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A. Determine whether the financial statements fairly present the entity's operations.
B. Evaluate the feasibility of attaining the entity's operational objectives.
C. Make recommendations for improving performance.
D. Report on the entity's relative success in attaining profit maximization.
5. For the highest degree of independence the director of internal auditing should report
directly to:
A. The controller.
B. The audit committee of the board of directors.
C. The executive vice-president.
D. The chief accountant.
8. In assessing audit risk, the CPA needs to do all of the following except
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C. Understand the economic substance of significant transactions completed by the
client.
D. Understand the entity and the industry in which it operates.
9. The objectives of the Philippine Accountancy Act of 2004 are the following, except:
A. Independence as a professional.
B. Basic competence at the time of certification.
C. Membership in the accredited association.
D. Completion of continuing professional education program
A. The Professional Regulation Commission has the authority to remove any member of
the Board of Accountancy for negligence, incompetence, or any other just cause.
B. Insanity is not a ground for proceeding against a CPA.
C. A person shall be considered to be in the professional practice of accounting if,
as an officer in a private enterprise, he makes decisions requiring professional
accounting knowledge.
D. After three years, subject to certain conditions, the Board of Accountancy may
order the reinstatement of a CPA whose certificate of registration has been
revoked.
12. . No person shall serve the Professional Regulatory Board of Accountancy for more
than
A. 3 years
B. 6 years
C. 9 years
D. 12 years
13. Are the following CPAs required to comply with the requirements on continuing
professional education?
A B C D
• CPAs in Public Accountancy Yes Yes Yes Yes
• CPAs in Commerce and Industry Yes Yes No No
• CPAs in Education/Academe Yes Yes Yes No
• CPAs in Government Yes No Yes No
14. The Accountancy Law provided that a CPA certificate may be suspended or revoked on
grounds except
A. Immoral or dishonorable conduct.
B. Gross negligence or incompetence in the practice of profession.
C. Refusal to accept an audit engagement with a government corporation.
D. Conduct discreditable to the accounting profession.
15. Under the IRR of RA 9298, if a partner in a two-member partnership dies, the surviving
partner may continue to practice as an individual under the existing firm title which
includes the deceased partner’s name
A. For a period of time not to exceed five years.
B. For a period of time not to exceed two years.
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C. Indefinitely.
D. Until the partnership payout to the deceased partner’s estate is terminated.
A. Educational, training, and experience requirements for entry into the profession.
B. When the assurance client’s management appoints the firm, persons other than
management ratify or approve the appointment.
C. Continuing Professional Education (CPE) requirements.
D. Professional standards and monitoring and disciplinary processes.
19. Which of the following is NOT a factor to consider in determining the professional
fee of a professional accountant in public practice?
A. The skill and knowledge required for the type of professional services involved.
B. The result of the assurance work.
C. The level of training and experience of the persons necessarily engaged in
performing the professional services.
D. The time necessarily occupied by each person engaged in performing the
professional services.
A. General average of sixty-five percent (65%), with no grades lower than seventy-
five percent (75%) in any given subject.
B. General average of seventy-five percent (75%), with no grades lower than sixty-
five percent (65%) in any given subject.
C. General average of seventy-five percent (75%).
D. General average of sixty-five percent (65%).
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22. The following statements relate to the practice of public accountancy. Which
statement is incorrect?
23. A special/temporary permit may be issued by the Board of Accountancy (BOA) to the
following persons, except
A. A foreign CPA called for consultation or for a specific purpose which, in the
judgment of the BOA, is essential for the development of the country regardless
of whether there are Filipino CPAs who are qualified for such consultation or
specific purpose.
B. A foreign CPA engaged as a professor, lecturer or critic in fields essential to
accountancy education in the Philippines and his/her engagement is confined to
teaching only.
C. A foreign CPA who is an internationally recognized expert or with specialization
in any branch of accountancy and his/her service is essential for the advancement
of accountancy in the Philippines.
D. A foreign CPA called for consultation or for a specific purpose which, in the
judgment of the BOA, is essential for the development of the country and that
there is no Filipino CPA qualified for such consultation or specific purpose.
24. An accountant who reviews the financial statements of an entity should issue a report
stating that a review
A. Provides less assurance than an audit.
B. Provides negative assurance that internal control is functioning as designed.
C. Provides only limited assurance that the financial statements are fairly
presented.
D. Is substantially more in scope than a compilation.
25. Which of the following should not be included in an accountant’s report based upon
the compilation of an entity’s financial statements?
A. A statement that a compilation of the company’s financial statements was made in
accordance with the Philippine Standard on Related Services applicable to
compilation engagements.
B. A statement that management is responsible for the financial statements.
C. A statement that the accountant has not audited or reviewed the statements.
D. A statement that the accountant does not express an opinion but provides only
negative assurance on the statements.
