Chapter 6 Code of Ethics
11. The phase of professional competence that requires a professional accountant to adopt a program designed to ensure quality control in the performance of professional services consistent with technical and professional standards is: a. attainment of professional competence b. maintenance of professional competence c. application of professional competence d. review of professional competence
B
13. The essence of the due care principle is that the auditor should not be guilty of: a. bias c. fraud b. errors in judgement d. negligence
D
24. There is a broad range of engagements to provide a high or moderate level of assurance. Such engagements may include I. Engagements to report on a broad range of subject matters covering financial and nonfinancial information II. Attest and direct reporting engagements III. Engagements to report internally and externally IV. Engagements in the private and public sector a. I, II, III and IV b. II only c. I, II and III d. I and II only
A
14. Which of the following constitutes the fraud of larceny? a. Misappropriation of assets that have been entrusted to one's care b. Theft of assets c. Theft of assets covered up by manipulation of accounting records d. Agreement between two or more persons to commit a criminal act
B
1. The Code of Ethics for Professional Accountants in the Philippines is applicable to professional services performed in the Philippines on or after a. December 31, 2009 b. December 31, 2008 c. June 30, 2008 d. June 30, 2009
C
10. The engagement partner should be rotated after a pre-defined period normally no more than a. 2 years b. 3 years c. 5 years d. 7 years
C
7. These are policies and procedures designed to eliminate or to reduce threats of fundamental principles to an acceptable level. a. Internal controls b. Control activities c. Safeguards d. Segregation of duties
C
6. In order to achieve the objectives of the accountancy profession, professional accountants have to observe a number of prerequisite or fundamental principles. The fundamental principles include the following, except a. Objectivity b. Professional Competence and due Care c. Technical Standards d. Confidence
D
1. Which of the following statements best describes why the CPA profession has deemed it essential to promulgate a code of professional ethics and to establish a mechanism for enforcing observation of the Code? a. A distinguishing mark of profession is its acceptance of responsibility to the public. b. A pre-requisite to success is the establishment of an ethical code that primarily defines the professional's responsibility to clients and colleagues. c. A requirement of most state laws calls for the profession to establish a code of ethics. d. An essential means of self-protection for the profession is the establishment of flexible ethical standards by the profession.
A
10. Professional competence should include Attainment of professional competence Maintenance of professional competence a. YES YES b. NO YES c. NO NO d. YES NO
A
10. Those charged with governance of an entity, regardless of their title, which may vary from country to country. a. Director or officer b. Governors c. Board of Directors d. Committee on sustainability
A
11. The communication to the public of facts about a professional accountant which are not designed for the deliberate promotion of that professional accountant. a. Publicity b. Indirect promotion c. Advertising d. Solicitation
A
11. Which of the following statements best describes an auditor's responsibility regarding misstatements? a. An auditor should obtain reasonable assurance that the financial statements taken as a whole are free from material misstatements whether caused by fraud or error. b. An auditor should obtain absolute assurance that material misstatements in the financial statements will be detected. c. An auditor is responsible to detect material errors but has no responsibility to detect material fraud that is concealed through employee collusion or management override of internal control d. An auditor's failure to detect a material misstatement resulting from fraud is an indication of noncompliance with the requirements of the Philippine Standards on Auditing
A
8. Certain entities may be of significant public interest because, as a result of their business, their size or their corporate status, they have a wide range of stakeholders. Examples of these entities include all of the following, except: a. Non-listed companies b. Credit institutions c. Insurance companies d. Pesion funds
A
9. A distinct sub-group, whether organized on geographical or practice lines. a. Office b. Firm c. Practice d. Network firm
A
14. If requested to perform a review engagement for a nonpublic entity in which an accountant has an immaterial direct financial interest, the accountant is a. Independent, and, therefore, may issue a review report b. Not independent, and, therefore, may not issue a review report c. Not independent, and, therefore, may issue a review report d. Not independent, and, therefore, may not be associated with the financial statements
B
15. The principle of confidentiality impose an obligation on professional accountants to refrain from: a. Disclosing confidential information to another party even if the client authorizes the disclosure. b. Using confidential information acquired as a result of professional and business relationship to their personal advantage or the advantage o third parties. c. Disclosing information to defend them in case of litigation. d. Responding to an inquiry or investigation conducted by the Professional Regulatory Board of Accountancy.
