ACCTG 4200 FIRST TERM EXAM 03/04/2022

Instruction: On the google sheet attached, click the letter that corresponds to your answer.

1. The principles for conducting financial statement audits include which of the
following?
a. Compliance with the Code of Ethics for CPAs.
b. Compliance with Philippines Standards on Auditing.
c. Planning for performing the audit professional skepticism.
d. All the choices apply.

2. Which of the following best describes audit risk?

a. The susceptibility of an account balance or class of transactions to misstatement
that could be material, individually or when aggregated with misstatements in
other balances of classes, before consideration of any related controls.
b. The risk that misstatement that could occur in an account balance or class of
transactions and could be material individually or in the aggregate, will not be
prevented or detected and corrected on a timely basis by the company’s internal
control.
c. The risk that an auditor’s substantive procedure will not detect a misstatement
that exists in an account balance or class of transactions that could be material,
individually or when aggregated with misstatements in other balances or classes.
d. The risk that the auditors gives an inappropriate audit opinion when the financial
statements are materially misstated

3. Which of the following best describes the reason why independent auditors report on
financial statements?
a. A management fraud may exist and it is more likely to be detected by independent
auditors.
b. A poorly designed internal control structure may be in existence.
c. A misstatement of account balances may exist and is generally corrected as the
result if the independent auditor’s work.
d. Different interests may exist between the company preparing the statements and
the persons using the statements.

4. This term refers to the application of relevant training, knowledge and experience,
within the context provided by auditing, accounting and ethical standards, in making
informed decisions about the courses of action that are appropriate in the
circumstance of the audit engagement.
a. Professionalism
b. Conservatism
c. Professional judgment
d. Materiality

5. Which is incorrect?
a. Consistent evidence obtained from various sources of different nature is more
reliable.
b. It is generally more difficult to obtain assurance about subject matter information
at a point in time than about subject matter information covering a period of time.
c. When it is cost prohibitive or difficult to obtain an evidence, the auditor may shift
to obtain from other alternatives.
d. The practitioner considers the relationship between cost of obtaining the evidence
and the usefulness of the information.

PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 1

 ACCTG 4200 FIRST TERM EXAM 03/04/2022

6. What is the proper organizational role of internal auditing?
a. To serve as an independent, objective assurance and consulting activity that adds
value to operations.
b. To assist the external auditor on order to reduce external audit fees.
c. To perform studies to assist in the attainment of more efficient operations.
d. To serve as the investigative arm of the audit committee of the board of directors.

7. The scope and objectives of internal auditing vary widely and depend on the size and
structure of the entity and the requirements of its management. Ordinarily, internal
auditing activities include one or more of the following:
A. B. C. D.
Reviews of the accounting and internal control systems Yes Yes Yes Yes
Examination of financial and operating information Yes Yes Yes No
Review of efficiency and effectiveness of operations Yes Yes No No
Review of compliance with external requirements Yes No No No

8. Operational audit is primarily oriented toward

a. Future improvements to accomplish the goals of management.
b. The accuracy of data reflected in management’s financial records.
c. The verification that a company’s financial statements are fairly presented.
d. Past protection provided by existing internal control.

9. Which of the following statements is not a distinction between independent auditors

and internal auditors?
a. Independent auditors represent third party users external to the auditee entity,
whereas internal auditors report directly to management.
b. Although independent auditors strive for both validity and relevance of evidence,
internal auditors are concerned almost exclusively with validity.
c. Internal auditors are employees of the auditee, whereas independent auditors are
independent contractors.
d. The internal auditor’s span of coverage goes beyond financial auditing to
encompass operational and performance auditing.

