AUDITING THEORY

Quizzer 3:
1. A professional is distinguished by a certain characteristics including:
a. Mastery of a particular intellectual skill, acquired by training and
education.
b. Adherence by its members to a common code of values and conduct
established by its administrating body, including maintaining an
outlook which is essentially objective.
c. Acceptance of a duty to society as a whole.
d. All of these.

2. The set of rules and regulations promulgated in 2004 for the

“supervision, control and regulation” of the practice of Accountancy in
the Philippines.
a. Philippine Financial Reporting Standards.
b. The Code of Ethics for Professional Accountants.
c. Philippine Standards on Auditing.
d. The IRR of the Philippines Accountancy Act of 2004.

3. The objectives of the Philippine Accountancy Act of 2004 are the

following except:
a. The standardization and regulation of accounting education.
b. Examination for registration of certified public accountants.
c. Supervision, control, and regulation of the practice of accountancy.
d. Integration of accountancy profession.

4. Section 4 of the Rules and Regulations Implementing RA 9298 (IRR)

provides that any position in any business or company in the private
sector which requires supervising the recording of financial
transactions, preparation of financial statements, coordinating with
the external auditors for the audit of such financial statements, and
other related functions should be occupied by a duly registered CPA. It
provides further that the business or company where such position exists
has a
a. Paid-up capital of at least P 5,000,0000 and/or an annual revenue of
at least of P 10,000,000.
b. Paid-up capital of at least P 10,000,000 and/or an annual revenue of
at least of P 5,000,000.
c. Paid-up capital and/or an annual revenue of at least P 10,000,000.
d. Paid-up capital and/or an annual revenue of at least P 5,000,000.

5. The Board of Accountancy shall be composed of a chairman and _______

members to be appointed by the___________.
a. 6, President of the Philippines.
b. 5, President of the Philippines.
c. 6, Professional Regulation Commission (PRC)

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 d. 5, Philippine Institute of CPAs (PICPA)

6. The following statements relate to the term of office of the chairman

and members of the Board of Accountancy. Which of them is incorrect?
a. The chairman and members of the Board of Accountancy shall hold
office for a term of three 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 expired term is not to be considered as a
complete term.
d. The Board of Accountancy member who has served two successive
complete terms as chairman or member shall be eligible for
reappointment until the lapse of three years.

7. The Board of Accountancy shall be under the supervision and

administrative control of the
a. Professional Regulation Commission.
b. Philippine Institute of CPAs.
c. Association of CPAs in Public Practice
d. Office of the President of the Philippines

8. According to Section 7 of the IRR, no person has served two successive

complete terms as chairman or member of the Board of Accountancy shall
be eligible for reappointment as chairman or member until the lapse of
a. 1 year c. 3 years
b. 5 years d. 4 years

9. According to Section 7 of the IRR, no person shall serve in the Board

of Accountancy for more than
a. 3 years c. 10 years
b. 5 years d. 12 years

10. Which of the following is a function of the Board of Accountancy?

I. To prescribe and adopt rules and regulations necessary for
carrying out the provisions of the Philippine Accountancy Act of
2004.
II. To supervise the regulation, licensure, and practice of
accountancy in the Philippines.
III. To issue, suspend, revoke, or reinstate the certificate of
registration for the practice of the accountancy profession.

a. I and II only c. I and III only

b. II and III only d. I, II, and III

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11. Who has the power to suspend or remove any member of the Board of
Accountancy?
a. The Chairman of the FRSC
b. The Chairman of the PRC
c. The Chairman of the AASC
d. The President of the Philippines.

12. Which of the following is NOT a ground for suspension or removal of

members of BOA?
a. Negligence in the performance of duties, or lack professional
competence.
b. Intolerance of violations of the Philippine Accountancy Act.
c. Final judgment of crimes involving moral turpitude.
d. Rigging of the CPA licensure examination results.

13. Which of the following is not a requisite in applying for the CPA
Licensure Examinations?
a. Natural-born citizen of the Philippines.
b. Good moral character.
c. Holder of the Degree of Bachelor of Science in Accountancy.
d. Has not been convicted of any criminal offense involving moral
turpitude.