B
Acting for an audit client in the resolution of a dispute or litigation would most likely create a. Intimidation threat b. Advocacy threat c. Familiarity threat d. Self-interest threat
B
12. Advertising, as defined in the Code of Ethics, means a. The communication to the public of facts about a professional accountant which are not designed for the deliberate promotion of that professional accountant. b. The approach to a potential client for the purpose of offering professional services. c. 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. d. Any of the above.
C
12. What type of fraud occurs if an employee obtains financial benefit through intimidation? a. Conspiracy b. Embezzlement/Defalcation c. Extortion d. Larceny
C
5. Close family include the following, except a. Parent b. Non-dependent child c. Sibling d. Spouse
D
Which of the following fundamental ethical principles requires a professional accountant to be straightforward and honest in all professional and business relationships? a. Objectivity b. Professional behavior c. Professional competence and due care d. Integrity
D
Which of the following should be independent of the financial statements audit client? A B C D The member of the assurance team yes yes yes yes The firm yes yes no no The Network firm yes no no yes
A
Which of the following statements about CPAs financial interest in a client is incorrect? a. Immaterial indirect financial interest impairs the CPA's independence b. Immaterial direct financial interest impairs the CPA's independence c. Material direct financial interest impairs the CPA's independence d. Material indirect financial interest impairs the CPA's independence
A
12. Circumstances that threaten the ability of a professional accountant in business to perform duties with the appropriate degree of professional competence and due care include the following, except: a. Insufficient time for properly performing or completing the relevant duties. b. Incomplete, restricted or otherwise inadequate information for performing the duties properly. c. Sufficient experience, training and/or education. d. Inadequate resources for the proper performance of the duties.
C
9. A professional accountant's name can be associated with information that: a. Contains a misleading statement b. Intentionally omits or obscures information c. Uses estimates d. Contains information without any real knowledge of whether they are true or false
C
9. Based on the Code of Ethics for Professional Accountants, threats to compliance with fundamental principles arise from all of the following except: a. Self interest b. Advocacy c. The audit relationship d. Intimidation
C
10. Safeguards fall into two broad categories. Safeguards created by the profession, legislation or regulation does not include a. Educational, training and experience requirements for entry into the profession b. Continuing professional development requirements c. Corporate governance regulations d. Documented policies regarding identification of threats to compliance with the fundamental principles
D
10. The Code of Ethics for Professional Accountants in the Philippines defined "practice" as a. A distinct sub-group, whether organized on geographical or practice lines. b. An entity under common control, ownership or management with the firm or any entity that a reasonable and informed third party having knowledge of all relevant information would reasonably conclude as being part of the firm nationally or internationally. c. Any service requiring accountancy or related skills performed by a professional accountant including accounting, auditing, taxation, management consulting and financial management services. d. A sole proprietor or a partnership of professional accountants which offers professional services to the public.
D
8. A CPA shall not disclose confidential information obtained during an audit engagement in which one of the following situations? a. When the security of the state requires. b. With the consent of the client. c. In defense of himself when sued by his client. d. To a successor auditor without the client's permission.