10. Jack has been retained as auditor of EVC Company. The function of Jack’s opinion on
financial statements of EVC Company is to
a. Improve financial decisions of company management
b. Lend Credibility to management’s representation
c. Detect fraud and abuse in management operations
d. Serve requirements of BIR, SEC, or Central Bank

11. Which of the following statements does not describe a condition that creates a demand
for auditing?
a. Conflict between an information preparer and a user can result in biased
information.
b. Information can have substantial economic consequence for a decision maker.
c. Expertise is often required for information preparation and verification.
d. Users can directly assess the quality of information.
12. Which of the following statements does not properly describe an element of theoretical
framework of auditing?
a. The data to be audited can be verified.
b. Short-term conflicts may exist between mangers who prepare the data and auditors
who examine the data.
c. Auditors act on behalf of the management.
d. An audit benefits the public

PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 2

 ACCTG 4200 FIRST TERM EXAM 03/04/2022

13. Which of the following is true?
a. The criteria for any audit (an operational audit or a financial audit) are GAAP.
b. Both external and internal auditors can provide management advice to the
company.
c. A financial audit is designed to determine if the company is acquiring resources at
the lowest cost.
d. External auditors may perform operational audits and internal auditors may
perform financial audits.

14. An "integrated audit", as required by Sarbanes-Oxley Act for U.S. public companies,
includes an audit of
a. The company's internal control
b. The company's financial statements
c. The company's compliance with its rules and policies
d. Both A and B

15. Usually, an operational audit is performed

a. By independent external auditors.
b. By a team consisting of an equal number of external and internal auditors.
c. Only when an operating divisions is experiencing declines in productivity or
profitability.
d. By the internal auditors at the request of top management or board of directors.

16. Results of compliance audits are typically reported to someone within the
organizational unit being audited rather than to a broad spectrum of outside users.
Which of the following audits can be regarded as generally being a compliance audit?
a. COA auditor's evaluation of the computer operations of governmental units.
b. An internal auditor’s review of a company's payroll authorization procedures.
c. BSP examiner's examination of banks.
d. A CPA firm's audit of the local school district.

17. It refers to the level of auditor’s satisfaction as to the reliability of an assertion being
made by one party for use by another party.
a. Confidence level
b. Assurance level
c. Reasonableness level
d. Tolerable level

18. Any services in which the CPA firm issues a written communication that express a
conclusion with respect to the reliability of a written assertion that is the responsibility
of another party is a (n)
a. Accounting and bookkeeping service
b. Attestation service
c. Management advisory service
d. Tax service

19. Assurance engagement

a. Is an engagement in which a practitioner is engaged to issue, or does issue, a
written communication that expresses a conclusion about the reliability of a
written assertion that is the responsibility of another party.
b. Is a systematic process of objectively obtaining and evaluating evidence regarding
assertions about economic actions and events to ascertain the degree of
correspondence between those assertions and established criteria and
communicating the results to interested users.

PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 3

 ACCTG 4200 FIRST TERM EXAM 03/04/2022

c. Is an engagement in which the auditor provides a moderate level of assurance that
the information subject to the engagement is free of material misstatement.
d. Is an engagement intended to enhance the credibility of information about a
subject matter by evaluating whether the subject matter conforms in all material
respects with suitable criteria, thereby improving the likelihood that the
information will meet the needs of an intended user.

20. A government auditor evaluates a disbursement to determine if it is necessary,

excessive or extravagant in accordance with existing rules and regulations. What kind
of audit is he conducting?

Compliance audit Economy audit

a. Yes No
b. No Yes
c. Yes Yes
d. No No

21. Which of the following is incorrect regarding the “three-party relationship” element of
assurance engagements?
a. Professional accountants as those persons who are members of an IFAC member
body, which should be in public practice.
b. The responsible party and the intended user will often be from separate
organizations but need not be.
c. The responsible party is the person or persons, either as individuals or
representatives of an entity, responsible for the subject matter.
d. The intended user is the person or class of persons for whom the professional
accountant prepares the report for a specific use or purpose.

22. S1 To be qualified as having passed the licensure examination for accountants, a

candidate must obtain a general average of seventy-five percent, with no grades lower
than sixty-five percent in majority of the subjects.

S2 A candidate with conditional credits must take a removal examination within two
years from the date of the preceding examination.

a. True, True b. True, False c. False, True d. False, False

23. Which of the following is not a ground for the suspension or revocation of certificate
of registration and professional identification card?
a. Possession of an unsound mind
b. Practice in more than one field of accountancy
c. Conviction of a criminal offense involving moral turpitude
d. Unprofessional or unethical conduct, malpractice, or violation of RA 9298.

