CODE OF Ethics Reviewer PDF

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REVIEWER (401) - COE Which statement is incorrect regarding employed professional accountants?  When undertaking significant tasks for which a professional accountant has not had sufficientspecific training or experience, he or she should not mislead the employer as to the degree of expertise or ex...

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REVIEWER (401) - COE 1. Which statement is incorrect regarding employed professional accountants?  When undertaking significant tasks for which a professional accountant has not had sufficient specific training or experience, he or she should not mislead the employer as to the degree of expertise or experience he or she possesses, and where appropriate, expert advice and assistance should be sought.  A professional accountant, particularly one having authority over others, should give due weight for the need for them to develop and hold their own judgment in accounting matters and should deal with difference of opinion in a professional way.  Employed professional accountants owe a duty of loyalty to their employer as well as to the profession, therefore there may be no time that the two will be in conflict.  A professional accountant is expected to present financial information fully, honestly and professionally and so that it will be understood in its context. 2. Which of the following is incorrect regarding confidentiality?  Confidentiality should always be observed by a professional accountant unless specific authority has been given to disclose information or there is a legal or professional duty to disclose.  Confidentiality requires that a professional accountant acquiring information in the course of performing professional services neither uses nor appear to use that information for personal advantage or for the advantage of a third party.  The duty of confidentiality ceases after the end of the relationship between the professional accountant and the client or employer.  Professional accountants have an obligation respect the confidentiality of information about a client's or employer's affairs acquired in the course of professional services. 3. Assurance engagement include the following, except  An engagement conducted to provide a high level of assurance that the subject matter conforms in all material respects with identified suitable criteria.  An engagement conducted to provide a moderate level of assurance that the subject matter is plausible in the circumstances.  An engagement in accordance with the Philippine Standard on Assurance Engagement(s) issued by the Philippine Auditing Standards and Practices Council as approved by the Board of Accountancy/Professional Regulation Commission.  An engagement to perform agreed-upon procedures. 4. Which statement is incorrect regarding long association of senior personnel with audit clients that are listed entities?  Using the same lead engagement partner on an audit over a prolonged period may create a familiarity threat.  When audit client becomes a listed entity the length of time the lead engagement partner has served the audit client in that capacity should be considered in determining when the partner should rotated.

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The lead engagement partner should be rotated after a pre-defined period, normally no more than seven (7) years. A partner rotating after a pre-defined period should not resume the lead engagement partner role until a further period of time, normally two years, has elapsed.

5. If the firm is involved in the preparation of accounting records or financial statements and those financial statements are subsequently the subject matter of an audit engagement of the firm, this will most likely create  Self-review threat  Familiarity threat  Self-interest threat  Intimidation threat 6. These following services are considered to be a normal part of the audit process and do not, under circumstances, threaten independence, except  Drafting disclosure items.  Assisting in the preparation of consolidated financial statements.  Having custody of an assurance client's assets.  Analyzing and accumulating information for regulatory reporting. 7. If firm, or network firm, personnel providing such assistance make management decisions, the selfreview threat created could not be reduced to an acceptable level by any safeguards. Examples of such managerial decisions include the following, except  Preparing source documents or originating data, including decisions on evaluation assumptions), or making changes to such documents or data.  Assisting an audit client in resolving account reconciliation problems.  Determining or changing journal entries, or the classifications for accounts or transactions or other accounting records without obtaining the approval of the audit clients  Authorizing or approving transactions. 8. The Rules of Conduct will ordinarily be considered to have been violated when the professional accountant represents that specific consulting services will be performed for a stated fee and it is apparent at the time of the representation that the  Fee was a competitive bid.  Actual fee would be substantially lower than the fees charged by other professional accountants for comparable services  Professional accountant would not be independent.  Actual fee would be substantially higher.

9. Which of the following is incorrect regarding independence?  Independence is a combination of impartiality, intellectual honesty and a freedom from conflicts of interest.  Independence in appearance is the avoidance of facts and circumstances that are so significant a reasonable and informed third party, having knowledge of all relevant information, including any safeguards applied, would reasonably conclude a firm's or a member of the assurance team's integrity, objectivity or professional skepticism had been compromised.  Independence consists of independence of mind and independence in appearance.  Independence of mind is the state of mind that permits the provision of an opinion without being affected by influences that compromise professional judgment, allowing an individual to act with integrity, and exercise objectivity and professional skepticism. 10. Professional accountants may encounter problems in identifying unethical behavior or in resolving an ethical conflict. When faced with significant ethical issues, professional accountants should do the following, except  Seek counseling and advice on a confidential basis with an independent advisor or the applicable professional accountancy body or regulatory body to obtain an understanding of possible courses of action.  Review the conflict problem with the immediate superior if the organization's policies do not resolve the ethical conflict.  If the problem is not resolved with the immediate superior and the professional accountant determines to go to the next higher managerial level, the immediate superior need not be notified of the decision.  If a significant conflict cannot be resolved, a professional accountant may wish to obtain professional advice from the relevant professional body or legal advisors, and thereby obtain guidance on ethical issues without breaching confidentiality.  Follow the established policies of the employing organization to seek a resolution of such conflict.  If, after exhausting all relevant possibilities, the ethical conflict remains unsolved, a professional accountant should, where possible, refuse to remain associated with the matter creating the conflict. 11. Which of the following fee arrangements would violate the Code of Professional Conduct?  A fee based on the approval of a bank loan.  A fee based on the outcome of a bankruptcy proceeding.  A per hour fee that includes out-of-pocket expenses.  A fee based on the complexity of the engagement. 12. Assurance team include: All professionals participating in the assurance engagement; For the purposes of an audit client, all those within a network firm who can directly influence the outcome of the audit engagement; All others within a firm who can directly influence the outcome of the assurance engagement