D
16. What is the best method an auditor may use to detect fraud in the financial statements of clients? a. Use professional skepticism b. Understand and properly apply Generally Accepted Accounting Standards c. Brainstorm with the client to find the type of fraud occurring d. Actively search for all errors in the financial statements H
A
4. These are fees calculated on a predetermined basis relating to the outcome or result of a transaction or the result of the work performed a. Contingent fees b. Fixed fees c. Predetermined fees d. Commissions
A
5. If a firm, or a network firm, has a material direct financial interest in an audit client of the firm, the self-interest threat created would be so significant no safeguards could reduce the threat to an acceptable level. The appropriate action to permit the firm to perform the engagement would be to: a. Dispose of the financial interest b. Dispose of a sufficient amount of it so that the remaining interest is no longer material c. Either a or b d. Neither a or b
A
7. The following are examples of circumstances that may create familiarity threats, excepts a. Promoting shares in a listed entity when that entity is a financial statement audit client b. Long association of senior personnel with the assurance client c. A member of the engagement team having a close or immediate family relationship with a director or officer of the client d. A former partner of the firm being a director or officer of the client or an employee in a position to exert direct and significant influence over the subject matter of the engagement
A
Accepting gifts or undue hospitality from an assurance client would most likely create a. Intimidation threat b. Advocacy threat c. Familiarity threat d. Self-review threat
A
13. The preparation of accounting records or financial statements for an audit client will most likely create a. Intimidation threat b. Self-review threat c. Familiarity threat d. Self-interest threat
B
5. Under the revised Code, which fundamental principle is explicitly mentioned to be safeguarded even as the CPA consults with relevant professional bodies and legal advisors? a. Technicality b. Confidentiality c. Integrity d. Objectivity
B
20. The receipt of gifts and hospitality from a client may create threats to fundamental principles. Which of the following is a correct combination of threat and fundamental principle created by this situation? a. Self-interest threat; professional competence and due care. b. Intimidation threat; integrity c. Self-interest threat; objectivity d. Advocady threat; objectivity
C
3. An inadvertent violation of the Code of Ethics, depending on the nature and significance of the matter, may not compromise compliance with the fundamental principles provided, once the violation is discovered. a. The CPA withdraws from the specific professional service involved. b. A disclaimer of opinion is issued to the client as a result of the violation. c. The violation is corrected promptly and any necessary safeguards are applied. d. The engagement is promptly transferred to another, non-violationg professional accountant.
C
3. The CPA profession deemed it necessary to establish a code of ethics and a mechanism for its enforcement because a. An ethical conduct that stresses the CPA's responsibility to clients and colleagues is a prerequisite to success. b. A requirement of law provides that CPAs establish a code of ethics. c. Acceptance of responsibility to the public is a distinguishing mark of a profession. d. The establishment of flexible ethical standards provides self-protection for CPA's.
C
4. Safeguards within the client's systems and procedures may include: a. Involving another firm to perform or re-perform part of the assurance engagement b. Discussing independence issues with the audit committee or others charged with governance c. Policies and procedures to emphasize the assurance client's commitment to fair financial reporting d. Involving an additional professional accountant to review the work done or otherwise advise as necessary
C
7. Using the same senior personnel on an assurance engagement over a long period of time would most likely create a. Intimidation threat b. Advocacy threat c. Familiarity threat d. Self-interest threat
C
9. The term related entity is defined under the Code of Ethics to include any of the following relationships with the client, except: a. An entity that has direct or indirect control over the client provided the client is material to such entity. b. An entity over which the client has direct or indirect control. c. An entitiy with a direct financial interest in the client even though such entity has no significant influence over the client provided the interest in the client is material to such entity. d. An entity which is under common control with the client (referred to as a "sister entity") provided the sister entity and the client are both material to the entity that controls both the client and the sister entity.
C
The rotation of senior accounting personnel can be regarded as a safeguard a. Created by the profession b. Created within the client's system and procedures c. Created in the work environment d. Created within the business community
C
13. There is a high risk as well as a history, that fraud is instituted through which of the following? a. Adjusting entries b. Closing entries c. Unusual entries d. All of the above
D
6. Financial interest means a. Any bank account which is used solely for the banking of clients' monies. b. Any monies received by a professional accountant in public practice to be held or paid out on the instruction of the person from whom or on whose behalf they are received. c. A financial interest beneficially owned through a collective investment vehicle, estate, trust or other intermediary over which the individual or entity has no control. d. An interest in an equity or other security, debenture, loan or other debt instrument of an entity, including rights and obligations to acquire such an interest and derivatives directly related to such interest.
