AUDITING THEORY

Self-interest and intimidation threats

A close business relationship between a firm or a member of the audit team, or a member of that individual's immediate family, and the audit client or its management may create (Auditing Theory: The CPA'S Professional Responsibility)

A. Discuss the matter with those charged with governance of the audit client.

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 safeguards would be least likely considered to eliminate the threat or reduce it to an acceptable level? A. Discuss the matter with those charged with governance of the audit client. 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. (Auditing Theory: The CPA'S Professional Responsibility)

D. Both I and II

A loan, or guarantee of a loan, to the firm from an audit client that is a bank or a similar institution, would not create a threat to independence provided I. The loan, or guarantee, is made under normal lending procedures, terms and requirements. II. The loan is immaterial to both the firm receiving the loan and the audit client. A. I only B. II only C. Neither I nor II D. Both I and II (Auditing Theory: The CPA'S Professional Responsibility)

2

A partner surviving the death or withdrawal of all the other partners in a partnership may continue to practice under the partnership name for a period of not more than _____ years after becoming a sole proprietor. (Auditing Theory: The Accountancy Profession)

Either I or II

A practitioner is associated with financial information when... I. The practitioner attaches a report to that financial information. II. The practitioner consents to the use of his/her name in a professional connection. (Auditing Theory: Auditing and Related Services)

The practitioner's conclusion is to be contained in a written report.

A practitioner should accept an assurance engagement only if (Auditing Theory: Auditing and Related Services)

Inform interested parties through any medium that a partnership or salaried employment of an accountancy nature is being sought.

A professional accountant in public practice is allowed to (Auditing Theory: The CPA'S Professional Responsibility)

B. The outcome or result of a transaction or the result of the work performed.

According to Section 240 of the Code of Ethics, fees charged for assurance engagements should be a fair reflection of the value of the work involved. In determining professional fees, the following should be taken into account, except A. The time necessarily occupied by each person engaged on the work. B. The outcome or result of a transaction or the result of the work performed. C. The skill and knowledge required for the type of work involved. D. The level of training and experience of the persons necessarily engaged on the work. (Auditing Theory: The CPA'S Professional Responsibility)

Both I and II

After accepting an assurance engagement, a practitioner is not allowed to change the engagement to a non-assurance engagement, or from a reasonable assurance engagement to a limited assurance engagement, except when there is reasonable justification for the change. Which of the following ordinarily will justify a request for a change in the engagement? I. A change in circumstances that affects the intended users' requirements. II. A misunderstanding concerning the nature of the engagement. (Auditing Theory: Assurance Services)

D. Withdraw from, or refuse to accept, the assurance engagement.

After evaluating the significance of the threat created by an actual or threatened litigation, the following safeguards should be applied to reduce the threat to an acceptable level, except A. Disclosing to the audit committee, or others charged with governance, the extent and nature of the litigation. B. If the litigation involves a member of the assurance team, removing that individual from the assurance team. C. Involving an additional professional accountant in the firm who was not a member of the assurance team to review the work or otherwise advise as necessary. D. Withdraw from, or refuse to accept, the assurance engagement. (Auditing Theory: The CPA'S Professional Responsibility)

Specific operating units are functioning economically and efficiently.

An objective of a performance audit is to determine whether an entity's (Auditing Theory: Auditing and Related Services)

A fine of not less than P50,000 or by imprisonment for a period not exceeding two years or both.

