QUIZ NO.

1: RA 9298 & INTRODUCTION

1. The Code of Professional Ethics for CPAs promulgated by the Board applies to

a. All CPAs in public practice

b. All CPAs in government

c. All CPAs in public practice and employed in private business

d. All CPAs in public practice employed in private business and industry, in the
government and in education.

2. The underlying reason for a code of ethics is

a. That it provides a safeguards against unscrupulous people

b. That it is required by legislation

c. To provide the licensing agencies with a basis for measuring the performance of
the practitioners

d. The need for public confidence in the quality service of the profession

3. The CPA profession deemed it necessary to establish a code of ethics and a

mechanism for its enforcement  because

a. The establishment of flexible ethical standards provides self-protection for CPAs

b. An ethical conduct that stresses the CPAs responsibility to clients and colleagues
is a prerequisite to success

c. A requirement of law provides that CPAs establishes a code of ethics

d. Acceptance of responsibility to the public is a distinguishing mark of a profession.

4. Which of the following is not one of the characteristic of a profession?

a. A responsibility to protect exclusively the interest of a client or employer.

b. Mastery of a particular intellectual skill acquired by training and education

c. Adherence by its members to a common code of conduct

d. Acceptance of a duty to society as a whole

5. 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 this principle

a. To obtain professional knowledge and experience to enable them to fulfil their

responsibilities

b. To act diligently in accordance with applicable technical and professional

standards

c. To become aware and understand relevant technical, professional and business

developments

d. To be fair, intellectually honest and free of conflict of interest

6. The essence of due care principle is that the auditor should not be guilty of

a. Negligence     b. Fraud                 c. Bias                    d. Errors in judgment

7. Competence as a CPAs includes all of the following except,

a. Consulting others if additional technical information is needed

b. Having the technical qualifications to perform an engagement

c. Warranting the infallibility of the work performed

d. Possessing the ability to supervise and evaluate the quality of staff work

8. The phase of professional competence that requires a professional accountant to

adopt a program designed to endure quality control in the performance of
professional services consistent with technical and professional standards is

a. Review of professional competence

b. Attainment of professional competence

c. Application of professional competence

d. Maintenance of professional competence

9. Professional competence should include:

        Statement 1 – Attainment of professional competence

        Statement 2 – Maintenance of professional competence

 a. Both statements are true      

b. Both statements are false     

c. Only Statement 1 is true

d. Only Statement 2 is true

An auditor who accepts an audit engagement and does not possess the industry
experience/ expertise of the business entity should

First inform management that an unqualified opinion cannot be issued

Engage financial experts familiar with the nature of the business entity

Refer a substantial portion of the audit to another CPA who will act as a principal auditor

Obtain knowledge of matters that relate to the nature of the entity’s business

The principle of confidentiality imposes an obligation on professional accountant to

refrain from

Responding to an inquiry or investigation conducted by the Board

Disclosing confidential information to another party even if the client authorises the
disclosure

Disclosing information to defend themselves in case of litigation

Using confidential information acquired as a result of professional and business

relationship to their personal advantage or advantage of third parties

The principle of confidentiality applies to

All professional accountant

Professional accountant in public practice

Professional accountant in government

Professional accountant in commerce and industry

Which of the following is considered a violation of rules on confidentiality

The CPA divulges information disclosed to him by a prospective client

The CPA discloses information to another CPA in compliance with a quality review
conducted by the Quality Review Committee

The CPA discloses information to protect his own interest in the course of legal
proceedings

The CPA discloses information to a successor auditor after obtaining the client
permission

The Code of Ethics for professional accountant states that a CPA shall not disclose any
confidential information obtained in the course of a professional engagement except
with the consent of his client. In which of the following situations given below would a
CPA be in violation of the principle of confidentiality

Disclosing confidential information in an investigation conducted by the PRC through

the Board

Disclosing confidential information in order to properly discharge the CPAs

responsibilities in accordance with his professional standards

Disclosing confidential information to another accountant interested in purchasing the

CPAs practice

Disclosing confidential information in compliance with a subpoena issued by a court

 
A CPA shall not disclose confidential information obtained during an audit engagement
in which one of the following situations

To a successor auditor without the client permission

When the security of the state requires

In defense of himself when sued by the client

With the consent of the client

Andy, a non-CPA has a law practice. Andres, a CPA has agreed to pay Andy 20% of
the fee for services rendered by Andres to Andy’s client. Who, if anyone, is in violation
of the code of ethics?

Andres    2. Andy               3.. Both Andres and Andy       4.. Neither Andres and Andy

A professional accountant name can be associated with information that

Contains information without any real knowledge of whether they are true or false
Contains a misleading statement

Uses estimates

Intentionally omits or obscures information

In which of the following circumstances would a CPA be bound by ethics to refrain from
disclosing any confidential information obtained during the course of a professional
engagement

Confidential client information is made available with the client’s permission

The CPA is issued a summon enforceable by a court order which orders the CPA to
present confidential information

An inquiry by the PRC and the CPA needs the disclosure to defend himself

A major stockholder of a client company seeks accounting information from the CPA
after the management declined to disclose the requested information

When a professional accountant performs services in a country other than home

country and differences on specific matters exists between ethical requirements of the
two countries, the professional accountant should apply
The less strict ethical requirements

The ethical requirements of his or her home country

The stricter of the two ethical requirements

The ethical requirements of the country in which services are being performed

Identify the incorrect statement. “A professional accountant rendering tax services is

entitled to put forward the best position in favor of a client or an employer, provided….