D
6. Princess, CPA, has exhausted all relevant possibilities in an ethical conflict which she is trying to resolve. The conflict remains unresolved. Accordingly, the revised Code allows which of the following steps to be taken by Princess? I. Refuse to remain associated with the matter creating the conflict. II. Withdraw from the engagement team or specific assignment. III. Resign from the engagement. IV. Resign from the firm or the employing organization. a. I and II b. III and IV c. II, III, and IV d. I, II, III, and IV
D
8. Firm includes the following, except a. A sole practitioner professional accountant. b. An entity that controls a partnership of professional accountants. c. An entity controlled by a partnership of professional accountants. d. A sole practitioner, partnership or corporation of professional accountants.
D
18. Which of the following is not explicitly referred to in the Code of Ethics as source of technical standards? a. Commission on Audit (COA) b. Auditing Standards and Practices Council (ASPC) c. Securities and Exchange Commission (SEC) d. Relevant legislation
A
20. Which of the following is incorrect regarding professional competence? a. Professional accountants may portray themselves as having expertise or experience they do not possess. b. Professional competence may be divided into two separate phases. c. The attainment of professional competence requires initially a high standard of general education. d. The maintenance of professional competence requires a continuing awareness of development in the accountancy profession.
A
3. Which of the following threats to compliance with the fundamental principles may occur as a result of the financial principles may occur as a result of the financial or other interests of a professional accountant of an immediate or close family member? a. Self-interest b. Self-review c. Advocacy d. Familiarity
A
4. The following are modifications to the IFAC Code to consider Philippine regulatory requirements and circumstances, except a. The period for rotation of the lead engagement partner was changed from five to seven years. b. Advertising and solicitation by individual professional accountants in public practice were not permitted in the Philippines. c. Additional examples relating to anniversaries and websites wherein publicity is acceptable, as provided in BOA Resolution 19, Series of 2000, were included. d. Payment and receipt of commissions were not permitted in the Philippines.
A
4. Which of the following best describes self-interest threat? a. May occur as a result of the financial of other interests of a professional accountant or of an immediate or close family member. b. May occur when a previous judgment needs to be re-evaluated by the professional accountant responsible for that judgment. c. May occur when a professional accountant promotes a position the the point that subsequent objectivity may be compromised. d. May occur when, because of a close relationship, a professional accountant becomes too sympathetic to the interests of others. e. May occur when a professional accountant may be deterred from acting objectively by threats, actual or perceived.
A
8. When an auditor is sued for negligence in the performance of an audit, to what parties does the contributory negligence defense apply? a. Only to the parties having a contractual relationship with the auditor b. To any third party that relied on the audited financial statements c. To any third party that lost money or suffered damages from investing in the audited company d. Only to those third parties that the auditor could reasonably have known would have relied on the audited financial statements
A
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 client will most likely create: a. Intimidation threat b. Self-interest c. Familiarity threat d. Self-review threat
A
1. Which statement is incorrect regarding the Code of Ethics for Professional Accountants in the Philippines? a. Professional accountants refer to persons who are Certified Public Accountants (CPA) and who hold a valid certificate issued by the Board of Accountancy. b. Where a national statutory requirement is in conflict with a provision of the IFAC Code, the IFAC Code requirement prevails. c. The Code of Ethics for Professional Accountants in the Philippines is mandatory for all CPAs and is applicable to professional services performed in the Philippines on or after January 1, 2004. d. Professional accountants should consider the ethical requirements as the basic principles which they should follow in performing their work.
B
13. Existing accountant, as defined in the Code of Ethics, means a. A professional accountant employed in industry, commerce, the public sector or education. b. A professional accountant in public practice currently holding an audit appointment or carrying out accounting, taxation, consulting or similar professional services for a client. c. Those persons who hold a valid certificate issued by the Board of Accountancy. d. A sole proprietor, or each partner or person occupying a position similar to that of a partner and each staff in a practice providing professional services to a client irrespective of their functional classification (e.g., audit, tax or consulting) and professional accountants in a practice having managerial responsibilities.