Any person who shall violate any of the provisions of the Accountancy Act or any of its implementing rules and regulations promulgated by the Board of Accountancy subject to the approval of the PRC, shall, upon conviction, be punished by (Auditing Theory: The Accountancy Profession)

Monitoring

As defined in PSQC 1, __________ is a process comprising an ongoing consideration and evaluation of the firm's system of quality control, including a periodic inspection of a selection of completed engagements, designed to provide the firm with reasonable assurance that its system of quality control is operating effectively. (Auditing Theory: The CPA'S Professional Responsibility)

Publicity

As defined in the Code of Ethics, __________ is the communication to the public of facts about a professional accountant which are not designed for the deliberate promotion of that professional accountant. (Auditing Theory: The CPA'S Professional Responsibility)

Advertising

As defined in the Code of Ethics, __________ is the communication to the public of information as to the services or skills provided by professional accountants in public practice with a view to procuring professional business. (Auditing Theory: The CPA'S Professional Responsibility)

Self-review threat

As defined in the Code, "a valuation comprises the making of assumptions with regard to future developments, the application of certain methodologies and techniques, and the combination of both in order to compute a certain value, or range of values, for an asset, a liability or for a business as a whole." Which of the following threats may be created when a firm or a network firm performs valuation for an audit client that is to be incorporated in the client's financial statements? (Auditing Theory: The CPA'S Professional Responsibility)

That the practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated.

Assurance engagement risk is the risk (Auditing Theory: Assurance Services)

A. A professional accountant accepting gifts from a client whose value is inconsequential or trivial.

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. 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 client. (Auditing Theory: The CPA'S Professional Responsibility)

Direct financial interest

Financial interests may be held through an intermediary (for example, a collective investment vehicle, estate or trust). When control over the investment vehicle or the ability to influence investment decisions exists, the code defines that financial interest to be a/an (Auditing Theory: The CPA'S Professional Responsibility)

Engagement Quality Control Review

For audits of financial statements of listed entities, the engagement partner should not issue the auditor's report until the completion of the (Auditing Theory: The CPA'S Professional Responsibility)

Compliance

Governmental auditing often extends beyond examinations leading to the expression of opinion on the fairness of financial presentation and includes audits of efficiency, economy, effectiveness, and also (Auditing Theory: Auditing and Related Services)

D. I, II, and III

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. 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. (Auditing Theory: The CPA'S Professional Responsibility)

Subject matter information

In an assurance engagement, the outcome of the evaluation or measurement of a subject matter against criteria is called (Auditing Theory: Assurance Services)

Assertion-based engagements

In some assurance engagements, the evaluation or measurement of the subject matter is performed by the responsible party, and the subject matter information is in the form of an assertion by the responsible party that is made available to intended users. These engagements are called (Auditing Theory: Assurance Services)

Both independence of mind and independence in appearance

In the case of audit engagements, it is in the public interest and, therefore, required by the Code that members of audit teams, firms and network firms shall be independent of audit clients. Independence requires (Auditing Theory: The CPA'S Professional Responsibility)

Yes No Yes

Independence is not a requirement for which of the following engagements? (Auditing Theory: Auditing and Related Services)

Review

Inquiries and analytical procedures ordinarily form the basis for which type of engagement? (Auditing Theory: Auditing and Related Services)

Determine whether the internal control system provides reasonable assurance that the company's objectives and goals are met efficiently and economically.

Internal auditors review the adequacy of the company's internal control system primarily to (Auditing Theory: Auditing and Related Services)

Exposure to the elements.

Internal auditors should review the means of physically safeguarding assets from losses arising from (Auditing Theory: Auditing and Related Services)

D. Refuse the engagement because of his spouse's stock ownership.

Jayson, CPA, was offered the engagement to audit W Corporation for the year ended December 31, 2016. He had served as a director of W Corporation until December 31, 2014, and his spouse currently owns 6,000 of the 100,000 outstanding share capital of W Corporation. Jayson disassociated from W Corporation prior to being offered the engagement. Moreover, the engagement does not cover any period that includes Jayson's association or employment with W Corporation. Under the code of ethics, Jayson should A. Accept the engagement. B. Let a partner from the same office accept and conduct the engagement. C. Refuse the engagement because he had served as a director. D. Refuse the engagement because of his spouse's stock ownership. (Auditing Theory: The CPA'S Professional Responsibility)