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27. 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?
A. Monitoring
B. Leadership responsibilities for quality within the firm
C. Human resources
D. Engagement performance
28. 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. A member of the assurance team having a significant close business relationship
with an assurance client.
D. Acting as campaign manager for the president of a client who is running for a
public office.
29. 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?
A. Self-review, familiarity, or advocacy threats
B. Advocacy, familiarity or self-review threats
C. Self-interest, familiarity or intimidation threats
D. Self-interest, advocacy or self-review threats
30. The following statements relate to the provision of legal services to an audit
client. Which is incorrect?
A. Legal services to support an audit client in the execution of a transaction (e.g.,
contract support) may create a self-review threat.
B. 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.
C. 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.
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.
31. 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.
A. Advertising
B. Publicity
C. Solicitation
D. Marketing professional services
32. 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?
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A. Advocacy threat
B. Familiarity threat
C. Self-review threat
D. Intimidation threat
33. 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.
34. 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
A. Where possible, structuring the responsibilities of the assurance team so that
the professional does not deal with matters that are within the responsibility of
the immediate family member.
B. Withdrawing from the assurance engagement.
C. Removing the individual from the assurance team.
D. Discussing the issue with those charged with governance, such as the audit
committee.
35. 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
A. Self-interest and intimidation threats
B. Self-review and familiarity threats
C. Advocacy and self-review threats
D. Self-interest and self-review threats
36. 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 material 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
37. 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.
38. Which of the following services, if any, may a practitioner who is not independent
provide?
A. Compilations but not agreed-upon.
B. Reviews but not compilations.
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C. Reviews but not financial statement audits.
D. Agreed-upon procedures but not review.
A professional accountant who does not consider and apply the guidance included in a
relevant Practice Statement need not explain how the basic principles and essential
procedures in the Engagement Standard(s) addressed by the Practice Statement have been
complied with.
40. Certain fundamental beliefs called "postulates" underlie auditing theory. Which of
the following is not a postulate of auditing?
A. No long-term conflict exists between the auditor and the management of the
enterprise under audit.
B. Economic assertions can be verified.
C. An audit has a benefit only to the owners
D. The auditor acts exclusively as an auditor.
43. If the auditor learns that an entity is inappropriately using the auditor’s name in
association with financial information, he/she should:
A. Remain silent.
B. Require management to cease doing so.
C. Inform any known third party users of the inappropriate use of his/her name in
connection with the information.
D. Seek legal advice if necessary.
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A. An engagement conducted to provide a high level of assurance that the subject
matter conforms in all material respects with identified suitable criteria.
B. An engagement to perform agreed-upon procedures.
C. An engagement conducted to provide a moderate level of assurance that the subject
matter is plausible in the circumstances.
D. An engagement in accordance with the Philippine Standard on Assurance
Engagement(s).
46. Which of the following has the primary responsibility for the fairness of the
representations made in the financial statements?
A. Client’s management
B. Audit committee
C. Independent auditor
D. Board of Accountancy
A. Client’s management
B. Audit committee
C. Independent auditor
D. Board of Accountancy
A. Contains basic principles, essential procedures, and related guidance for the
performance of assurance engagements.
B. Defines and describes the elements and objectives of an assurance engagement,
and identifies engagements to which PSAs, PSREs, and PSAEs apply.
C. Provides a frame of reference for CPAs in public practice when performing audits,
reviews, and compilations of historical financial information.
D. Establishes standards and provides procedural requirements for the performance
of assurance engagements.
50. 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. Appointment to fill up an unexpired term is not to be considered as a complete
term.
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D. 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.
A. Contingent fees
B. Flat sum fees
C. Retainer fees
D. Per diem fees
A. Self-interest threat
B. Intimidation threat
C. Self-review threat
D. Familiarity threat
55. Occurs when a firm, or a member of the assurance team, promotes, or may be perceived
to promote, an assurance client’s position or opinion to the point that objectivity may,
or may be perceived to be, compromised. Such may be the case if a firm or a member of
the assurance team were to subordinate their judgment to that of the client.
A. Self-interest threat
B. Advocacy threat
C. Self-review threat
D. Familiarity threat
57. Below are the names of three CPA firms and pertinent facts relative to each firm.
Unless otherwise indicated, the individuals named are CPAs and partners, and there are
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no other partners. Which firm name and related facts indicates a violation of the IRR
of RA 9298?
A. Joyce, Ara and Angela, CPAs (Joyce died about 10 years ago, Ara and Angela are
continuing the firm)
B. Lupin and Fujico, CPAs ( the name of Goymon a third active partner is omitted in
the firm name)
C. Hugo and Pugo, CPAs (Bibi died 3 years ago, Bobot was admitted into the partnership
2 months after Bibi’s death.)