24. Which of the following statements is correct?

a. Single practitioners and partnerships for the practice of public accountancy shall
be registered certified public accountants in the Philippines.
b. A certificate of accreditation shall be issued to certified public accountants in public
practice only upon showing, that such registrant has acquired a maximum of three
(3) years meaningful experience in any of the areas of public practice including
taxation.
c. Meaningful experience, as mentioned by RA 9298 are explained in detail under
PSA 220.
d. The SEC shall register corporation organized for the practice of public accountancy.

PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 4

 ACCTG 4200 FIRST TERM EXAM 03/04/2022

25. Subjects or citizens of foreign countries:
a. May be allowed to practice accountancy in the Philippines regardless of the
provisions of existing laws and international treaty obligations, including mutual
recognition agreements entered into by the Philippine government with other
countries.
b. Are not allowed to practice accountancy in the Philippines, unless they take, and
pass the certified public accountant licensure examination given by the Board of
Accountancy.
c. May be allowed to practice accountancy in the Philippines subject to the provisions
of existing laws and international treaty obligations, including mutual recognition
agreements entered into by the Philippine government with other countries.
d. Are never allowed to practice accountancy in the Philippines because they will
jeopardize the interests of Filipino certified public accountants.

26. The following are grounds for suspension or removal of members of the Board f
Accountancy, except:
a. Neglect of duty or incompetence.
b. Violation or tolerance of any violation of RA 9298 and its IRR, or the Code of Ethics
and technical and professional standards of practice for CPAs.
c. Pending case on a crime involving moral turpitude.
d. Manipulation or rigging of the CPA licensure examination results.

27. Which statement is incorrect regarding the pronouncements of ASPC?

a. The PSAs and Interpretations may also have application, as appropriate, to other
related activities of auditors.
b. PSAs contain basic principles and essential procedures (identified in bold type
black lettering) together with related guidance in the form of explanatory and other
material. c. PSAs need only be applied to material matters.
c. The Interpretations have the same authority as the PAPSs.

28. Which statement is correct regarding AASC?

a. The AASC shall be composed of 15 members plus a Chairman.
b. The chairman and members of the AASC shall be appointed by the President of the
Philippines upon the recommendation of PRC.
c. The chairman and members of the AASC shall have a non-renewable term of 3
years.
d. The chairman should have been or presently a senior practitioner in public
accountancy.

29. In all of the following situations except one, a person is deemed to be engaged in
professional accounting practice. Which of them is the exception?
a. Performing audits or verification of financial transactions and records for more
than one client.
b. Employed as the department chairman that supervises the BSA program of an
educational institution.
c. Employment as controller of a private business enterprise and such employment
requires that the holder thereof should be a CPA.
d. Appointment in the government where first grade civil service eligibility is a
prerequisite.

30. The creation of FRSC and AASC is intended to assist the BOA in carrying out its
function
a. To monitor the conditions affecting the practice of accountancy and adopt such
measures, rules and regulations and best practices as may be deemed proper for

PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 5

 ACCTG 4200 FIRST TERM EXAM 03/04/2022

the enhancement and maintenance of high professional, ethical, accounting and
auditing standards.
b. To supervise the registration, licensure and practice of accountancy in the
Philippines.
c. To prescribe and adopt the rules and regulations necessary for carrying out the
provisions of RA 9298.
d. To prepare, adopt, issue or amend the syllabi of the subjects for examinations.

31. 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 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 (Hugo died 25 months ago, Pugo is continuing the firm as a
sole proprietor)
d. Bubu and Bibi, CPAs (Bibi died 3 years ago, Bobot was admitted into the
partnership 2 months after Bibi’s death.)

32. If the application for registration to practice public accountancy of Tiu, Tiu, & Co.
CPAs, was approved on July 1, 2016, the registration shall expire on
a. September 30, 2018 c. July 31, 2019
b. September 30, 2019 d. December 31, 2018

33. Which of the following statements concerning ownership of working papers is

incorrect?
a. All working papers made by a CPA and his/her staff in the course of an
examination remain the property of such CPA in the absence of a written
agreement between the CPA and the client to the contrary.
b. Working papers include schedules and memoranda prepared and submitted by
the client of the CPA.
c. Working papers include reports submitted by a CPA to his/her client.
d. Working papers shall be treated confidential and privileged unless such
documents are required to be produced through subpoena issued by any court,
tribunal, or government regulatory or administrative body.