C. Joni and Jona, CPAs (Joni died about three years ago; Jona is continuing the firm as a sole proprietor.)

Listed below are names of four CPA firms and pertinent facts relative to each firm. Unless otherwise indicated, the individuals named are CPAs and partners, and there are no other partners. Which is a violation of the Implementing Rules and Regulations of RA 9298? A. Tin, Ton and Tan, CPAs (Tin died about five years ago; Ton and Tan are continuing the firm.) B. Pol and Bon, CPAs (The name of Cua, a third partner, is omitted from the partnership name.) C. Joni and Jona, CPAs (Joni died about three years ago; Jona is continuing the firm as a sole proprietor.) D. Elias and Co., CPAs (The firm has ten other partners who are all CPAs). (Auditing Theory: The Accountancy Profession)

A measure of management performance in meeting organizational goals.

Operational audits generally have been conducted by internal and COA auditors, but may be performed by certified public accountants. A primary purpose of an operational audit is to provide (Auditing Theory: Auditing and Related Services)

Reviews of any historical financial information by a practitioner other than the entity's auditor.

PSRE 2400 (Engagements to Review Financial Statements), as amended by the AASC in February 2008, applies to (Auditing Theory: Auditing and Related Services)

C. The practitioner may not have the required assurance knowledge and skills to gather and evaluate evidence.

Reducing assurance engagement risk to zero is very rarely attainable or cost beneficial as a result of the following factors, except A. The use of selective testing. B. The fact that much of the evidence available to the practitioner is persuasive rather than conclusive. C. The practitioner may not have the required assurance knowledge and skills to gather and evaluate evidence. D. The use of judgment in gathering and evaluating evidence and forming conclusions based on that evidence. (Auditing Theory: Assurance Services)

Neutral criteria contribute to conclusions that are free from bias.

Suitable criteria are required for reasonably consistent evaluation or measurement of the subject matter of an assurance engagement. Which of the following statements concerning the characteristics of suitable criteria is correct? (Auditing Theory: Assurance Services)

Quality assurance review

The Board of Accountancy has the power to conduct an oversight into the quality of audits of financial statements through a review of the quality control measures instituted by auditors in order to ensure compliance with the accounting and auditing standards and practices. This power of the BOA is called (Auditing Theory: The Accountancy Profession)

10

The Board of Accountancy shall submit to the PRC the ratings obtained by each candidate within _____ days after the examination, unless extended for just cause. (Auditing Theory: The Accountancy Profession)

Defines and describes the elements and objectives of an assurance engagement, and identifies engagements to which PSAs, PSREs, and PSAEs apply.

The Philippine Framework for Assurance Engagements (Auditing Theory: Assurance Services)

Both I and II

The auditor is required to comply with all PSAs relevant to the audit of an entity's financial statements. A PSA is relevant to the audit when I. The PSA is in effect. II. The circumstances addressed by the PSA exist. (Auditing Theory: Auditing and Related Services)

A belief that management and those charged with governance are honest and have integrity relieves the auditor of the need to maintain professional skepticism.

The auditor is required to maintain professional skepticism throughout the audit. Which of the following statements concerning professional skepticism is false? (Auditing Theory: Auditing and Related Services)

Effects of a direct financial interest in the client upon the auditor's independence.

The concept of materiality is least important to an auditor when considering the (Auditing Theory: The CPA'S Professional Responsibility)

30

The death or disability of an individual CPA and/or the dissolution and liquidation of a firm or partnership of CPAs shall be reported to the BOA not later than _____ days from the date of such death, dissolution or liquidation. (Auditing Theory: The Accountancy Profession)

D. A member of the assurance team having a significant close business relationship with an assurance client.

The following circumstances create advocacy threats for a professional accountant in public practice except A. Promoting shares in an audit client. B. Acting as an advocate on behalf of an audit client in litigation or disputes with third parties. C. Acting as campaign manager for the president of a client who is running for a public office. D. A member of the assurance team having a significant close business relationship with an assurance client. (Auditing Theory: The CPA'S Professional Responsibility)

