The Code of Ethics and Republic Act 9298 docx PDF

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CHAPTER 13:THE CODE OF ETHICS AND REPUBLIC ACT 9298 The code of professional ethics for CPA’s promulgated by the Board of Accountancy applies to a. All CPA’s in public practice. b. All CPA’s in government c. All CPA’s in public practice and employed in private business. d. All CPAs in public practic...

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CHAPTER 13: THE CODE OF ETHICS AND REPUBLIC ACT 9298 1.

The code of professional ethics for CPA’s promulgated by the Board of Accountancy applies to a. All CPA’s in public practice. b. All CPA’s in government c. All CPA’s in public practice and employed in private business. d. All CPAs in public practice employed in private business and industry, in government and in education.

2.

The underlying reason for a code of professional ethics. a. That is required by legislation. b. To provide the licensing agencies with a basis for measuring the performance of the practitioners. c. The need for public confidence in the quality of service of the profession. d. That it provides a safeguard against unscrupulous people.3.

3.

The CPA profession deemed it necessary to establish a code of ethics and a mechanism for its enforcement because. a. An ethical conduct that stresses the CPAs responsibility to clients and colleagues is a prerequisite to success. b. A requirement of law provides that CPAs establish a code of ethics. c. Acceptance of responsibility to the public is a distinguishing mark of a profession. d. The establishment of flexible ethical standards provides self-protection for CPAs.

4.

Which of the following statements is true when the CPA has been engage to perform an audit of financial statements? a. The CPA firm is engage and paid by the client, therefore, the has primary responsibility to be an advance for the client. b. The CPA firm is engaged and paid by the client, but the primary beneficiaries of the audit are those who rely on the financial statements. c. Should a situation arise where there is no convincing authoritative standards available, and there is a choice of actions which could impact a client’s financial statements, the CPA is free to endorse the choice which is in the investors’ interests. d. The CPA firm’s paramount concern should be the interest of the client.

5.

Which of the following is not one of the characters of the profession? a. Mastery of a particular intellectual skill acquired by training and education. b. Adherence by its members to a common code of conduct. c. Acceptance of a duty to society as a whole. d. A responsibility to protect exclusively the interest of a client or employer.

6.

In order to achieve the objectives of the accountancy profession, professional accountants have to observe a number of prerequisites or fundamentals principles. The fundamental principles include the following, except. a. Objectivity b. Professional Competence and due care. c. Technical Standards. d. Confidence.

7.

The principle of the professional competence and due care imposes certain obligation on professional accountants. Which of the following is not one of those obligations required by this principle? a. To act diligently in accordance with applicable technical and professional standards. b. To be fair, intellectually honest and free of conflict of interest. c. To become aware and understand relevant technical, professional and business developments. d. To obtain professional knowledge and experience to enable them to fulfill their responsibilities.

8.

Competence as a certified public accountant includes all of the following except. a. Having the technical qualified to perform an engagement. b. Possessing the ability to supervise and evaluate the quality of staff work. c. Warranting the infallibility of the work performed. d. Consulting others if additional technical information is needed.

9.

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

c. d.

Refer a substantial portion of the audit to another CPA who will act as the principal auditor. First inform management that an unmodified opinion cannot be issued.

10. Professional competence should include

a. b. c. d.

Attainment of professional Competence Yes No No Yes

maintenance of professional Competence yes yes no no

11. The phase of professional competence that requires a professional accountant to adopt a program design to ensure a quality control in the performance of professional services consistent with technical and professional standards is. a. Attainment of professional competence. b. Maintenance of professional competence. c. Application of professional competence. d. Review of professional competence. 12. Which of the following is the least required in attaining professional competence? a. High standards of general education. b. Specific education, training and examination in professionally relevant subjects. c. Period of meaningful work experience. d. Continuing awareness of development in the accountancy profession. 13. The essence of the due care principle is that the auditor should not be guilty of. a. Bias c. fraud b. Errors in judgment d. negligence. 14. The principle of confidentiality applies to. a. Professional accountants in public practice. b. Professional accountants in commerce and industry. c. Professional accountants in government. d. All Professional accountants 15. The principle of confidentiality imposes an obligation on professional accountants to refrain from. a. Disclosing confidential information to another party even if the client authorizes the disclosure. b. Using confidential information acquired as a result of professional and business relationships to their personal advantage or the advantage of third parties. c. Disclosing information to defend themselves in case of litigation. d. Responding to an inquiry or investigation conducted by the Professional Regulatory Board of Accountancy. 16. A CPA shall not disclose confidentiality information obtained during an audit engagement in which one of the following situations? a. When the security of the state requires. b. With the consent of the client. c. In defense of himself when sued by his client. d. To a successor auditor without the clients permission. 17. Which of the following is incorrect regarding confidentiality? a. Professional accountants have an obligation to respect the confidentiality. b. The duty of confidentiality ceases after the end of the relationship between the professional accountant and the client or employer. c. 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. d. Confidentiality requires that 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. 18. The code of ethics for professional accountants 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 situations given below would a CPA be in violation of the principle of confidentiality? a. Disclosing confidential information in order to properly discharge the CPAs responsibilities in accordance with his professional standards. b. Disclosing confidential information in compliance with a subpoena issued by court. c. Disclosing confidential information to another accountant interest in purchasing the CPAs practice.

d.