34. The following statements relate to some of the provisions of RA 9298. Which is
correct?
a. Audit working papers are generally the property of the company whose financial
statements were audited.
b. After three (3) years, subject to certain conditions, the Board of Accountancy may
order the reinstatement of a CPA whose certificate of registration has been
revoked.

c. The penal provision (Sec. 36) of RA 9298 applies only to the violation of any of the
provisions of RA 9298 because its Implementing Rules and Regulations are
unenforceable.
d. It shall be the primary duty of the PRC and the BOA to effectively enforce the
provisions of RA 9298.

PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 6

 ACCTG 4200 FIRST TERM EXAM 03/04/2022

35. A study, appraisal, or review by the Board or its duly authorized representatives, of the
quality of audit of financial statements through a review of quality control measures
instituted by an individual CPA, Firm, or Partnership of CPAs engaged in the practice
of accountancy to ascertain his/her its compliance with the prescribed professional,
ethical, and technical standards of public practice
a. Quality Review
b. Peer Review
c. Quality Control
d. Advancement and Quality Compliance Oversight

36. The Board shall elect from among its members for a term 1 year
a. Vice Ganda c. Treasurer
b. Secretary d. Vice Chairman

37. Which of the following is most likely a ground for suspension or removal of any
member of the Board?
a. Preliminary judgment of crimes involving moral turpitude
b. Neglect of duty
c. Intolerance of any violation of the Act
d. Rigging of the CPA’s licensure examination dates

38. The Board shall submit to the Commission the ratings obtained by each candidate
within
a. 2 calendar days after the examination c. 10 calendar days after the examination
b. 5 calendar days after the examination d. 15 calendar days after the examination

39. The Board shall not register and issue a certificate of registration and professional
identification card to any successful examinee who is (choose the exception)
a. Convicted by court of competent jurisdiction of a criminal offense involving moral
turpitude
b. Guilty of immoral and dishonorable conduct
c. Of unsound mind
d. Saying the word AMALAYER many times.

40. The death or disability of an individual CPA and/or the dissolution and liquidation of
a firm or a partnership of CPAs shall be reported to the BOA not later than ___ days
from the date of such death, dissolution or liquidation.
a. 15 b. 30 c. 60 d.90

41. Under the foreign reciprocity, special/temporary permit may be issued by the Board
subject to the approval of the Commission and payment of the fees the latter has been
prescribed and charged thereof to the following persons except
a. A foreign CPA called for consultation or for a specific purpose which, in the
judgment of the Board, is essential for the development of the country.
b. A foreign CPA engaged as a professor, lecturer or critic in fields essential to
accountancy education in the Philippines
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 advancement of
accountancy in the Philippines
d. A foreign certified public accountant who visits the Philippines to study additional
learning in the field of computer system and design.

PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 7

 ACCTG 4200 FIRST TERM EXAM 03/04/2022

42. Which statement is correct regarding CPE requirements for renewal of professional
license?
a. The total CPE credit units required for CPAs shall be sixty (60) units for three (3)
years, provided that the minimum of twenty (20) credit units shall be earned in
each year.
b. A registered professional shall be permanently exempted form CPE requirements
upon reaching the age of 60 years old.
c. A registered professional who is working abroad shall be temporarily exempted
from compliance with CPE requirement during his/her stay abroad, provided that
he/she is has been out of the country for at least one year immediately prior to the
date of renewal.
d. Those who failed to renew professional licenses for a period of five (5) continuous
years from initial registration, or from last renewal shall be declared delinquent.

