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AUDITING THEORY Red SirugRA 9298 – PHILIPPINE ACCOUNTANCY ACT OF 2004(Multiple Choice Questions) The objective of the Philippine Accountancy Act of 2004 includes: a. The standardization and regulation of accountingeducation. b. The examination for registration of certifiedpublic accountants. c. The ...

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AUDITING THEORY

Red Sirug RA 9298 – PHILIPPINE ACCOUNTANCY ACT OF 2004 (Multiple Choice Questions)

1.

2.

The objective of the Philippine Accountancy Act of 2004 includes: a. The standardization and regulation of accounting education. b. The examination for registration of certified public accountants. c. The supervision, control, and regulation of the practice of accountancy in the Philippines. d. All of the above The Philippine Accountancy Act of 2004 shall provide for and govern: a. The supervision, control, and regulation of the practice of accountancy in the Philippines. b. The standardization and regulation of accounting education. c. The examination for registration of certified public accountants. d. All of the above

3.

The document that contains the norm and principles governing the practice of the accountancy profession in the highest standards of ethical conduct a. RA 9298 b. Code of Ethics for CPAs in the Philippines c. IRR to RA 9298 d. PSA 220 on Quality Control

4.

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certain conditions, the Board of Accountancy may order the reinstatement of a CPA whose certificate of registration has been revoked.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.

5.

Which of the following organization has been recognized by the Commission on October 2, 1975 per Accreditation No. 15, As Accredited Professional Organization? a. Board of Accountancy (BOA) b. Association of CPA's in Public Practice (ACPAPP) c. Association of CPAs in Education (ACPAE) d. Philippine Institute of CPAs (PICPA)

6.

The area of practice of accountancy namely public accountancy, commerce and industry, academe / education and government are called: a. Sectors b. Scope of practice of accountancy c. Section d. Segment

7.

As used in RA 9298, this term refers to the area of practice of accountancy: a. Segment b. Line c. Sector d. Section

8.

A Certified Public Accountant or CPA is: a. A person who holds a valid Certificate of Registration issued by the PRC b. A person who holds a valid professional Identification Card issued by the PRC c. A person who holds a valid Certificate of Registration and a valid Professional Identification Card issued by the PRC d. A person who is engaged in the practice of public accountancy

9.

A CPA is in public accounting practice when he/she: a. Holds, or is appointed to, 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. Represents his/her clients before government agencies on tax and other matters related to accounting. c. Represents his/her employer before government agencies on tax and other matters related to accounting. d. Teaches accounting, auditing, management advisory services, accounting aspect of finance, business law, taxation, and other technically related subjects.

10. Which of the following statements concerning the practice of accountancy in commerce and industry is incorrect? a. A CPA is in the practice of accountancy in commerce and industry when he/she is involved in decision making requiring professional knowledge in the science of accounting, as well as the accounting aspects of finance and taxation. b. A CPA is in the practice of accountancy in commerce and industry when he/she renders professional services as a Certified Public Accountant to more than one client on a fee basis. c. A CPA is in the practice of accountancy in commerce and industry when he/she represents his/her employer before government agencies on tax and other matters related to accounting. d. A CPA is in the practice of accountancy in commerce and industry when such employment or position requires that the holder thereof must be a Certified Public Accountant. 11. Which of the following does not constitute a practice of accountancy? a. A person holding out himself as one skilled in the