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Yes, No, No

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Yes, No, Yes Yes, Yes, Yes Yes, Yes, No

13. Which of the following least likely create self-interest threat  Undue dependence on total fees from a client.  Having a close business relationship with a client.  Concern about the possibility of losing the engagement.  Being pressured to reduce inappropriately the extent of work performed in order to reduce the fees 14. Which of the following is least likely to create a threat to independence?  The fees generated by the assurance client represent a large proportion of the revenue of an individual partner.  When litigation takes place, or appears likely, between the firm or a member of the assurance team and the assurance client.  The firm charges a contingent fee to an assurance client.  Accepting gifts or hospitality, the value of which is clearly insignificant, from an assurance client. 15. A professional accountant in business should maintain information for which the professional accountant in business is responsible in a manner that, except  Classifies and records information in a timely and proper manner  Represents the facts accurately and completely in all material respects  Describe clearly the true nature of business transactions, assets or liabilities  Selecting accounting policies that would maximize the reported income or minimize the reported cost 16. A former officer, director or employee of the assurance client serves as a member of the assurance team. This situation will least likely create  Familiarity threat  Intimidation threat  Self-review threat  Self-interest threat 17. Which of the following is incorrect regarding professional competence?  Professional competence may be divided into two separate phases.  The maintenance of professional competence requires a continuing awareness of development in the accountancy profession.  The attainment of professional competence requires initially a high standard of general education.

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Professional accountants may portray themselves as having expertise or experience they do not possess.

18. Close family include the following, except  Non-dependent child  Spouse  Sibling  Parent 19. Examples of circumstances that may create familiarity threat least likely include  A member of the assurance team giving an immediate family member or close family member who is a director or officer of the assurance client.  A member of the assurance team having an immediate family member or close family member who, as an employee of the assurance client, is in a position to exert direct and significant influence over the subject matter of the assurance engagement.  A former partner of the firm being a director, officer of the assurance client or an employee in a position to exert direct and significant influence over the subject matter of the assurance engagement.  Promoting shares in a listed entity when that entity is a financial statement audit client 20. Examples of circumstances that may create self-interest threat include  All of the above  Contingent fees relating to assurance engagements  A loan to or form an assurance client or any of its directors or officers  A financial interest in a client or jointly holding a financial interest with a client 21. Examples of circumstances that may create self-review threat least likely include  A member of the assurance team being or having recently been a director of officer of that client.  Reporting on the operation of financial systems after being involved in their design or implementation.  The discovery of significant error during a re-evaluation of the work of the professional accountant in public practice.  Accepting gifts or preferential treatment from a client, unless the value is clearly insignificant. 22. The provision of accounting and bookkeeping services to audit clients in emergency or other unusual situations, when it is impractical for the audit client to make other arrangements, would not be considered to pose an unacceptable threat to independence provided:  The audit client accepts responsibility for the results of the work.  The firm, or network firm, does not assume any managerial role or make any managerial decisions.

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Personnel providing the services are not members of the assurance team. All of the three other choices.

23. Intimidation threat  Occurs when, by virtue of a close relationship, a professional accountant becomes too sympathetic to the client's interests.  is not a threat to independence  Occurs when a professional accountant may be deterred from acting objectively and exercising professional skepticism by threats, actual or perceived.  Occurs when a professional accountant promotes a position or opinion to the point that subsequent objectivity may be compromised 24. If the valuation services involves the valuation of matters material to the financial statements and the valuation involves a significant degree of subjectivity, the self-review threat created (choose the incorrect one)  Could not be reduced to an acceptable level by the application of any safeguard.  The assurance team should withdraw from the audit engagement, if the team opted to perform the valuation services.  Such valuation services should not be provided.  Could be reduced to an acceptable level by the application of safeguards. 25. Which statement is incorrect regarding clients' monies?  Fees due from a client may be drawn from client's monies without the need of notifying the client.  Monies may only be drawn from the client account on the instructions of the client.  The professional accountants in public practice should not hold client's monies if there is reason to believe that they were obtained from, or are to be used for, illegal activities.  A professional accountant in public practice should maintain one or more bank accounts for clients' monies. 26. The provision of accounting and bookkeeping services of a routine or mechanical nature to divisions or subsidiaries of listed audit clients would not be seen as impairing independence with respect to the audit client provided that the following conditions are met, except  The fees to the firm, or network firm, from such services are collectively significant.  The services provided are collectively immaterial to the division or subsidiary.  The divisions or subsidiaries for which the service is provided are collectively immaterial to the audit client.  The services do not involve the exercise of judgment.

