory or inappropriately recording higher values for
existing inventory.
d. All of the above.
13. For control purposes, the quantities of materials ordered may be omitted from the copy of
the purchase order that is
a. Forwarded to the accounting department
b. Retained in the purchasing department's files
c. Returned to the requisioner
d. Forwarded to the receiving department
14. In a company whose materials and supplies include a great number of items, a fundamental
deficiency in control requirements would be indicated if
a. A perpetual inventory master file is not maintained for items of small value
b. The store keeping function were to be combined with production and record keeping.
c. The cycle basis for physical inventory taking was to be used
d. Minor supply items were to be expense when acquired.
15. With respect to an internal control measure that will ensure accountability for fixed asset
retirements, management should implement control that include
a. Continuous analysis of miscellaneous revenue to locate any cash proceeds from sale of
plants assets.
b. Periodic inquiry of plant executives by internal auditors as to whether any plant assets
have been retired
c. Continuous use of serially numbered retirement work orders.
 d. Periodic observation of plant assets by the internal auditors.
16. Which of the following is not an internal control weakness related to factory equipment?
a. Checks issued in payment of acquisitions of equipment are not signed by the controller.
b. All acquisitions of factory equipment are required to be made by the department in need
of the equipment.
c. Factory equipment replacements are generally made when estimated useful lives, as
indicated in depreciation schedules, have expired.
d. Proceeds from sales of fully depreciated equipment are credited to other income.
17. If preparation of a periodic scrap report is essential in order to maintain adequate control
over the manufacturing process, the data for this report should be accumulated in the
a. Accounting department
b. Production department
c. Warehousing department
d. Budget department
18. Which of the following is a common rationalization for fraudulent financial reporting?
a. This is one-time transaction and it will allow the company to get through the current
financial crisis but we'll never do it again.
b. We are only borrowing the money; we will pay it back next year.
c. The accounting rules don't make sense for our company, and they make our financial
results look weaker than is necessary, so we have a good reason to record revenue using a
non IFRS method.
d. A and D
19. Which of the following creates an opportunity for fraud to be committed in an
organization?
a. Management demands financial success
b. Poor internal control
c. Commitments tied to debt covenants
d. Management is aggressive in its application of accounting rules
20. Which of the following best represents fraudulent financial reporting?
a. The transfer agent issues 40,000 shares of the company's stock to a friend without
authorization by the board of directors.
b. The controller of the company inappropriately records January sales in December so that
year-end results will meet analysis expectations.
c. The in-house attorney received payments from a Japanese business for negotiating the
development of a new plant in Batangas City.
d. The accounts receivable clerk covers up the theft of cash receipts by writing off older
receivables without authorization.
21. What is the primary difference between fraud and errors in financial statement reporting?
a. The materiality of the misstatement
b. The intent to deceive
c. The level of management involved
 d. The type of transaction effected
22. ISO31000 suggests that once risks have been identified and assessed, techniques to manage
the risks should be applied. These techniques include the following except
a. Retention
b. Sharing
c. Reduction
d. Complete disregard

23. Non-Financial risks associated with Financial Institutions include the following except
a. Derivative risk
b. Integrity risk
c. Leadership risk
d. Regulatory risk
24. Operations risk is manifested in all of the following except
a. Interest rates volatility
b. Process stoppage
c. Technological obsolescence
d. Management fraud
25. The risk that the real rate of return will be lesser than the nominal or stated rate of return
due to inflation is referred to as
a. Purchasing power risk
b. Liquidity risk
c. Default risk
d. Business risk
26. In the "Unified Code of Conduct for Business" the logistics department commits to do the
following, except
a. Not to penalize employees for refusing to pay bribes or facilitation payments even if it
results in failure to meet deadlines or revenue is lost.
b. Not to tolerate any breaches or violation of existing laws in exchange for undue
advantage and unethical concessions a favors.
c. To pay correct duties and taxes based on transparent assessment of goods and services.
d. To protect employees from retaliation when complaints are failed against them
27. Among the commitments of the "Finance and Accounting Section of an organization" is
a. To pay taxes in compliance with all laws
b. To have appropriate tools to receive, monitor and act on internal and external complaints
of employees
c. To communicate rules and guidelines or giving gifts, entertainment tokens of hospitality
and contributes to from public or private organizations
 d. To prohibit contracting a third party to bribe or commit corrupt practices in behalf of the
company
28. Top management's commitment in the "Unified Code of Conduct for Business" included
the following except
a. To lead by example in conducting business with integrity
b. To communicate within the company and the general public the company's position
against bribery, corruption and unethical business practice.
c. To institute training programs or business ethics covering all levels of the organization.
d. To support strategy integrity practices and efforts and allocate sufficient resources for
their implementation.
29. Audit committee activities and responsibilities include which of the following?
a. Selecting the external audit firm
b. Approving corporate strategy
c. Reviewing management performance and determining compensation
d. None of the above
30. The characteristics of good governance where fair legal framework are enforced impartially
is
a. Participation
b. Rule of Law
c. Equity
d. Accountability
31. To encourage enhanced performance by the board and management, it is recommended
that the following should be adopted except
a. Disclosure of the process for performance evaluation of the board, its committees,
individual directors and by executives
b. A remuneration committee
c. Distinguish between non-executive director's remuneration from that of executives
d. Establish policies on risks oversight and management
32. The basic principle of "accountability" for effective governance answers the following
questions positively, except
a. Does the board recognize and manage risk?
b. Does the board lay solid foundations for management oversight?
c. Does the composition mix of board membership ensure an appropriate range and risk of
expertise diversity, knowledge added value?
d. Does the board promote objective, ethical and responsible decision making?
33. Who is responsible for ensuring the accuracy, timeliness of public reporting of financial and
other information for public companies?
a. External auditors
b. Securities and exchange commission
c. Shareholders
 d. Board of Accountancy
34. Who performs audit of companies for compliance with company policies and law, audits
efficiency of operations and periodic evaluation and tests of controls?
a. External auditors
b. Internal auditors
c. Commission on audit
d. Chief accountant
35. Which of the following audit committee responsibilities has the SEC mandated?
a. Obtaining each year a report by the internal auditor that addresses the company's internal
control procedures any quality control or regulatory problems, and any relationships that
might threaten the independence of the internal auditor.
b. Discussing in its meetings the company's earnings guidance provided to analysts
c. Reviewing with the internal auditor any audit problems or difficulties that they have had
with management.
d. All of the above.