43. The CPD program shall have the following objectives (choose the incorrect statement)
a. To promote the general welfare of the public
b. To provide and ensure the continuous education of a registered professional with
the latest trends in the profession brought about by modernization and scientific
and technological advancements
c. To attain and maintain the highest standards and quality in the practice of his
profession
d. To serve as a vehicle for the promotion of international certification for Filipino
CPAs

44. Rules and regulations implementing Republic Act No. 9298 otherwise known as the
Philippine Accountancy Act of 2004.
a. Philippine Accountancy Act of 2004
b. Code of Ethics for Professional Accountants
c. Implementing Rules and Regulations or IRR
d. BOA Pronouncements and Rulings

45. FRSC shall be composed of

a. Fifteen members and a Chairman
b. Fourteen members with a Chairman
c. Fourteen members and a Chairman
d. Eight members and a Chairman

46. The creation of FRSC and AASC is intended to assist the BOA in carrying out its
function
a. To monitor and conditions affecting the practice of accountancy and adopt such
measures, rules and regulations and best practices as may be deemed proper for
the enhancement and maintenance of high professional, ethical, accounting and
auditing standards.
b. To supervise the registration, licensure, and practice of accountancy in the
Philippines.
c. To prescribe and adopt the rules and regulations necessary for carrying out the
provisions of RA9298.
d. To prepare, adopt, issue or amend the syllabi of the subjects of examinations.

47. These are issuances that are intended to provide interpretative guidelines and practical
assistance to professional accountants in implementing PSAs and to promote good
practice
a. Auditing standards c. Auditing procedures
b. Practice statements d. Disclosure paper

PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 8

 ACCTG 4200 FIRST TERM EXAM 03/04/2022

48. Which of the following is not one of the functions of ETC?
a. Determine a minimum standard curriculum for the study of accountancy to be
implemented in all schools offering accountancy as an undergraduate degree.
b. Establish teaching standards, including the qualifications of members of the
faculty schools and colleges of accountancy.
c. Monitor the progress of program on the study of accountancy and undertaking
measures for the attainment of high quality of accountancy education in the
country.
d. Recommend to the Board the revocation of the Certificate of Registration and the
professional identification card of an individual CPA or firm including any of their
staff members who has not observed the quality control measures and who has not
complied with the standards of quality prescribed for the practice of public
accountancy.

49. The chairman of the Commission on Audit is appointed by the President of the
Philippines and shall serve
a. 3 years without appointment
b. 5 years with reappointment
c. 6 years without reappointment
d. 7 years without reappointment

50. Which is incorrect concerning IAASB pronouncement?

a. Governs audit, assurance, and related engagements that are conducted in
accordance with International Standards
b. In case of conflict with local laws, may some instances override the latter
c. Do not override local laws and regulations
d. By nature, requires exercise of judgement

51. Which of the following is an international non-assurance engagement standard?

a. Philippine Standards on Auditing
b. International Standards on Quality Control
c. Philippine Standards on Quality Control
d. International Standards on Related Services

52. Within the context of quality control, the primary purpose of continuing professional
education and training activities, is to enable a CPA firm to provide personnel within
the firm with:
a. Technical training that assures proficiency as an auditor.
b. Professional education that is required in order to perform with due professional
care.
c. Knowledge required to fulfill assigned responsibilities and to progress within the
firm.
d. Knowledge required in order to perform a peer review.

53. Which of the following objectives are generally a component of a firm’s quality control?
A. Professional requirements E. Consultation
B. Skills and competence F. Due professional care
C. Assignment G. Monitoring
D. Inspection H. Delegation

a. A, B, C, D, E, F c. A, B, C, E, G, H
b. A, B, C, F, E, G d. B, C, G, F, H

PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 9

 ACCTG 4200 FIRST TERM EXAM 03/04/2022

54. Which one of the following relates to delegation objective of quality control?
a. The firm creates a group that provides technical training to audit staff.
b. There is to be a sufficient direction, supervision, and review of work at all levels to
provide reasonable assurance that the work performed meets appropriate
standards of quality.
c. Assignment of work to the more qualified personnel.
d. Whenever necessary, consultation within or outside the firm is to occur with those
who have appropriate expertise.

55. An auditor who accepts an audit engagement and does not possess the industry
expertise of the business entity, should
a. Engage financial experts familiar with the nature of the business entity.
b. Obtain a knowledge of matters that relate to the nature of the entity's business.
c. Refer a substantial portion of the audit to another CPA who will act as the principal
auditor.
d. First inform management that an unqualified opinion cannot be issued.