D. A member of the assurance team being, or having recently been, a director or officer of the client.

The following circumstances may create intimidation threats, except A. Being threatened with dismissal or replacement in related to a client engagement. B. Being pressured to reduce inappropriately the extent of work performed in order to reduce fees. C. Being threatened with litigation. D. A member of the assurance team being, or having recently been, a director or officer of the client. (Auditing Theory: The CPA'S Professional Responsibility)

C. Authorizing or approving transactions

The following forms of assistance to a financial statement audit client do not generally threaten the firm's independence, except A. Analyzing and accumulating information for regulatory reporting. B. Assisting in resolving account reconciliation problems. C. Authorizing or approving transactions. D. Assisting in the preparation of consolidated financial statements. (Auditing Theory: The CPA'S Professional Responsibility)

C. Excess credit units earned may be carried over to the next three-year period including credit units earned for doctoral and master's degrees.

The following statements relate to CPE credit units. Which is incorrect? A. The total CPE credit units for registered accounting professionals shall be sixty (60) credit units for three (3) years, provided that a minimum of fifteen (15) credit units shall be earned in each year. B. Any excess credit units in one year may be carried over to the succeeding years within the three-year period. C. Excess credit units earned may be carried over to the next three-year period including credit units earned for doctoral and master's degrees. D. One credit hour of CPE program, activity or source shall be equivalent to one (1) credit unit (Auditing Theory: The Accountancy Profession)

D. It shall be the primary duty of the PRC and the BOA to effectively enforce the provisions of RA 9298

The following statements relate to some of the provisions of RA 9298. Which is correct? A. Audit working papers are generally the property of the company whose financial statements were audited. B. After three (3) years, subject to certain conditions, the Board of Accountancy may order the reinstatement of a CPA whose certificate of registration has been revoked. C. The penal provision (Sec. 36) of RA 9298 applies only to the violation of any of the provisions of RA 9298 because its Implementing Rules and Regulations are unenforceable. D. It shall be the primary duty of the PRC and the BOA to effectively enforce the provisions of RA 9298. (Auditing Theory: The Accountancy Profession)

A. The provision of legal services to an audit client involving matters that would not be expected to have a material effect on the financial statements may create a self-review threat.

The following statements relate to the provision of legal services to an audit client. Which is incorrect? A. The provision of legal services to an audit client involving matters that would not be expected to have a material effect on the financial statements may create a self-review threat. B. Legal services to support an audit client in the execution of a transaction (e.g., contract support) may create a self-review threat. C. Acting for an audit client in the resolution of a dispute or litigation in such circumstances when the amounts involved are material in relation to the financial statements of the audit client would create advocacy and self-review threats so significant no safeguards could reduce the threats to an acceptable level. D. The appointment of a partner or an employee of the firm or network firm as General Counsel for legal affairs to an audit client would create self-review and advocacy threats that are so significant no safeguards could reduce the threats to an acceptable level. (Auditing Theory: The CPA'S Professional Responsibility)

A. Preparing calculations of current and deferred tax liabilities (or assets) for an audit client for the purpose of preparing accounting entries that will be subsequently audited by the firm creates a self-interest threat.

The following statements relate to the provision of taxation, internal audit or IT Systems services to audit clients. Which is false? A. Preparing calculations of current and deferred tax liabilities (or assets) for an audit client for the purpose of preparing accounting entries that will be subsequently audited by the firm creates a self-interest threat. B. A self-review threat may be created when a firm, or network firm, provides internal audit services to an audit client. C. The provision of services by a firm or network firm to an audit client that involve the design and implementation of financial information technology systems that are used to generate information forming part of a client's financial statements may create a self-review threat. D. The provision of services in connection with the assessment, design, and implementation of internal accounting controls and risk management controls does not create a threat to independence provided that firm or network firm personnel do not perform management functions. (Auditing Theory: The CPA'S Professional Responsibility)

D. There should be adequate documentation to show the qualifications and primary field of professional activity of each nominee.