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knowledge, science and practice of accounting and as a qualified person to render professional services as a CPA to more than one client. b. A person is appointed as a marketing director of a government owned and controlled corporation. c. A person in educational institution teaching accounting, auditing, business law, taxation or other technically related subjects. d. A person representing his/her employer before government agencies on tax and other accounting related matters. 12. Which of the following statements concerning the practice of accountancy in the academe/education is incorrect? a. Members of the Integrated Bar of the Philippines are not allowed to teach business law and taxation subjects. b. The position of either the Dean or the Department Chairman or its equivalent that supervises the Bachelor of Science in Accountancy program of an educational institution is deemed to be in practice of accountancy in the academe/education. c. CPAs are allowed to teach business law subjects. d. The position of either the Dean or the Department Chairman or its equivalent that supervises the Bachelor of Science in Accountancy program of an educational institution must be occupied only by a duly registered CPA. 13. Which of the following statements concerning the practice of accountancy is correct? a. A CPA is in the practice of accountancy in the government when he/she is involved in the audit or verification of financial transactions and accounting records of his/her clients. b. A CPA is in public accountancy when he/she renders his/her professional services as a CPA to more than one client on a fee basis in the design, installation, review, and revision of accounting systems and controls. c. A CPA is in the practice of accountancy in the academe/education when he/she is in an educational institution teaching any of the subjects included in the BSA curriculum. d. A CPA is in the practice of accountancy in commerce and industry when his/her position requires civil service eligibility as a Certified Public Accountant. 14. Which is not permitted by RA 9298 to practice public accountancy? a. A CPA in individual capacity. b. A sole proprietorship. c. A general partnership. d. A corporation, whose stockholders are all CPAs. 15. Which is permitted by RA 9298 to practice public accountancy? a. A corporation whose stockholders are all CPAs b. A corporation whose some of stockholders are CPAs c. Limited liability partnership d. A non-stock corporation whose members are all CPAs

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16. The names under which a CPA practices the profession must: a. Indicate any specialization. b. Contain more than three name. c. Include one fictitious name. d. Not misleading as to form of organization. 17. A certificate of accreditation shall be issued to CPA's in public practice only upon showing, in accordance with rules and regulations promulgated by the BOA and approved by the PRC, that such registration has acquired a: a. Minimum of 3 years meaningful experience in any of the areas of practice of accountancy including taxation. b. Minimum of 3 years meaningful experience in any of the areas of practice of accountancy. c. Minimum of 3 years meaningful experience in any of the areas of public practice including taxation. d. Minimum of 3 years meaningful experience in any of the areas of public practice excluding taxation. 18. The minimum meaningful experience in public accountancy as required by RA 9298 shall include: a. At least one year as audit assistant and at least one year as auditor in charge. b. At least one year as audit assistant and at least two years as auditor in charge. c. At least two years as audit assistant and at least two years as auditor in charge. d. At least two years as audit assistant and at least one year as auditor in charge. 19. 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 shall be occupied only by a duly registered CPA if the business or company where the above position exists has a. An annual revenue of at least P5,000,000.00 b. A total asset of at least P10,000,000 c. A paid-up capital of at least P10,000,000.00 d. A paid-up capital of at least P5,000,000.00 20. Individual CPAs, Firms or Partnerships of CPAs, including partners and staff members thereof shall register with the BOA and the PRC. If the application for registration of AB and Co., CPAs was approved on August 30, 2005, the registration will expire on a. Sept. 30, 2007 b. Dec. 31, 2007 c. Dec. 31, 2008 d. Aug. 30, 2007 21. CPAs, firms and partnerships of CPAs engaged in the practice of public accountancy including partners and staff members thereof, shall register with the PRC and the BOA, such registration to be renewed every a. Three years on or before December 31 b. Three years on or before September 30 c. Two years on or before December 31 d. Two years on or before September 30 22. Based on R.A. 9298, how many years can a partner who survived the death or withdrawal of other