56. The fourth standard of reporting requires the auditor’s report to contain either an
expression of opinion regarding the financial statements taken as a whole or an
assertion to the effect that an opinion cannot be expressed. The objective of the fourth
standard is to prevent
a. An auditor from expressing different opinions on each of the basic financial
statements.
b. Restrictions on the scope of the examination, whether imposed by the client or by
the inability to obtain evidence.
c. Misinterpretations regarding the degree of responsibility the auditor is assuming
d. An auditor from reporting on one basic financial statement and not the others.

57. Ethical requirements to which the engagement team and engagement quality control
reviewer are subject, which ordinarily comprise parts A and B of the Code of Ethics
together with national requirements that are more restrictive.
a. Fundamental principles c. Client screening criteria
b. Relevant ethical requirements d. Pre-conditions to an audit

58. When a firm withdraws from an engagement, the firm may have reportorial
responsibilities to the following:
A B C D
Appropriate level of management Yes Yes Yes Yes
Those charged with governance Yes Yes No No
Regulatory authorities Yes No No Yes

59. What aspects are most important in determining the eligibility of engagement quality
control reviewers?
a. Technical qualifications and objectivity.
b. Integrity and objectivity.
c. Competence and independence.
d. All of these

60. The firm should establish policies and procedures requiring appropriate
documentation to provide evidence of the operation of each element of its system of
quality control. How such matters are documented is based on:
a. PSQC No. 1 c. Philippine Audit Practice Statement
b. PSA 220 d. The firm’s decision

PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 10

 ACCTG 4200 FIRST TERM EXAM 03/04/2022

61. Which element of a system of quality control is addressed by the establishment of the
policies and procedures designed to provide the firm with reasonable assurance that it
has sufficient personnel with competence, capabilities, and commitment to ethical
principles?
a. Ethical requirements
b. Monitoring
c. Leadership responsibilities for quality within the firm
d. Human resources

62. In pursuing its quality control objectives with respect to assigning personnel to
engagements, a public accounting firm may use policies and procedures such as
a. Rotating employees from assignment to assignment on a random basis to aid in
the staff training effort.
b. Requiring timely identification of the staffing requirements of specific
engagements so that enough qualified personnel can be made available.
c. Allowing staff to select assignment of their choice to promote better client
relationships.
d. Assigning a number of employees to each engagement in excess of the number
required so as not to overburden the staff and interfere with the quality of the audit
work performed.

63. ABC and Co., a large international CPA firm, is to have an “external peer review”. The
peer review will most likely be performed by
a. Employees and partners of ABC and Co. who are not associated with the particular
audits being reviewed.
b. Audit review staff of the Securities and Exchange Commission.
c. Audit review staff of the PICPA.
d. Employees and partners of another CPA firm.

64. Which of the following is not an element of quality control?

a. Documentation c. Supervision
b. Inspection d. Consultation

65. The auditor with final responsibility for an engagement and one of the assistants have
a difference of opinion about the results of an auditing procedure. If the assistant
believes it is necessary to be disassociated from the matter’s resolution, the CPA firm’s
procedures should enable the assistant to
a. Refer the disagreement to regulatory or professional bodies
b. Document the details of the disagreement with the conclusion reached
c. Discuss the disagreement with the entity’s management or its audit committee
d. Report the disagreement to an impartial peer review monitoring team

66. To succeed in an action against the auditor, the client must be able to show that:
a. The auditor was fraudulent
b. The auditor was grossly negligent
c. There was a written contract
d. There is a close causal connection between the auditor’s behavior and the damages
suffered by the client

67. The limitation of an auditor’s liability under contract law is known as

a. Privity of contract
b. Contributory liability
c. Statutory liability
d. Common law liability

PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 11

 ACCTG 4200 FIRST TERM EXAM 03/04/2022

68. The Accountancy Law 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. Schedules and memoranda made by the CPA and his staff.
b. Working papers prepared and submitted by the client.
c. Excerpts or copies of documents furnished the auditor.
d. Reports submitted by the CPA to the client.