D. Bubu and Bibi, CPAs (Bubu died 25 months ago, Bibi is continuing the firm as a
sole proprietor)
59. Any person who shall violate any of the provisions of the Philippines Accountancy
Act or any of its IRR promulgated by the Board of Accountancy subject to the approval
of the PRC, shall upon conviction, be punished by
A. A fine of not less than P50,000 or by imprisonment for a period exceeding two
years or both
B. A fine of not less than P50,000 or by imprisonment for a period not exceeding two
years
C. A fine of not less than P50,000 or by imprisonment for a period not exceeding two
years or both
D. A fine of not less than P50,000 and by imprisonment for a period not exceeding
two years
60. As defined in Annex "C" of the IRR, this refers to the inculcation, assimilation and
acquisition of knowledge, skills, proficiency and ethical and moral values, after the
initial registration of a professional that raise and enhance the professional's
technical skills and competence.
A. Professional Development
B. Continuing Professional Education
C. Continuing Professional Development
D. Professional Growth and Development
62. A candidate who obtains the rating of seventy-five percent (75%) and above in at
least a majority of the subjects shall receive a conditional credit for the subjects
passed. He/she shall take an examination in the remaining subjects within
A. One (1) year from the preceding examination.
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B. Two (2) years from the preceding examination.
C. Three (3) years from the preceding examination.
D. Five (5) years from the preceding examination.
63. Which of the following is not a requisite in applying for the CPA licensure
examinations?
A. Good moral character
B. Natural-born citizen of the Philippines
C. Holder of the degree of Bachelor of Science in Accountancy
D. Has not been convicted of any criminal offense involving moral turpitude
67. The two most important qualities for an operational auditor are:
A. personality and appearance.
B. independence and technical training.
C. competence and independence.
D. academic background and sufficient experience.
68. . PSA 220 requires the engagement partner to consider whether members of the
engagement team have complied with the ethical requirements relating to audit
engagements. The Code of Ethics establishes the fundamental principles of professional
ethics, which include
I. Integrity
II.Objectivity
III.Professional competence and due care
IV.Confidentiality
V. Professional behavior
A. I, II, IV, and V only C. I, III, IV, and V only
B. II,III,IV, and V only D. I,II,III,IV, and V only
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70. What is the branch of accounting that is most related with the accounting sector
"Association of CPAs in Commerce and Industry (ACPACI)?”
A. Public accounting
B. Government accounting
C. Private accounting
D. Accounting education
71. This standard setting body shall have a chairman who had been or presently a senior
accounting practitioner in any scope of accounting practice.
A. FRSC
B. AASC
C. PICPA
D. ACPAPP
72. This standard setting body shall have a chairman who had been or presently a senior
accounting practitioner in public accountancy.
A. FRSC
B. AASC
C. PICPA
D. ACPAPP
73. The SEC is composed of a chairperson and four commissioners appointed by the President
of the Philippines for a term of
A. 3 years
B. 6 years
C. 7 years
D. 8 years
76. Which of the following is not one of the principal duties of the COA?
A. Keep the general accounts of the government and preserve the vouchers and
supporting papers pertaining thereto.
B. Promulgate accounting and auditing rules and regulations including those for the
prevention and disallowance of irregular, unnecessary, excessive, extravagant or
unconscionable expenditures or uses of government funds and properties
C. Submit to the President of the Philippines and Congress, within the time fixed by
law, an annual report covering the financial condition and operation of the
government
D. Maintain price stability conducive to a balanced and sustainable economic growth
77. Which of the following shall be issued to examinees who pass the CPA licensure
examination?
A. Certificate of accreditation and professional identification card
B. Certificate of registration or professional identification card
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C. Certificate of full compliance and professional identification card
D. Professional identification card and Certificate of registration
78. Pursuant to the IRR of the Philippine Accountancy Act of 2004, the Accounting
Standards Council (ASC) was replaced by the
A. Auditing and Assurance Standards Council (AASC)
B. Financial Reporting Standards Council (FRSC)
C. Association of CPAs in Education (ACPAE)
D. Education Technical Council (ETC)
80. In financial statement audits, the audit process should be conducted in accordance
with
A. Philippine Standards on Accounting
B. Philippine Standards on Auditing
C. Philippine Accounting Standards
D. Philippine Financial Reporting Standards
81. The following statements relate to the BOA. Which statements is correct?
A. The Chairman and members are appointed by the President of the Philippines upon
recommendation of PICPA
B. The Professional Regulation Commission may remove from the Board any member whose
certificate to practice has been removed or suspended.
C. Majority of the board members shall as much as possible be in public practice.
D. The Board consists of a Chairman and six members
82. Unless otherwise exempted, registered CPAs in the practice of accountancy who have
not completed the CPE requirements shall
A. Be dropped from the roster of CPAs
B. Not be allowed to renew their professional licenses
C. Present evidence to the satisfaction of the Board that they have the necessary
knowledge, skills and experience to discharge their responsibility
D. Submit a letter addressed to the Board indicating the reasons for not complying
with the CPE requirements
83. Which of the following is not one of the functions of the Board of Accountancy
specifically provided under the RA 9298?