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partner(s) continue to practice under the partnership name after becoming a sole practitioner? a. 1 year b. 2 years c. 3 years d. Indefinite period of time 23. Which of the following is not one of the qualifications of the members of the Board of Accountancy? a. He/She must not be a director or officer of PICPA at the time of his appointment. b. He/She must be a natural-born citizen and a resident of the Philippines. c. He/She must be a duly Certified Public Accountant with at least ten years of experience in practice of public accountancy. d. He/She must not have any direct or indirect pecuniary interest in any school, college, university, or institution offering a BS Accountancy course or institution conducting review classes in preparation for the licensure examination at the time of his appointment to the Board. 24. Which of the following is not one of the qualifications of the members of the Board of Accountancy? a. Must be a natural-born CPA and a resident of the Philippines. b. Must be a duly registered Certified Public Accountant with at least ten years of experience in practice of accountancy. c. Must be of good moral character. d. Must not have been convicted of crimes involving moral turpitude. 25. No person shall serve the Professional Regulatory Board of Accountancy for more than: a. 3 years b. 6 years c. 9 years d. 12 years 26. The President of the Philippines, upon the recommendation of the Commission, may suspend or remove any member of the Board of Accountancy. Which of the following is not a valid ground for suspension or removal of members of the Board of Accountancy? a. Neglect of duty or incompetence b. A member of the Board manipulated the CPA licensure examination results. c. A member of the Board has been sued of crimes involving moral turpitude. d. A member of the Board has violated RA 9298. 27. Which statement is correct regarding the term of office of the chairman and the members of the Board of Accountancy (BOA)? a. A person may serve in the Board of Accountancy for eight consecutive years. b. No person who has served three (3) successive complete terms shall be eligible for reappointment until the lapse of one (1) year c. Appointment to fill up an unexpired term is to be considered a complete term. d. No person shall serve in the Board for more than 10 years. 28. Which of the following is not one of the functions of

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the Board of Accountancy specifically provided under the RA 9298? a. To monitor the conditions affecting the practice of accountancy and adopt such measures deemed proper for the enhancement and maintenance of high professional, ethical, accounting and auditing standards. b. To make investigations as it deems necessary to determine whether any person has violated any provisions of this law or any standards promulgated by the Board as part of the rules governing the practice of accountancy c. To delegate its power and function to determine and prepare test questions for the CPA licensure examination. d. To conduct an oversight into the quality of audits of financial statements through a review of the quality control measures. 29. Which is the least function of the Board of Accountancy? a. To prepare, adopt, issue or amend syllabi at the subjects for examinations in consultation with the academe. b. To investigate violations of the RA 9298 c. To prepare questions for the CPA licensure examination which shall strictly within the scope of the syllabi of the subjects for examination. d. To supervise PICPA. 30. The following statements relate to the RA 9298. Which statement is true? a. The Professional Regulation Commission has the authority to remove any member of the Board of Accountancy for negligence, incompetence, or any other just cause. b. No person shall be appointed as a member of the Board of Accountancy unless he has been in the practice of accountancy for at least 10 years, among others. c. Insanity is not a ground for proceeding against a CPA. d. After three years, subject to certain conditions, the Board of Accountancy may order the reinstatement of a CPA whose certificate of registration has been revoked. 31. Which of the following is not a function of the Board of Accountancy? a. To supervise the registration, licensure and practice of accountancy in the Philippines b. To prescribe and/or adopt a code of ethics for the practice of accountancy c. To issue, suspend, revoke, or reinstate the certificate of registration for the practice of the accountancy profession d. To adopt an official seal of the Commission. 32. The person authorized to remove a member of BOA on valid grounds and after due process is: a. The Commissioner of the PRC. b. The Chairman of BOA, unless he is the one under investigation. c. The President of the Philippines. d. Congress of the Philippines. 33. The following are the grounds for suspension or removal of members of BOA, except a. Neglect of duty.