Disclosing confidential information in an investigation conducted by the PRC thru the Board of Accountancy.

19. Which of the following statement is false? a. Confidentiality is broken when auditor is presented with a subpoena concerning an audit client. b. Information that a CPA obtains from a client is generally not privileged. c. When Board of Accountancy conducts a review of the quality controls of another CPA firm, permission of the client is not needed to examine audit documentation. d. A CPA firm which observes substandard audit documentation of another firm during a quality control review should immediately inform the firm being reviewed in order to rectify the deficiency. 20. Which of the following is considered a violation of rules on confidentiality? a. The CPA discloses information to protect his own interest in the course of legal proceedings. b. The CPA discloses information to a successor auditor after obtaining the client’s permission. c. The CPA discloses information to another CPA in compliance with a quality control review conducted by the Board of Accountancy d. The CPA divulges information disclosed to him by a prospective client. 21. When a professional accountant learns of a material error or omission in a tax return of a prior year, or of the failure to file a required tax return, the professional accountant has a responsibility to do the following except. a. Promptly advise the client or employer of the error or omission and recommended that disclosure be made to the revenue authorities. b. Immediately inform the revenue authorities. c. Take reasonable steps to ensure that the error is not repeated in subsequent tax returns if the professional accountant concludes that a professional relationship with the client or employer can be continued. d. Inform the client or the employer that it is not possible to act for them in connection with that return or other related information submitted to the authorities if the client or the employer does not correct the error. 22. 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? a. The CPA is issued a summon enforceable by a court order which orders the CP A to present confidential information. b. A major stockholder of a client company seeks accounting information from the CPA after the management declined to disclose the requested information. c. Confidential client information is made available with the clients permission. d. An inquiry by the Professional Regulation Commission and the CPA needs the disclosure to defend himself. 23. The principle of professional behavior requires a professional accountant to. a. Be straightforward and honest in performing professional services. b. Be fair and should not allow prejudice or bias, conflict of interest or influence of others to override objectivity. c. Perform professional services with due care, competence and diligence. d. Act in a manner consistent with the good reputation of the profession and refrain from any conduct which might bring discredit to the profession. 24. Identify the incorrect statement. “ A professional accountant rendering tax service is entitled to put forward the best position in favor of a client or an employer, provided: a. It does not impair the accountants integrity and objectivity b. It is rendered with professional competence. c. It is consistent with the law. d. The professional accountant assumes responsibility for the content of the tax return. 25. A professional accountant’s name can be associated with the information that: a. Contains a misleading statement. b. Intentionally omits or obscures information c. Uses estimates. d. Contains information without any real knowledge of whether they are true or false. 26. When a professional accountant performs services in a country other than the home country and differences on specific matters exist between ethical requirements of the two countries, the professional accountant should apply. a. The ethical requirements of his or her home country. b. The ethical requirements of the country in which services are being performed. c. The stricter of the two ethical requirements.

d.

The less strict ethical requirements.

27. One of the major differences between auditors and other professionals is that most professionals. a. Do not have to pass rigorous examination to be admitted in the profession. b. Are not expected to act in the best interest of the public. c. Need not be concerned about independence. d. Do not need the confidence of the public. 28. Independence in auditing means. a. Not having any financial or economic relationship with the client. b. Being an advocate of the assurance client. c. Taking an unbiased viewpoint. d. Not having a loan to or from an assurance client. 29. Which of the following most accurately states how objectivity has been defined by the Code of Ethics? a. Being honest and straight forward in all professional and business relationships. b. A state of mind that permits the provision of an opinion without being affected by influences that compromise professional judgment. c. A combination of impartiality, intellectual honesty and a freedom from conflict of interest. d. Avoiding facts and circumstances that could reduce the public confidence in the professional accountant’s report. 30. Which fundamental principle is seriously threatened by an engagement that is compensated based on the net proceeds on loans received by the client from a commercials bank? a. Integrity b. Objectivity c. Confidentiality d. Professional behavior. 31. A CPA, while performing an audit, strives to achieve independence in appearance in order to. a. Reduce risk and liability b. Become independence in mind c. Maintain public confidence in the profession. d. Comply with the generally accepted standards of fieldwork. 32. The concept pf materiality would be least important to an auditor in determining. a. Transactions that should be reviewed b. The need for disclosing a particular transaction or event. c. The extent of audit work planned for particular account. d. The effect of an auditor’s direct financial interest in a client. 33. The primary factor that distinguishes a direct from an indirect financial interest is the. a. Materiality of the amount involve\ b. Control over investment decisions. c. Risk associated with such investment. d. Relationship between the investors and investee. 34. Ultimately, the decision as to whether the CPA is independent or not, will be made by the a. Client c. public b. Audit committee d. auditor 35. The Philippine Code of Ethics for professional accountants requires independence. Of mind in appearance a. Yes yes b. Yes no c. No no d. No yes 36. Independence is required whenever a professional accountant performs. a. Professional services. b. Assurance services c. Non-assurance services d. Tax consultancy services. 37. Not all engagements performed by professional accountants are assurance engagements. Other engagements frequently performed by professional accountants that are not assurance engagements include the following, except. a. Agreed-upon procedures. b. Compilation of financial or other information.