The following statements relate to the submission of nominations to the Board of Accountancy. Which is correct? A. The Accredited National Professional Organization of CPAs (APO) shall submit its nominations to the president of the Philippines not later than sixty (60) days prior to the expiry of the term of an incumbent chairman or member. B. The APO shall submit its nominations to the PRC not later than thirty (30) days prior to the expiry of the term of an incumbent chairman or member. C. If the APO fails to submit its own nominee(s) to the PRC within the required period, the PRC in consultation with the Board of Accountancy shall submit to the president of the Philippines a list of five (5) nominees for each position. D. There should be adequate documentation to show the qualifications and primary field of professional activity of each nominee. (Auditing Theory: The Accountancy Profession)

C. No person who has served two successive complete terms as chairman or member shall be eligible for reappointment until the lapse of two (2) years.

The following statements relate to the term of office of the chairman and members of the Board of Accountancy (BOA). Which is false? A. The chairman and members of the BOA shall hold office for a term of three (3) years. B. Any vacancy occurring within the term of a member shall be filled up for the unexpired portion of the term only. C. No person who has served two successive complete terms as chairman or member shall be eligible for reappointment until the lapse of two (2) years. D.Appointment to fill up an unexpired term is not to be considered as a complete term. (Auditing Theory: The Accountancy Profession)

5

The holding of media-covered events undertaken only to commemorate a professional accountant's anniversaries in public practice does not violate the rules on advertising and solicitation provided that such undertaking should be done only every _____ years of celebration. (Auditing Theory: The CPA'S Professional Responsibility)

Examine and evaluate the system of internal control.

The internal auditing department's responsibility for deterring fraud is to (Auditing Theory: Auditing and Related Services)

President of the Philippines

The members of the Professional Regulatory Board of Accountancy shall be appointed by the (Auditing Theory: The Accountancy Profession)

B. Yes Yes Yes

The nature, timing, and extent of an audit firm's quality control policies and procedures depend on The Nature Appropriate The CPA of the CPA Cost-Benefit Firm's Size Firm's Practice Considerations A. Yes Yes No B. Yes Yes Yes C. No No No D. Yes No Yes (Auditing Theory: The CPA'S Professional Responsibility)

I and II only

The overall objectives of the auditor in conducting an audit of financial statements are: I. To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether caused by fraud or error. II. To report on the financial statements. III. To obtain conclusive rather than persuasive evidence. IV. To detect all misstatements, whether due to fraud or error. (Auditing Theory: Auditing and Related Services)

Minimize the likelihood of association with clients whose management lacks integrity

The primary purpose of establishing quality control policies and procedures for deciding whether to accept a new client is to (Auditing Theory: The CPA'S Professional Responsibility)

D. Self-review threat

The recruitment of senior management for an assurance client, such as those in a position to affect the subject matter of the assurance engagement, may create the following current or future threats to independence, except A. Self-interest threat B. Familiarity threat C. Intimidation threat D. Self-review threat (Auditing Theory: The CPA'S Professional Responsibility)

Intimidation threat

The threat that a professional accountant will be deterred from acting objectively because of actual or perceived pressures from the client is known as (Auditing Theory: The CPA'S Professional Responsibility)

Contingent fees

These are fees calculated on a predetermined basis relating to the outcome or result of a transaction or the result of the work performed. (Auditing Theory: The CPA'S Professional Responsibility)

Self-review threat

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). (Auditing Theory: The CPA'S Professional Responsibility)

To serve as an independent, objective assurance and consulting activity that adds value to operations.