14. Which of the following is one of the reasons for not issuing a
certificate of registration to a successful examine? The individual:
a. is of unsound mind.
b. Had been guilty of immoral and dishonorable conduct.
c. Had been convicted by a court of a criminal offense involving moral
turpitude.
d. All of the given choices.

15. The certificate of Registration issued to successful examinees

a. Is renewable every three years.
b. Is renewable every five years.
c. Shall remain in full force and effect until withdrawn, suspended
or revoked in accordance with RA 9298.
d. Shall bear the signature of the PRC Chairperson and the two PRC
Commissioners.

16. A CPA whose certificate of registration has been revoked:

a. Can no longer be reinstated.
b. Is automatically reinstated as a CPA by the PRC after two years if
he has acted in an exemplary manner.
c. May be reinstated by the Professional Regulation Commission after
two years if he has acted in an exemplary manner.
d. May be reinstated as a CPA by the Board of Accountancy after two
years if he has acted in an exemplary manner.

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17. The Professional Identification Card issued to successful examinees
a. Is renewable every three years.
b. Is renewable every five years.
c. Shall remain in full force and effect until withdrawn, suspended
or revoked in accordance with RA 9298.
d. Shall bear the signature of the PRC Chairperson and the two PRC
Commissioners.

18. The Philippine Accountancy Act of 2004 provides that all working
papers made during an audit shall be the property of the auditor.
These working papers shall include the following, except:
a. Working papers prepared by the CPA and his staff.
b. Analysis and schedule prepared and submitted to the auditor by his
client’s staff.
c. Excerpts or copies of documents furnished to the auditor.
d. Any report submitted by the auditor to his client.

19. Who are required to apply for accreditation with the Professional
Regulation Commission if the applicant is a partnership of
Professional Accountants?
a. Managing partner only.
b. All partners only.
c. Partners and staff members.
d. Partners, principals, and staff members.

20. According to Revised Rules on Advertising adopted by the BOA, the

following form of advertisement or publicity is prohibited:
a. Publicity of the appointment or other activity in a matter of local
or national importance or the award of any distinction to a
professional accountant.
b. Listing of professional accountants in directories.
c. Publishing services in billboard (e.g., tarpaulin, streamers, etc.)
advertisements.
d. Stating the professional accountant’s name and his/her professional
qualifications and name of the organization connected with the
professional accountant in the books or articles on professional
subjects that he/she authored.

21. According to Revised Rules on Advertising adopted by the BOA, which

of the following is not an acceptable practice related to advertising
or publicity of professional accountants?
a. A professional accountant may invite clients, staff or other
professional accountants to attend training courses or seminars
conducted for the assistance of staff. Other persons should not be
invited to attend such training courses or seminars except in
response to an unsolicited request.
b. Booklets and other documents bearing the name of a professional
accountant and giving technical information for the assistance of
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 staff or clients may be issued to such persons, other professional
accountants or other interested parties.
c. Genuine vacancies for staff may be communicated to the public
through any medium in which comparable staff vacancies normally
appear.
d. Publishing and comparing fees with other CPAs or CPA firms or
comparing those services with those provided by another firm or CPA
practitioner.

22. According to Revised Rules on Advertising adopted by the BOA, which

of the following is not an acceptable practice related to advertising
or publicity of professional accountants?
a. A professional accountant in public practice may publicize on
behalf of clients, primarily staff. However, the professional
accountant in public practice should ensure that the emphasis in
the publicity is directed towards the objectives to be achieved for
the client.
b. A professional accountant in public practice may issue to clients
or, in response to an unsolicited request, to a non-client: (a) A
factual and objectively worded of the services provided; and (b) a
directory setting out names of partners, office addresses and names
and address of associated films and correspondents.
c. Stationery of professional accountants in public practice should
be of an acceptable professional standard and comply with the
requirements of the law and of the member body concerned as to
names of partners, principals and others who participate in the
practice, use of professional descriptions and designatory letters,
cities or countries where the practice is represented, logotypes,
etc. The designation of any services provided by the practice as
being specialist nature should not be permitted. Similar
provisions, where applicable, should apply to nameplates.
d. Referring to, using or citing actual or purported testimonials by
third parties.