c. d.

Management consulting Examination of prospective financial information.

38. It refers to the avoidance of facts and circumstances that are so significant that a reasonable, and informed third party, having knowledge of all the relevant information , including safeguards applied, would reasonably conclude a firm’s or a member of the assurance team’s integrity, objectivity or professional skepticism had been compromised. a. Independence in fact b. Independence in appearance c. Independence in mind. d. Inherent Independence 39. When CPAs are able to maintain their actual independence , it is referred to as independence in a. Conduct b. Appearance c. Fact d. Total. 40. According to the Code Of Professional Ethics, professional accountants. a. Should be independent in fact and in appearance at all times. b. In public practice should be independent in fact and in appearance at all times. c. In public practice should be independent in fact and in appearance when providing auditing and other assurance services. d. In public practice should be independent in fact and in appearance when providing auditing tax, and other advisory services. 41. If requested to perform a review engagement for a non-public entity in which an accountant has an immaterial deirct financial interest, the accountant is a. Independent and therefore may issue a review report. b. Not independent and therefore, may not issue a review report. c. Not independent and therefore, may issue a review report. d. Not independent and therefore , may not be associated with the financial statements. 42. The network firms are required to be independent of the client. a. For assurance engagements provided to an audit client. b. For assurance engagements provided to clients that are not audit clients, when the report is not expressly restricted for use by identified users. c. For assurance engagements provided to clients that are not audit clients, when the assurance report is expressly restricted for use by identified users d. For non-assurance engagements. 43. Which of the following should be independent of the financial statement audit client? A b c yes yes The members of the assurance team The firms yes yes Network firms yes no no

d yes no yes

yes no

44. For assurance engagements provided to clients that are not audit clients, when the assurance report is expressly restricted for use by identified users, the following should be independent of the clients. A b c d yes yes The members of the assurance team yes yes The firms yes yes no no Network firms yes no no yes 45. Which of the following statements is not correct about independence requirements? a. For assurance engagement provided to audit client, the members of the assurance team, the firm and network firms are required to be independent of the client. b. 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. c. For assurance engagements provided to non-audit clients, where the distribution of the assurance reports limited only to specified users, the members of the assurance team are required to be independent of the client. d. For assurance engagements provided to non-audit clients, where the distribution of the assurance report is limited only to specified users, the firm should independent of the client. 46. Which of the following professional are services does not require independence? a. Direct reporting engagements. b. Examination of financial forecast c. Tax consultancy services d. Assertion-based engagements

47. For which of the following professional services must CPAs be independent? a. Management advisory services b. Audits of financial statements. c. Preparation of tax returns. d. All three of the above. 48. A CPA firm should decline an offer to perform consulting services engagement if: a. The proposed engagement is not accounting related. b. Recommendations made by the CPA firm are to be subject to review by the client. c. Acceptance would require the CPA firm to make management decisions for an audit client. d. Any of the above is true. 49. The member of the assurance e 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. a. Starts when the assurance begins to perform assurance services and ends when the assurance report is issued. b. Starts when the assurance team begins to perform assurance services and ends when the fieldwork is completed. c. Starts when the engagement letters prepared and ends when the fieldwork is completed. d. Starts when the engagement letter is prepared and ends when assurance report issued. 50. This occurs as a result of the financial or other interest of a professional accountant or of an immediate or close family member. a. Self-interest threat c. advocacy threat b. Self-review threat d. familiarity threat. 51. This occurs when, because of a close relationship, a professional accountant becomes too sympathetic to the interest of others. a. Self-interest threat c. advocacy threat b. Self-review threat d. familiarity threat. 52. According to the Philippine Code of Ethics, compliance with fundamental principles is potentially affected by self-interest, self-review...