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b. Incompetence. c. Violation of the CPA’s Code of Ethics. d. Pending case involving moral turpitude. 34. Which of the following statements about the composition of the Board of Accountancy is incorrect? a. The Board shall be composed of a chairman and six members. b. The members of the Board shall be appointed by the President of the Philippines from a list of three recommendees for each position and ranked by the Commission from a list of five nominees for each position submitted by Accredited Professional Organization or PICPA. c. The Board shall elect a chairman from among its members to serve for a term of one year. d. If the APO fails to submit its nominees within 60 days prior to the expiry of the term of an incumbent chairman or member, the Commission in consultation with the Board shall submit to the president a list of three nominees for each vacant position. 35. 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 36. This standard setting body shall have a chairman who had been or presently a senior accounting practitioner in any of the scope of accounting practice. a. PICPA b. ACPAPP c. FRSC d. AASC 37. This standard setting body shall have a chairman who had been or presently a senior accounting practitioner in public accountancy. a. BOA b. AASC c. FRSC d. ACPAE 38. The Chairman and the members of the FRSC and AASC shall have a term of a. 1 year b. 3 years c. 5 years d. 6 years 39. The following statements relate to the term of office of the Chairman and members of the Board of Accountancy (BOA). Which is false? a. The Chairman and members of the BOA shall hold office for a term of three (3) 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 unexpired term is not to be considered as a complete term. d. No person who has served two successive complete terms as chairman or member shall be eligible for reappointment until

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the lapse of two (2) years. 40. The Board of Accountancy shall elect a vice-chairman from among its members for a term of a. Two (2) years b. One (1) year c. Three (3) years d. Five (5) years 41. According to Section 9(A) of the IRR, the Commission upon the recommendation of the Board shall create an accounting standard setting body to be known as the a. Accounting Standards Board b. Accounting Standards Council c. Financial Reporting Standards Council d. Financial Reporting Standards Board 42. The Financial Reporting Standards Council shall be composed of a. 8 members b. 14 members c. 15 members d. 17 members 43. According to Section 9(A) of the IRR, the Commission upon the recommendation of the Board, shall create an auditing standard setting body to be known as the a. Auditing and Assurance Standards Council (AASC) b. Auditing Standards Board c. Auditing Standards Council d. Auditing Standards and Practices Council (ASPC) 44. The Auditing and Assurance Standards Council (AASC) shall be composed of a. 8 members b. 14 members c. 15 members d. 17 members 45. Which of the following does not have representation in the Financial Reporting Standards Council (FRSC)? a. Board of Investments (BOI) b. Philippine Institute of CPAs (PICPA) c. Bureau of Internal Revenue (BIR) d. Board of Accountancy (BOA) 46. The following are represented both to the Financial Reporting Standards Council (FRSC) and Auditing and Assurance Standards Council (AASC), except: a. Bangko Sentral ng Pilipinas b. Bureau of Internal Revenue c. Securities and Exchange Commission d. Board of Accountancy 47. Which of the following functions to promulgate auditing standards? a. National Accredited Professional Organization b. Financial Reporting Standards Council c. Auditing and Assurance Standards Council d. ACPAPP 48. The auditing standard setting body created by the Board of Accountancy is known as a. Accounting Standards Council (ASC) b. Financial Reporting Standards Council (FRSC) c. Auditing Standards and Practices Council (ASPC) d. Auditing and Assurance Standards Council

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(AASC) 49. Which of the following statements about Accounting Standard Setting Council is false? a. The accounting standard setting body is to be known as Financial Reporting Standards Council (FRSC). b. The Accounting standard setting body shall be composed of a chairman and fourteen members. c. The public accounting practice is the sector that is most represented in the accounting standard setting council. d. The chairman and members of the standard setting council shall be appointed by the Commission upon the recommendation of the Board in coordination with APO. 50. The sector that is most represented in the AASC is the: a. Commerce and Industry b. Academe c. Public Practice d. Government 51. Which of the following statements is correct about AASC? a. The AASC shall be composed of a chairman and six members. b. The chairman and members of the AASC shall be appointed by the President of the Philippines from a list of three recommendees ranked by the Commission from the list of 5 nominees for each position submitted by APO. c. The chairman and members of the AASC shall have a term of three years renewable for another term. d. The AASC shall elect a Vice-Chairman from among its members for a term of one year. 52. Which of the following statem...