Audit Chapter 4 (11-21) PDF

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1. How can a Professional Accountant become an ASEAN Chartered Professional Accountant?  For a professional accountant to become an ASEAN Chartered Professional Accountant, he or she shall file an application to the Monitoring Committee of his or her Country of Origin which shall submit the application on his or her behalf to the ASEAN Chartered Professional Accountant Coordinating Committee (ACPACC). Upon Acceptance of the ACPACC and payment of necessary fees, a Professional Accountant shall be emplaced on the ASEAN Chartered Professional Accountants Register (ACPAR) and accorded the title of ASEAN Chartered Professional Accountant or ACPA. 2. What are the allowable forms of organization for the practice of public accountancy in the Philippines?  The allowable forms of organization for the practice of public accountancy in the Philippines are the following:  RA No. 9298 allows single proprietorships and partnerships to be formed for the practice of public accountancy in the Philippines.  The SEC shall not register any corporation organized for the practice of public accountancy. 3. Why are corporations not allowed as a legal form of organization for the practice of accountancy?  In accordance with RA 9298, the only forms of organization to be allowed by SEC to practice accountancy are sole proprietorships and partnerships. This is because the practice of accountancy involves the personal expertise of a CPA. A CPA has his own personal set of skills and judgment that he uses in auditing and expressing an opinion in which the stakeholders rely on. Not allowing corporations was aimed to not impair the independence and integrity of an accountant in rendering his services. 4. Give at least three duties and responsibilities performed by the following:  Associate  Observing physical count of inventories  Quality control on audit deliverables  Checking short and long extensions  Senior associate  Drafts and finalizes the audit program  Supervise associates and performs review procedures on work performed by associates  Address minor accounting and auditing issues with clients and audit associates  Manager  Settle major accounting or auditing issues  Usually draft the report for review by the partner

 Prepare the overall audit plan  Partner  Obtain and maintain relationship with clients  Discuss with clients the objective and scope of the audit  Sign the reports and firm correspondence 5. What is a certificate of accreditation?  It is a certificate under seal, issued by the PRC upon the recommendation by the Professional Regulatory Board of Accountancy (PRBOA) pursuant to the IRR, attesting that individual CPAs, firms, including the sole proprietors and the staff members thereof and partnerships of CPAs including the partners and the staff members thereof, are duly accredited to practice public accountancy in the Philippines. 6. What are the ethical principles involved in choosing the name for a CPA firm?  In case of individual CPA, his/her must be registered with the BOA and PRC and is printed on the CPA certificate  In the case of firms, they shall do business under a registered name and authorized firm documents issued by DTI  In the case of registered partnerships, they shall do business under the respective partnership names as indicated in their current Articles of Incorporation  CPAs shall practice only under the name allowed by law and shall not include any fictitious name, indicates specialization or is misleading as to the type of organization 7. Explain the different considerations in setting up and maintaining an accounting practice:  Compliance with government and legal requirements  The first-time registrants must accompany their application with a sworn statement by the individual CPA, sole proprietor of the firm and managing partner of the partnership, stating that all partners of the partnership has at least 3 years of meaningful experience in any areas of the public practice.  It is essential for firms to comply with all government and legal requirements in order to be authenticated and accredited by the PRBOA.  Location and work environment  Most of the large accounting firms are in Makati, the business district; CPAs will have a business advantage. The major factors affecting the decision on the place of office is the convenience and accessibility to clients  Technology  Having an Information system will gain an advantage against competitors, particularly in the areas of efficiency, effectiveness and risk management.

The other equipment must be periodically inspected and repaired as necessary.  Human resources  The success of a CPA firm depends largely on the competence and performance of its employees; thus, the human resource must have a good policy on hiring. 8. Is advertising allowed in the Philippines?  It is not allowed because it is deemed unethical for accountants to advertise. Advertising can lead to undue competition among practitioners and would encourage a more commercial approach to the profession. 9. What are the different forms of acceptable publicity according to the Board of Accountancy?  Awards  Professional accountants seeking employment or professional business  Directories  Books, articles, interviews, lectures, radio, and television appearances  Training courses and seminars  Booklets and documents containing technical information  Staff vacancies  Publicity on behalf of clients  Brochures and firm directories  Stationery and nameplates  Announcements  Anniversaries  Websites  Inclusions of the name of the CPA in a document issued by a client 10.What are the factors considered in determining fees? How are they billed to clients?  The skill and knowledge required for the type of work  The level of training and experience of the persons engaged on work  The time necessarily occupied by each person engaged in the work  The degree of responsibility and urgency that the work entails 11.A partner dies, causing the dissolution of the partnership where he serves as managing partner. What are the reporting responsibilities of the partnership to the BOA?  The death of the partner must be reported to the BOA by any designated staff member of the firm or managing partner of the firm, not later than 30 days from the date of such death and dissolution. The report shall be made in the form of an affidavit or by furnishing the BOA with certified copy of the dissolution filed with the SEC....