23. According to Revised Rules on Advertising adopted by the BOA, which

of the following is not an acceptable practice related to advertising
or publicity of professional accountants?
a. 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 alternation in the address of a practice. Such
announcements should be limited to a bare statement of facts and
consideration given to the appropriateness of the area of
distribution of the newspaper or magazine and number of insertions.
b. A professional accountant may develop and maintain 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 like firm’s name,
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 partners/principal’s name and brief description of their
educational attainment, brief listing of services, postal address,
telephone fax and e-mail addresses.
c. When a client proposes to publish a report by a professional
accountant in public practice dealing with the client’s existing
business affairs or in connection with the establishment of a new
business venture, the professional accountant in public practice
should take steps to ensure that the context in which the report
is published is not such as might result in the public being misled
as to the nature and meaning of the report. In these circumstances,
the professional accountant in public practice should advise the
client that permission should first to be obtained before
publication of the document.
d. Discrediting, disparaging, or attacking other firms or CPA
practitioners.

24. A professional accountant’s press and other media releases or

announcements or newspapers supplements, or other similar
publications or other commemorative media, or the holding of media
covered events undertaken only to commemorate media their
anniversaries in public practice by informing the public of their
achievements or accomplishments in contributing towards nation
building and in international understanding, goodwill, or
relationship or enhancing the image or standards of the accounting
profession do not violate the rules on advertising and only factual
matters without detailed listing of services. Such undertaking should
be done only every_________ of celebration.
a. Ten years c. Three years
b. Five years d. One year

25. In accordance with the ASEAN Mutual Recognition Arrangement (MRA) on

Accountancy Services, the objectives of such MRA is/are:
a. Facilitate mobility of accountancy services professionals across
ASEAN member States.
b. Enhance the current regime for the provision of accountancy
services in the ASEAN Member States.
c. Exchange information in order to promote adoption of best practices
on standards and qualifications.
d. All of the above.

26. ASEAN MRA provides that the arrangement shall cover the provision of
accountancy services covered under Central Product Classification 862
of the Provisional CPC of the United Nations, except:
a. The provision of general accounting and bookkeeping services.
b. Management advisory services.
c. Shared services and loan staff arrangements.
d. Signing off the independent auditor’s report.

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27. A professional accountant is eligible to apply through the Monitoring
Committee of his or her Country of Origin, to be registered as an
ASEAN Chartered Professional Accountant (ACPA) on the SEAN Chartered
Professional Accountant Register (ACPAR) provided that he/she
possesses the following qualifications:
I. Has completed accountancy degree or professional accountancy
program recognized by the National Accountancy Board (NAB)
and/or Professional Regulatory Authority (PRA) of the Country
of Origin or Host Country.
II. Possesses a current and valid professional certificate in the
Country of Origin issued by the NAB or PRA.
III. Has acquired relevant practical experience of not less than
three (3) years cumulatively within a five (5) year period
following the qualification referred to in I above.
IV. Has complied with Continuing Professional Development (CPD)
policy of the Country of Origin.
V. No records of any serious violation of technical, professional
or ethical standards, local and international, applicable to
the practice of accountancy.

a. I, II and III only.

b. I, II, III and IV only.
c. I, II, IV and V only
d. I, II, III, IV and V

28. 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.

29. Section 36 (Penal Provision) of RA 9298 states that any person who
shall violate any of the provisions of the Act or any of its
implementing rules and regulations shall, upon conviction, be punished
by
a. A fine of not less than P 50,000.
b. Imprisonment for a period not exceeding two (2) years.
c. A fine of not less than P 50,000 or by imprisonment for a period
not exceeding two (2) years.
d. A fine of not less than P 50,000 or by imprisonment for a period
not exceeding two (2) years, or both.

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