69. A person is deemed to be in practice of the accounting profession in commerce and

industry when she/he:
a. Holds, or is appointed to a position in an accounting professional group in
government or in a government-owned and/or controlled corporation, where
decision-making requires professional knowledge in the science of accounting
b. Is involved in decision-making requiring professional knowledge in the science of
accounting, as well as the accounting aspects of finance and taxation, or is
employed in a position that requires a CPA
c. Is in an educational institution which involves teaching of accounting, auditing,
management advisory services, accounting aspect of finance, business law,
taxation, and other technically-related subjects
d. Holds out himself/herself as one skilled in the knowledge, science and practice of
accounting, and as someone qualified to render professional services as a CPA

70. Which of the following functions would usually be performed by a senior associate?
a. Signs the audit report
b. Assumes overall responsibility
c. Performs detailed audit procedure
d. Prepares the audit program and performs more complex audit procedures
e. Tasked with liaison work between partners and other team members

71. Which of the following cannot be mentioned by an author in publicizing a book in

accounting?
a. Name
b. Qualifications
c. Membership in professional organization
d. Services that the author’s firm provides

72. Subjects or citizens of foreign countries:

a. May be allowed to practice accountancy in the Philippines, regardless of the
provisions of existing laws and international treaty obligations, including mutual
recognition agreements entered into by the Philippine government with other
countries
b. Are not allowed to practice accountancy in the Philippines, unless they take, and
pass, the certified public accountant licensure examination given by the Board of
Accountancy
c. May be allowed to practice accountancy in the Philippines, subject to the
provisions of existing laws and international treaty obligations, including mutual
recognition agreements entered into by the Philippine government with other
countries
d. Are never allowed to practice accountancy in the Philippines because they will
jeopardize the interests of Filipino certified public accountants

73. The QRC shall have the following functions:

a. Conduct quality control review on applicants for registration to practice public
accountancy and render a report on such quality review

PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 12

 ACCTG 4200 FIRST TERM EXAM 03/04/2022

b. Revoke the certificate of registration and professional ID if an individual CPA, firm
or partnership of CPAs who have not observed quality control measures
c. All of the answers
d. None of the answers

74. According to 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
c. Indefinitely
d. Until the partnership pay-out to the deceased partner’s estate I terminated

75. 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 c. Indirect promotion
b. Advertising d. Solicitation

76. The term professional accountant in public practice includes the following, except
a. A sole proprietor providing professional services to a client.
b. Each partner or person occupying a position similar to that of a partner staff in a
practice providing professional services to a client.
c. Professional accountants employed in the public sector having managerial
responsibilities.
d. A firm of professional accountants in public practice.

77. Which of the following is not likely to create a threat to independence?

a. The total fees generated by an assurance client represent a large proportion of a
firm’s total fees.
b. Fees due from an assurance client for professional services remain unpaid for a
long time.
c. A firm obtains an assurance engagement at a significantly lower fee level than that
charged by the predecessor firm, or quoted by other firms.
d. A court or other public authority established fees.

78. A client company has not paid its 2003 audit fees. According to the Code of
Professional Conduct, for the auditor to be considered independent with respect to the
2004 audit, the 2003 audit fees must be paid before the
a. 2003 report is issued
b. 2004 field work is started
c. 2004 report is issued
d. 2005 field work is started

79. Which statement is incorrect regarding professional fees?

a. Professional fees should normally be computed on the basis of appropriate rates
per hour or per day for the time of each person engaged in performing professional
services.
b. The appropriate rates should be based on the fundamental premise that the
organization and conduct of the professional accountant in public practice and the
services provided to clients are well planned, controlled and managed.
c. It is for each professional accountant in public practice to determine the
appropriate rates.
d. It is not proper for a professional accountant in public practice to charge a client a
lower fee than has previously been charged for similar services

PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 13

 ACCTG 4200 FIRST TERM EXAM 03/04/2022

80. Which of the following fee arrangements would violate the Code of Professional
Conduct?
a. A fee based on the approval of a bank loan.
b. A fee based on the outcome of a bankruptcy proceeding.
c. A per hour fee that includes out-of-pocket expenses.
d. A fee based on the complexity of the engagement.

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PREPARED BY: GAUDIE P. GALLARDO, CPA, MSA, MBA 14