The professional accountant assumes responsibility for the content of the tax return

It does not impair the accountant integrity and objectivity

It is consistent with the law

It is rendered with professional competence

A CPA, while performing an audit, strives to achieve independence in appearance in

order to
Comply with the generally accepted standards of fieldwork

Reduce risk and liability

Become independent in mind

Maintain public confidence in the profession

Independence in auditing means

Not having a loan to or from an assurance client

Not having any financial or economic relationship with the client

Taking an unbiased viewpoint

Being an advocate of the assurance client

One of the major differences between auditors and other professionals is that most
professionals
Do not need confidence of the public

Do not have to pass rigorous examination to be administered in the profession

Need not be concerned about independence

Are not expected to act in the best interest of the public

The concept of materiality would be least important to an auditor in determining

The effect of an auditor’s direct financial interest in a client

Transactions that should be reviewed

The extent of audit work planned for particular account

The need for disclosing a particular transaction or event

Which of the following most accurately states how objectivity has been defined by the
Code of Ethics
Avoiding facts and circumstances that could reduce the public confidence in the
professional accountant report

Being honest and straightforward in all professional and business relationship

A combination of impartiality, intellectual honesty and a freedom from conflict of interest

A state of mind that permits the provision of an opinion without being affected by
influences that compromise professional judgment

Independence is required whenever a professional accountant performs

Professional services      3. Non-assurance services

Assurance services         4. Tax consultancy services

Ultimately, the decision as to whether the CPA is independence or not, will be made by
the

Audit Committee     2.  Auditor              c. Public                 d. Client

 

It refers to the avoidance of facts and circumstances that are so significant that a
reasonable and informed third party, having knowledge of all relevant information,
including safeguards applied would reasonably conclude a firm’s or a member of the
assurance team’s integrity, objectivity or professional scepticism had been
compromised

Inherent independence      3. Independence in appearance

Independence in fact          4. Independence of mind

The primary factor that distinguishes a direct from an indirect financial interest is the

Relationship between investor and investee

Materiality of the amount involved

Risk associated with such investment

Control over investment decision

The network firms are required to be independent of the client

For non-assurance engagement

For assurance engagement provided to an audit client

For assurance engagements provided to client that are not audit client when the
assurance report is expressly restricted for use of identified users

For assurance engagements provided to clients that are not audit clients, when the
auditor is not expressly restricted for use by identified users.

Which of the following statements is not correct about independence requirements

For assurance engagements provided to non-audit clients, where the distribution of the
assurance reports is limited only to specified users, the firm should be independent of
the client

For assurance engagements provided to audit client, the members of the assurance
team, the firm and network firms are required to be independent of the client

For assurance engagements provided to non-audit clients, where the distribution of the
assurance report is limited only to specified users, the members of the assurance team
are required to be independent of the client

For assurance engagements provided to non-audit clients, the members of the

assurance team and the firm are required to be independent of the client.
 

The member of the assurance team and the firm should be independent of the
assurance client during the period of the assurance engagement. For this purpose, the
period of the engagement

Starts when the engagement letter is prepared and ends when the assurance report is
issued

Starts when the assurance team begins to perform assurance services and ends when
the fieldwork is completed

Starts when the engagement letter is prepared and ends when the fieldwork is
completed

Starts when the assurance team begins to perform assurance services and ends when
the assurance report is issued

Which of the following professional services does not require independence

Assertion based engagements Tax consultancy services

Direct reporting engagements Examination of financial forecast

 

This occur when because of a close relationship, a professional accountant becomes

too sympathetic to the interest of others

Self-interest threat Self-review threat            c. Advocacy threat              d. Familiarity

threat

This occur as a result of the financial or other interests of a professional accountant or

of an immediate or close family member

Self-interest treat Self-review threat            c. Advocacy threat              d. Familiarity

threat

This treat occurs when a member of the assurance team may be deterred from acting
objectively and exercising professional scepticism by threats, actual or perceived, from
the directors, officers or employees of an assurance client

Intimidation threat Familiarity threat            c. Advocacy threat              d. Self-interest

threat

 
According to the Philippine Code of Ethics, compliance with fundamentals principles is
potentially affected by self-interest, self-review, advocacy, familiarity and intimidation
threats. Which of the following best described advocacy threat?

This occurs when a firm or a member of the assurance team, promotes or may be
perceived to promote, an assurance clients position or opinion to the point that
objectivity may, or maybe perceived to be, compromised

This occurs when a firm or member of the assurance team could benefit from financial
interest in an assurance client

This occur when a member for an assurance team was previously a director or officer of
the assurance client

This occur when any product or judgment of a previous engagement needs to be re-
evaluated in reaching conclusions on the assurance engagement

Which of the following circumstances would least likely create self-interest threat

Having a close personal relationship between a member of the assurance team and the
assurance client, its directors, officers or employees

Contingent fees relating to assurance engagements

A loan or guarantee to or from an assurance client or any of its directors or officers

A direct financial interest or material indirect financial interest in an assurance client

Which of the following would most likely create a self-review threat

A former partner joins the assurance client

Financial interest in a client

Litigation involving professional accountant and a client

A former officer of a client is now a member of the assurance team

Which of the following would least likely create self-interest threat

Pressure to reduce inappropriately the extent of work performed in order to reduce fees

Undue dependence on total fees from an assurance client

Having a close business relationship with an assurance client

Concern about the possibility of losing the engagement