Chapter 1

Accountancy as a profession

 Systematic theory
 Community sanction
 Regulations Code
 A culture

Scope of Practice

 Practice of public accountancy

 Practice in Commerce and Industry
 Practice in Education/Academe
 Practice in the Government

Qualification of Applicants for CPALE

 A Filipino citizen
 Is a good moral character
 Holder of BSA
 Not been convicted of any criminal offense

Scope of Examination

 Financial Accounting and Reporting (FAR)

 Advance Financial Accounting and Reporting (AFAR)
 Management Advisory Services (MAS)
 Auditing
 Taxation
 Regulatory Framework for Business Transaction (RFBT)

Chapter 2

Types of Services of Accountant in Public Practice

 Assurance Services
 Non-assurance Services

Assurance Services

 Independent Financial Audit

 Reviews
 CPA Web trust, Business Performance Measurement Services

Non-assurance Services
  Agreed-upon procedures
 Compilation
 Tax
 Management advisory services
 Accounting and data processing
 Other non-assurance services

Assertion-based Engagements vs. Direct Reporting Engagement

Types of Assurance Engagements

 Reasonable assurance engagement

 Limited assurance engagement

Elements of an Assurance Engagement

 Three party relationship

o A practitioner
o A responsible party
o Intended users
 An appropriate subject matter
 Suitable criteria
 Sufficient appropriate evidence
 Written assurance report

Chapter 3

Overview of an independent financial audit engagement

 Pre-engagement activities
 Planning activities
 Internal Controls risk assessment activities
 Account balance audit activities
 Reporting activities

Ethical Requirements

 Independence
 Integrity
 Objectivity
 Professional competence and due care
 Confidentiality
 Professional behavior
 Technical standards
Limitations (reasonable assurance)

 The use of testing

 Inherent limitation on accounting and internal control system
 Most audit evidence is persuasive rather than conclusive

Internal Auditing approach and techniques

 Operational audit
 Management audit
 Financial audit

Scope of Government audit

 Financial and compliance audit

 Economy and efficiency audit
 Program results

Types of auditors

 Public accounting firms

 Internal auditors
 Government auditors

Chapter 4

Penalties of noncompliance

 Payment of damages to those claiming injury

 Public censure
 Injunction
 Suspension or prohibition from practice before SEC
 Temporary or permanent loss of license to practice

Misstatements

 An improper or inadequate disclosure

 An improper valuation

Legal Concepts Related to Auditor’s Liability

 Due professional care

 Sources of responsibility
 Degree of wrongdoing
 Lack of privilege communication
 Liability for acts of others
Chapter 5

Threats

 Self-interest threat
 Self-review threat
 Familiarity threat
 Advocacy threat
 Intimidation threat

Safeguards

 Safeguards created by the profession, legislation or regulation

 Safeguards in work environment

Chapter 6

Organization of CPA firms

 Partnerships and Sole proprietorship

Auditing positions

 Audit partner
o To sign audit report
o To approve billing to client
o To obtain/establish contracts with clients
 Audit manager/ Supervisor
o To discuss reports and results of audit with clients
o To take direct charge of training programs
o To discuss with the client problems that may arise in the course of audit
 In-charge(Senior) Auditor
o To assign particular phases of the audit work to staff and direct supervision
o To prepare the audit program for an engagement subject to review
o To perform certain audit procedures requiring skills and experience
 Staff auditor
o To prepare schedules and reports on findings
o To work on tax returns
o Generally, to serves as an assistant

Fees charged considerations

 Skills and knowledge required

 Level of training and experience
 Time necessarily occupied
  Degree of responsibility

Methods of Billing Clients

 Actual time charges basis or Per Diem basis

 Flat or Fixed fee basis
 Maximum fee basis
 Retainer basis

Chapter 7

Elements of a System of Quality Control

 Leadership responsibility
 Ethical requirements
 Client Relationship
 Human Resource
 Engagement Performance
 Monitoring

Ethical Requirements (v.2)

 Integrity
 Objectivity
 Professional Competence and Due Care
 Confidentiality
 Professional Behavior

Factors for determining form and content of documentation

 The size of the firm

 Degree of authority
 Nature and complexity of the firm’s practice

Chapter 9