B
14. After beginning an audit of a new client, Soray, CPA, discovers that the professional competence necessary for the engagement is lacking. Soray informs management of the situation and recommends another CPA, and management engages the other CPA. Under these circumstances: a. Soray's lack of ompetence should be considered to be a violation of generally accepted auditing standards. b. Soray may request compensation from the client for any professional services rendered to it in connection with the audit. c. Soray's request for a commission from the other CPA is permitted because a more competent audit can now be performed. d. Soray may be indebted to the other CPA since the other CPA can collect from the client only the amount the client originally agreed to pay Soray.
B
17. According to professional audit standards, how might an understanding of the nature if fraud that may occur in the client organization best be identified by the audit firm? a. Fraud training courses from actual corporate fraud ex-criminals b. Conducting a brainstorming meeting with the members of the audit team c. Circulating a survey to the client company employees for completion d. Discussions with other CPA firms
B
19. Which statement is incorrect regarding the Code of Code of Ethics for Professional Accountants in the Philippines? a. The objectives as well as the fundamental principles are of a general nature and are not intended to be used to solve a professional accountant's ethical problems in a specific case. b. The code is divided into two parts, part A and part B. c. Part A applies to all professional accountants unless otherwise specified. d. Part B applies only to those professional accountants in public practice.
B
19. Which statement(s) is(are) incorrect regarding the auditor's responsibility to consider fraud and error in an audit of financial statements? a. The auditor is not and cannot be held responsible for the prevention of fraud and error being the primary responsibility of both the management and those charged with governance b. When planning and performing audit procedures and evaluating and reporting the results thereof, the auditor should consider the risk of misstatements in the financial statements resulting from fraud c. In planning the audit, the auditor should discuss with other members of the audit team the susceptibility of the entity to material statements in the financial statements resulting from fraud or error and exercise professional skepticism (the best method to detect method) d. The auditor should design audit programs that will provide reasonable assurance that material errors and fraud will be detected in the ordinary course of the examination
B
4. Which of the following statements is true when the CPA has been engaged to perform an audit of financial statements? a. The CPA firm is engaged and paid by the client, therefore, the firm has primary responsibility to be an advocate for the client. b. The CPA firm is engaged and paid by the client, but the primary beneficiaries of the audit are those who rely on the financial statements. c. Should a situation arise when there is no convincing, authoritative standard available, and there is a choice of actions which could impact a client's financial statements, the CPA is free to endorse the choice which is in the investor's interest. d. The CPA firm's paramount concern should be the interest of the client.
B
6. 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? a. Intimidation threat b. Self-interest threat c. Self-review threat d. Familiarity threat
B
7. The principle of professional competence and due care imposes certain obligations on professional accountants. Which of the following is not one of those obligations required by the principle? a. To act diligently in accordance with applicable technical and professional standards. b. To be fair, intellectually honest and free of conflict of interest. c. To become aware and understand relevant technical, professional and business developments. d. To obtain professional knowledge and experience to enable them to fulfill their responsibilities.
B
For which of the following professional services must CPAs be independent? a. Management Advisory Services b. Audits of Financial Statements c. Preparation of tax returns d. All three of the above
B
13. A CPA in public practice should not pay or receive a referral fee or commission, unless the CPA in public practice has established: a. Internal controls designed to scientifically compute the referral fee or commission. b. The explicit approval to pay or receive commissions has been obtained from the Securities and Exchange Commission. c. Safeguards to eliminate or reduce threats to fundamental principles to an acceptable level. d. Another company as recipient, whose name does not include the name of the CPA in public practice.
C
14. How did the Code of Ethics define public interest? a. A distinguishing mark of a profession is acceptance of its responsibility to the public. b. The accountancy profession's public consists of clients, credit grantors, governments, employers, employees, investors, the business and financial community, and others who rely on the objectivity and integrity of professional accountants. c. The collective well-being of the community of people and institutions the professional accountant serves. d. The standards of the accountancy profession are heavily determined by the public interest.