What is the proper organizational role of internal auditing? (Auditing Theory: Auditing and Related Services)

Self-review threat

What threat to independence is created when the litigation support services provided to an audit client include the estimation of the possible outcome and thereby affects the amounts or disclosures to be reflected in the financial statements? (Auditing Theory: The CPA'S Professional Responsibility)

Self-interest threat

What threat to independence may be created if fees due from an assurance client for professional services remain unpaid for a long time, especially if a significant part is not paid before the issue of the assurance report for the following year? (Auditing Theory: The CPA'S Professional Responsibility)

Self-interest threat

What threat to independence may be created when the fees generated by the assurance client represent a large proportion of the revenue of an individual of the firm? (Auditing Theory: The CPA'S Professional Responsibility)

Limited assurance engagement

What type of assurance engagement is involved when the practitioner expresses a negative form of conclusion? (Auditing Theory: Assurance Services)

Reasonable assurance engagement

What type of assurance engagement is involved when the practitioner expresses a positive form of conclusion? (Auditing Theory: Assurance Services)

D. I, II, and III

When a close family member of a member of the assurance team is a director, an officer, or an employee of the assurance client in a position to exert direct and significant influence over the subject matter information of the assurance engagement, threats to independence may be created. If the threats are other than clearly insignificant, which of the following safeguards can be applied to reduce the threats to an acceptable level? I. Removing the individual from the assurance team. II. Where possible, structuring the responsibility of the assurance team so that the professional does not deal with matters that are within the responsibility of the close family member. III. Policies and procedures to empower staff to communicate to senior levels within the firm any issue of independence and objectivity that concerns them. A. I and II only B. II and III only C. I and III only D. I, II, and III (Auditing Theory: The CPA'S Professional Responsibility)

C. Both I and II

When a firm obtains an assurance engagement at a significantly lower fee level than that charged by the predecessor firm, or quoted by other firms, the self-interest threat created will not be reduced to an acceptable level unless I. The firm is able to demonstrate that appropriate time and qualified staff are assigned to the task. II. All applicable assurance standards, guidelines, and quality control procedures are being complied with. A. I only B. II only C. Both I and II D. Neither I nor II (Auditing Theory: The CPA'S Professional Responsibility)

Removing the individual from the assurance team

When an immediate family member of a member of the assurance team is a director, an officer, or an employee of the assurance client in a position to exert direct and significant influence over the subject matter information of the assurance engagement, or was in such a position during the period covered by the engagement, the threats to independence can only be reduced to an acceptable level by (Auditing Theory: The CPA'S Professional Responsibility)

Obtain a general knowledge of the business and operations of the entity.

When performing a compilation engagement, the accountant is required to (Auditing Theory: Auditing and Related Services)

D. Either I or II

When the professional accountant determines that appropriate safeguards are not available or cannot be applied to eliminate the threats to independence or reduce them to an acceptable level, the professional accountant shall I. Eliminate the circumstance or relationship creating the threats. II. Decline or terminate the audit engagement. A. I only B. II only C. Neither I nor II D. Either I or II (Auditing Theory: The CPA'S Professional Responsibility)

Self-interest threat

When the total fees generated by an assurance client represent a large proportion of a firm's total fees, the dependence on that client or client group and concern about the possibility of losing the client may create a/an (Auditing Theory: The CPA'S Professional Responsibility)

Human resources

Which element of a system of quality control is addressed by the establishment of policies and procedures designed to provide the firm with reasonable assurance that it has sufficient personnel with the competence, capabilities, and commitment to ethical principles? (Auditing Theory: The CPA'S Professional Responsibility)

C. Yes Yes Yes

Which of the following are elements of a CPA firm's quality control that should be considered in establishing its quality control policies and procedures? Ethical Human Engagement Requirements Resources Performance A. No Yes No B. Yes No No C. Yes Yes Yes D. No No Yes (Auditing Theory: The CPA'S Professional Responsibility)

Different interests may exist between the company preparing the statements and the persons using the statements.