27. Safeguards in the work environment, include the following except  Policies and procedures that will enable the identification of interests or relationships between the firm and members of the assurance team and assurance clients.  Firm leadership that stresses the importance of independence and the expectation that members of assurance teams will act in the public interest.  External review of the firm's quality control system.  Policies and procedures to implement and monitor quality control of assurance engagements. 28. The term receiving accountant includes the following, except  A professional accountant in public practice currently holding an audit appointment or carrying out accounting, taxation, consulting or similar professional services for a client.  A professional accountant in public practice to whom the client of the existing accountant has referred audit engagement.  Incorrect Response  A professional accountant in public practice who is consulted in order to meet the needs of the client.  A professional accountant in public practice to whom the existing accountant has referred tax engagement. 29. If a member of the assurance team, or their immediate family member receives, by way of, for example, an inheritance, gift or, as a result of a merger, a direct financial interest or a material indirect financial interest in the assurance client, a self-interest threat would be created. The following safeguards should be applied to eliminate the threat or reduce it to an acceptable level:  Neither disposing of the financial interest at the earliest practical date or removing the member of the assurance team from the assurance engagement.  Either disposing of the financial interest at the earliest practical date or removing the member of the assurance team from the assurance engagement.  Removing the member of the assurance team from the assurance engagement.  Disposing of the financial interest at the earliest practical date. 30. Occurs when a professional judgment needs to be re-evaluated by the professional accountant responsible for that judgment  Familiarity threat  Self-review threat  Self-interest threat  Advocacy threat 31. Safeguards in the client, include the following, except  A corporate governance structure such as an audit committee that provides appropriate oversight and communications regarding a firm's services.  Professional standards and monitoring and disciplinary processes.

 The assurance client has competent employees to make managerial decision.  Internal procedures that ensure objective choices in commissioning non-assurance engagements. 32. Family and personal relationships between a member of the assurance team and a director, an officer or certain employees, depending on their role, of the assurance client, least likely create  Intimidation threat  Self-interest threat  Self-review threat  Familiarity threat 33. For assurance engagements provided to clients that are not audit clients, when the report is not expressly restricted for use by identified users, the following should be independent of the client --The members of the assurance team; The firm; Network firms  Yes, No, Yes  Yes, Yes, No  Yes, Yes, Yes  Yes, No, No 34. Fees calculated on a predetermined basis relating to the outcome or result of a transaction or the result of the work performed.  Flat sum fees  Contingent fees  Retainer fees  Per diem fees 35. The communication to the public of facts about a professional accountant which are not designed for the deliberate promotion of that professional accountant.  Publicity  Solicitation  Advertising  Indirect promotion 36. Circumstances that threaten the ability of a professional accountant in business to perform duties with the appropriate degree of professional competence and due care include, except (NA WRONG SI MS ANI WAY EXCEPT IYA NABUTANG MURAG I CHANGE NA NIYA)  Insufficient time for properly performing or completing the relevant duties  Complex and voluminous information to be processed  Insufficient experience, training and/or education  Incomplete, restricted or otherwise inadequate information for performing the duties properly

Which of the following is the least required in attaining professional competence? 

Continuing awareness of development in the accountancy profession.

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High standard of general education. Specific education, training and examination in professionally relevant subjects. Whether prescribed or not, a period of meaningful work experience.

37. Which statement is incorrect regarding the Revised Code of Ethics for Professional Accountants in the Philippines?  Where a local law is in conflict with a provision of the Code of Ethics, the Code of Ethics requirement prevails.  Professional accountants should consider the ethical requirements as the basic principles which they should follow in performing their work.  It is impractical to establish ethical requirements which apply to all situations and circumstances that professional accountants may encounter.  Professional accountants refer to persons who are Certified Public Accountants (CPA) and who hold a valid certificate issued by the Board of Accountancy.  All CPAs are expected to comply with the ethical requirements of the Code and other ethical requirements that may be adopted and approved by IESBA. Apparent failure to do so may result in an investigation into the CPA's conduct. 38. When a member of the assurance team knows that his or her close family member has a direct financial interest or a material indirect financial interest in the assurance client, a self-interest threat may be created. Safeguards least likely include: Involving a professional accountant who took part in the assurance engagement to review the work done by the member of the assurance team with the close family relationship or otherwise ...