C
15. Which of the following is an example of a common type of financial reporting fraud? a. Capitalizing major overhauls to operating equipment b. Deferring service revenue until it is delivered to customers c. Recording sales for inventory sold with the right to return d. Excluding a contingent liability that has been settled
C
16. In which of the situations given below would disclosure by a CPA be in violation of the Code? a. Disclosing confidential information in order to properly discharge the CPA's responsibilities in accordance with his profession's standards. b. Disclosing confidential information in compliance with a subpoena issued by a court. c. Disclosing confidential information to another accountant interested in purchasing the CPA's practice. d. Disclosing confidential information in a review of the CPA's professional practice by the PICPA Quality Review Committee.
C
18. Which of the following is the incorrect about the auditor's responsibility of evaluation noncompliance by the entity to laws and regulations? a. An audit cannot be expected to detect noncompliance with all laws and regulations b. Noncompliance refers to acts of omissions or commission by the entity being audited which are contrary to prevailing laws or regulations. c. Noncompliance includes personal misconduct of entity management or employee though they are unrelated to the entity's business activities d. Detection of noncompliance, regardless of materiality, requires considerations of the implications for the integrity of managements or employees.
C
2. S1: Professional accountants refer to persons who are registered in the PRC as CPAs and who hold a valid certificate issued by the BOA, whether they be in any sector of practice of accountancy. S2: The Code of Ethics for Professional Accountants in the Philippines is mandatory for all CPAs. a. True, False b. False, True c. True, True d. False, False
C
2. The underlying reason for a code of professional ethics is a. That is required by legislation. b. To provide the licensing agencies with a basis for measuring the performance of the practitioners. c. The need for public confidence in the quality of service in the profession. d. That is provides a safeguard against unscrupulous people.
C
5. The following statements relate to the provisions of the Code of Ethics thatdeal with the professional accountant's marketing of professional services. Which is false? a. When a professional accountant in public practice solicits new work through advertising or other forms of marketing, a self-interest threat to compliance with the principle of professional behavior may be created b. The professional accountant should be honest and truthful when marketing professional services c. Advertising and publicity are generally unacceptable d. When marketing professional services, the professional accountant should not make exaggerated claims for services offered, qualifications possessed or experience gained.
C
1. The code of professional ethics for CPA's promulgated by the Board of Accountancy applies to a. All CPA's in public practice. b. All CPA's in government. c. All CPA's in public practice and employed in private business. d. All CPA's in public practice, employed in private business and industry, in the government, and in education.
D
11. The term assurance team includes: a. All professionals participating in the assurance engagement. b. All others within a firm who can directly influence the outcome of the assurance engagement. c. In the case of an audit client, all those within a network firm who can directly influence the outcome of the audit engagement. d. All of these.
D
12. Which of the following is the least required in attaining professional competence? a. High standard of general education. b. Specific education, training and examination in professionally relevant subjects. c. Period of meaningful work experience. d. Continuing awareness of development in the accountancy profession.
D
15. A CPA should not be associated with reports, returns, communications, or other information where they believe that the information: a. Contains materially false or misleading statement. b. Contains statements or information furnished recklessly. c. Omits or obscured information required to be included where such omission or obscurity would be misleading. d. All of these.
D
15. The Code recognizes that the objectives of the accountancy profession are to work to the highest standards of professionalism, to attain the highest levels of performance and generally to meet the public interest requirement set out above. These objectives require four basic needs to be met including the following, except a. Credibility b. Quality of Services c. Professionalism d. Integrity
D
16. In order to achieve the objectives of the accountancy profession, professional accountants have to observe a number of prerequisites or fundamental principles. The fundamental principles include the following, except a. Objectivity b. Professional Competence and due Care c. Technical Standards d. Confidence
D
17. Appropriate safeguards during client acceptance may include: a. Obtaining knowledge and understanding of the client. b. Obtaining knowledge and understanding about the client's owners, managers, and those responsible for its governance and business activities. c. Securing the client's commitment to improve corporate governance practices or internal controls. d. All of these.
D
17. The principle of professional behavior requires a professional accountant to a. Be straightforward and honest in performing professional services. b. Be fair and should not allow prejudice or bias, conflict of interest or influence of others to override objectivity. c. Perform professional services with due care, competence and diligence. d. Act in a manner consistent with the good reputation of the profession and refrain from any conduct which might bring discredit to the profession.