Which of the following best describes the reason why independent auditors report on financial statements? (Auditing Theory: Auditing and Related Services)

A. The firm promoting shares in an audit client.

Which of the following circumstances may create advocacy threat for a professional accountant in public practice? A. The firm promoting shares in an audit client. B. A firm issuing an assurance report on the effectiveness of the operation of financial systems after designing or implementing the systems. C. A firm being threatened with dismissal from a client engagement. D. A firm being concerned about the possibility of losing a significant client. (Auditing Theory: The CPA'S Professional Responsibility)

Compilation of financial information

Which of the following is NOT an assurance service? (Auditing Theory: Assurance Services)

B. Disclosing to those charged with governance of the client the nature of service provided and extent of fees charged.

Which of the following is an example of engagement-specific safeguards in the work environment? A. Advising partners and professional staff of those assurance clients and related entities from which they must be independent. B. Disclosing to those charged with governance of the client the nature of service provided and extent of fees charged. C. A disciplinary mechanism to promote compliance with the firm's policies and procedures. D. Published policies and procedures to encourage and empower staff to communicate to senior levels within the firm any issue relating to compliance with the fundamental principles that concerns them. (Auditing Theory: The CPA'S Professional Responsibility)

Accept the engagement but he/she should conduct research or consult with others to obtain sufficient competence.

Which of the following is the most appropriate action to be taken by a CPA who has been asked to perform a consulting services engagement concerning the analysis of a potential merger if he/she has little experience with the industry involved? (Auditing Theory: Auditing and Related Services)

The partner in charge of the engagement.

Which of the following professionals has primary responsibility for the performance of an audit? (Auditing Theory: Auditing and Related Services)

Compilations but not reviews

Which of the following services, if any, may a practitioner who is not independent provide? (Auditing Theory: Auditing and Related Services)

Certificate of registration and professional identification card.

Which of the following shall be issued to examinees who pass the CPA licensure examination? (Auditing Theory: The Accountancy Profession)

Independent professional services that are intended to enhance the credibility of information to meet the needs of an intended user

Which of the following statements best describes assurance services? (Auditing Theory: Assurance Services)

C. A distinguishing mark of a profession is its acceptance of responsibility to the public.

Which of the following statements best explains why the CPA profession has found it essential to establish ethical standards and means for ensuring their observance? A. Vigorous enforcement of an established code of ethics is the best way to prevent unscrupulous acts. B. Ethical standards that emphasize excellence in performance over material rewards establish a reputation for competence and character. C. A distinguishing mark of a profession is its acceptance of responsibility to the public. D. A requirement for a profession is to establish ethical standards that stress primarily a responsibility to clients and colleagues. (Auditing Theory: The CPA'S Professional Responsibility)

A. Disclosure may be made to any party on consent of the client.

Which of the following statements concerning a CPA's disclosure of confidential client information is ordinarily correct? A. Disclosure may be made to any party on consent of the client. B. Disclosure should not be made even if such disclosure will protect the CPA's professional interests in legal proceedings. C. Disclosure should be made only if there is a legal or professional duty to make the disclosure. D. Disclosure may be made to any government agency without subpoena. (Auditing Theory: The Accountancy Profession)

Consulting services ordinarily involve external reporting

Which of the following statements concerning consulting services is false? (Auditing Theory: Auditing and Related Services)

Working papers include reports submitted by a CPA to his/her client.

Which of the following statements concerning ownership of working papers is incorrect? (Auditing Theory: The Accountancy Profession)

B. Professional accountants who author books or articles on professional subjects may state their name and professional qualifications; give the name of their organization; and give any information as to the services that the firm provides.

Which of the following statements concerning publicity is incorrect? A. Booklets and other documents bearing the name of a professional accountant and giving technical information for the assistance of staff or clients may be issued to such persons, other professional accountants or other interested parties. B. Professional accountants who author books or articles on professional subjects may state their name and professional qualifications; give the name of their organization; and give any information as to the services that the firm provides. C. Appropriate newspapers or magazines may be used to inform the public of the establishment of a new practice, of changes in the composition of a partnership of professional accountants in public practice, or of any alteration in the address of a practice. D. A professional accountant may develop and maintain a website in the Internet in such suitable length and style which may also include announcements, press releases, publications and such other necessary and factual information. (Auditing Theory: The CPA'S Professional Responsibility)

C. The BOA shall not register and issue a Certificate of Registration and Professional Identification Card to any successful examinee of unsound mind.