A. To monitor the conditions affecting the practice of accountancy and adopt such
measures deemed proper for the enhancement and maintenance of high professional,
ethical, accounting and auditing standards.
B. To make investigations as it deems necessary to determine whether any person has
violated any provisions of this law or any standards promulgated by the Board as
part of the rules governing the practice of accountancy
C. To delegate its power and function to determine and prepare test questions for
the CPA licensure examination.
D. To conduct an oversight into the quality of audits of financial statements through
a review of the quality control measures
84. As used in the Philippine Framework for Assurance Engagements, the term
“practitioner” refers to a CPA in public practice.
In a limited assurance engagement, the practitioner expresses his/her conclusion in
positive form.
A. True; False
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B. Both statements are true
C. False; True
D. Both statements are false
A. True; False
B. Both statements are true
C. False; True
D. Both statements are false
A. True; False
B. Both statements are true
C. False; True
D. Both statements are false
87. PSA 120 (Framework of Philippine Standards on Auditing) applies to audits and related
services such as taxation and consultancy.
A. True; False
B. Both statements are true
C. False; True
D. Both statements are false
88. RA no. 9298 is also known as the Philippine Accountancy Law of 2004.
One credit hour of CPE program, activity or source shall be equivalent to two credit
unit.
A. True; False
B. Both statements are true
C. False; True
D. Both statements are false
89. No person shall serve in the Board for less than twelve years.
A. True; False
B. Both statements are true
C. False; True
D. Both statements are false
90. A certificate of accreditation issued only after showing that the registrant has
acquired the minimum 3 years meaningful experience in any of the areas of accountancy
(whether in the public accountancy, commerce and industry, education/academe and
government)
The SEC shall not register any corporation organized for the practice of public
accountancy. In other words, corporation form of CPA firm is not allowed.
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A. True; False
B. Both statements are true
C. False; True
D. Both statements are false
91. The PRC is the official government agency empowered to enforce RA 9298.
A. True; False
B. Both statements are true
C. False; True
D. Both statements are false
92. The Chairman and the members of the BOA members shall hold office for a term of 12
years.
Any vacancy during the term of a member shall be filled up for the unexpired portion of
the term only. Appointment to fill up an unexpired term is not to be construed as a
complete term.
A. True; False
B. Both statements are true
C. False; True
D. Both statements are false
I. To prescribe and adopt the rules and regulations necessary for carrying out the
provisions of this Act (RA 9298)
A. I and II only
B. I and III only
C. II and III only
D. I,II and III
III. Conduct quality review on applicants for registration to practice accountancy and
render a report which shall be attached to the application for registration.
A. I and II only
B. I and III only
C. II and III only
D. I,II and III
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accountancy comply with the policies, standards and requirements of the course prescribed
by CHED or other authorized government offices in the areas of curriculum, faculty,
library and facilities.
II. Promulgate accounting and auditing rules and regulations including those for the
prevention of irregular, unnecessary, excessive or extravagant expenditures or uses of
funds and property.
III. To prepare, adopt, issue or amend the syllabi of the subjects for examinations in
consultation with the academe, determine and prepare questions for the licensure
examination which shall strictly be within the scope of the syllabi of the subjects for
examinations as well as administer, correct and release the results of the licensure
examinations
A. I and II only
B. I and III only
C. II and III only
D. I,II and III
96. All applicants for registration for the practice of accountancy shall be required
to undergo a licensure examination to be given by the BOA in such places and dates as
the PRC may designate subject to compliance with the requirements prescribed by the PRC
in accordance with Republic Act No. 8981.
The Board, subject to the approval of the Commission, may revise or exclude any of the
subjects and their syllabi, and add new ones as the need arises.
A. True; False
B. Both statements are true
C. False; True
D. Both statements are false
A. True; False
B. Both statements are true
C. False; True
D. Both statements are false
98. Professional Identification Card is a card with validity of three (3) years, bearing
the registration number, date of issuance with an expiry date, due for periodic renewal,
duly signed by the Chairperson of the Commission issued by the BOA to a registered CPA
upon payment of the annual registration fees for three (3) years.
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C. False; True
D. Both statements are false
A. True; False
B. Both statements are true
C. False; True
D. Both statements are false
A person who is not a citizen of the Philippines shall not be allowed to practice
accountancy in the Philippines unless he/she can prove, in the manner provided by the
rules of court that, by specific provision of law, the country of which he/she is a
citizen, subject or national admits citizens of the Philippines to the practice of the
same profession without restriction.
A. True; False
B. Both statements are true
C. False; True
D. Both statements are false
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