D
19. CPA in business should maintain information for which he/she is responsible in a manner that: a. Describes clearly the true nature of business transactions, assets, or liabilities. b. Classifies and records information in a timely and proper manner. c. Represents the facts accurately and completely in all material respects. d. All of these.
D
2. Which statement is correct regarding the Code of Ethics for Professional Accountants in the Philippines? a. Professional accountants refer to persons who are Certified Public Accountants (CPA) in public practice and who hold a valid certificate issued by the Board of Accountancy. b. It is practical to establish ethical requirements which apply to all situations and circumstances that professional accountants may encounter. c. Professional accountants should consider the ethical requirements as the ideal principles which they should follow in performing their work. d. All CPAs are expected to comply with the ethical requirements of the Code and other ethical requirements that may be adopted and approved by IFAC. Apparent failure to do so may result in an investigation into the CPA's conduct. Bb
D
20. Firms are required to establish policies and procedures relating to independence communications with audit committees, or others charged with governance of the client. In the case of the financial statement audit of listedentities, such communication should be a. Oral b. In writing c. Oral or in writing d. Oral and in writing
D
21. Which of the following is the least required in attaining professional competence? a. High standard of general education. b. Specific education, training and examination in professionally relevant subjects. c. Period of meaningful work experience. d. Continuing awareness of development in the accountancy profession.
D
22. In the marketing and promotion of themselves and their work, professional accountants should a. Not use means which brings the profession into disrepute. b. Not make exaggerated claims for the services they are able to offer, the qualifications they possess, or experience they have gained. c. Not denigrate the work of other accountants. d. All of the above.
D
23. Whether a particular engagement is an assurance engagement will depend upon whether it exhibits all the following elements, including: I. A three party relationship involving a professional accountant, a responsible party, and an intended user II. A subject matter III. A suitable criteria IV. An engagement process V. A conclusion a. I, II, III, IV and V b. I, II, and III c. I, II, III and V d. I, II, III and IV
D
25. Not all engagements performed by professional accountants are assurance engagements. Other engagements frequently performed by professional accountants that are not assurance engagements include the following, except a. Agreed-upon procedures b. Compilation of financial or other information c. Management consulting d. Examination of prospective financial information
D
3. The following definitions from the IFAC Code were modified to consider Philippine regulatory requirements and circumstances, except a. Firm b. Professional accountants c. Professional accountants in public practice d. Lead engagement partner
D
3. Which of the following is not of the safeguards in the work environment? a. Using different partners and teams with separate reporting lines for the provision of non-assurance services to an assurance client b. Rotation of senior personnel c. Documented internal policies and procedures requiring compliance with the fundamental principles d. Continuing professional education requirements
D
5. Which of the following is not one of the characteristics of a profession? a. Mastery of practice intellectual skill acquired by training and education. b. Adherence by its members to a common code of contact. c. Acceptance of a duty to society as a whole. d. A responsibility to protect exclusively the interest of a client or employer.
D
7. If firm, or network firm, personnel providing such assistance make management decisions, the self-review threat created could not be reduced to an acceptable level by any safeguards. Examples of such managerial decisions include the following, except a. Determining or changing journal entries, or the classifications for accounts or transactions or other accounting records without obtaining the approval of the audit clients b. Authorizing or approving transactions. c. Preparing source documents or originating data (including decisions on evaluation assumptions), or making changes to such documents or data. d. Assisting an audit client in resolving account reconciliation problems.
D
When the safeguards available are insufficient to eliminate the threats to independence or to reduce them to an acceptable level, or when a firm chooses not to eliminate the activities or interest creating the threat, the only course of action available will be the a. Issuance of adverse opinion b. Issuance of qualified opinion or disclaimer of opinion c. Issuance of unmodified opinion with explanatory paragraph d. Refusal to perform, or withdrawal from, the assurance engagement
D
he principle of confidentiality applies to: a. Professional accountants in public practice b. Professional accountants in commerce and industry c. Professional accountants in government d. All professional accountants
D