Which of the following statements concerning the issuance of Certificates of Registration and Professional Identification Cards to successful examinees is correct? A. The Certificate of Registration issued to successful examinees is renewable every three (3) years. B. The Professional Identification Card issued to successful examinees shall remain in full force and effect until withdrawn, suspended or revoked in accordance with RA 9298. C. The BOA shall not register and issue a Certificate of Registration and Professional Identification Card to any successful examinee of unsound mind. D. The BOA may, after the expiration of three (3) years from the date of revocation of a Certificate of Registration, reinstate the validity of a revoked Certificate of Registration. (Auditing Theory: The Accountancy Profession)

D. A CPA shall practice only under an individual, firm, or partnership name in accordance with Philippine laws and shall not include any fictitious name but may indicate specialization.

Which of the following statements concerning the use of firm or partnership name is incorrect? A. In the case of an individual CPA, he/she shall do business under his/her registered name with the BOA and the PRC and as printed in his/her CPA certificate (for example, Juan Puruntong, CPA). B. In the case of a firm, it shall do business under its duly registered and authorized firm name appearing in the registration documents issued by the Department of Trade and Industry (DTI) and other government offices and such firm name shall include the real name of the sole proprietor as printed in his/her CPA certificate (for example, Arnulfo Gumamela and Associates). C. In the case of a registered partnership, it shall do business under its name as indicated in its current Articles of Partnership and Certificate of Registration issued by the Securities and Exchange Commission (SEC) (for example, Tanya, Sam, and Jervi, CPAs). D. A CPA shall practice only under an individual, firm, or partnership name in accordance with Philippine laws and shall not include any fictitious name but may indicate specialization. (Auditing Theory: The Accountancy Profession)

Sufficiency is the measure of the quantity of evidence.

Which of the following statements is true concerning evidence in an assurance engagement? (Auditing Theory: Assurance Services)

Compliance audit

Which of the following terms best describes the audit of a taxpayer's return by a BIR auditor? (Auditing Theory: Auditing and Related Services)

Self-interest threat

Which of the following threats to independence is created when a member of the assurance team participates in the assurance engagement while knowing, or having reason to believe, that he is to, or may, join the assurance client sometime in the future? (Auditing Theory: The CPA'S Professional Responsibility)

Self-interest, familiarity or intimidation threats

Which of the following threats to independence may be created by family and personal relationships between a member of the assurance team and a director, an officer, or an employee of the assurance client in a position to exert direct and significant influence over the subject matter information of the assurance engagement? (Auditing Theory: The CPA'S Professional Responsibility)

Self-interest or intimidation threat

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? (Auditing Theory: The CPA'S Professional Responsibility)

D. Preparing the original data used to generate records that are the subject matter of the assurance engagement.

Which of the following will not create self-interest threat for a professional accountant in public practice? A. The possibility of losing a significant client. B. Direct financial interest in the assurance client. C.Undue dependence on total fees from a client. D. Preparing the original data used to generate records that are the subject matter of the assurance engagement. (Auditing Theory: The CPA'S Professional Responsibility)

The purchase of goods and services from an assurance client by the firm (or from a financial statement audit client by a network firm) or a member of the assurance team provided that the transaction is in the normal course of business and on an arm's length basis.

Which of the following would not generally create a threat to independence? (Auditing Theory: The CPA'S Professional Responsibility)

Part A

Which part of the Code establishes the fundamental principles of professional ethics for professional accountants and provides a conceptual framework that professional accountants shall apply to identify threats to compliance with the fundamental principles, evaluate the significance of the threats identified, and apply safeguards, when necessary, to eliminate the threats or reduce them to an acceptable level? (Auditing Theory: The CPA'S Professional Responsibility)

Engagement partner

Who should take responsibility for the overall quality on each audit engagement? (Auditing Theory: The CPA'S Professional Responsibility)