IncorrectQuestion 1

0 / 1 pts
Which is not a theoretical postulate framing an audit?

Financial data can be subjected to verification.

The auditor is independent of the client.

Long-term conflict between the auditor and client may exist.

An audit benefits the public.

IncorrectQuestion 1
0 / 1 pts
Absolute assurance cannot be provided in an audit because of: (Choose the exception)

The employment of test procedures

Limitations inherent in the client’s internal controls

Human errors in judgment

The need to obtain conclusive evidence

IncorrectQuestion 2
0 / 1 pts
AAA Corp. has engaged a public accounting firm to issue a report on the accuracy of product quality
specifications included in trade sales agreements. This is an example of a (an):

Operational audit

Attestation service

Compliance audit

Financial statement audit

IncorrectQuestion 20
0 / 1 pts
While performing procedures for the audit engagement, the auditor was asked to change the engagement
to review. Assuming the change is not justifiable, which of these statements does not concur?

The auditor provides negative assurance on the new report.

The auditor continues to perform audit procedures.

The auditor communicates the matter to an appropriate level of management.

The auditor withdraws from the audit engagement.

IncorrectQuestion 33
0 / 1 pts
The following relates to intended users, choose the exception:

Intended users are the person/s for whom the practitioner prepares the assurance report

In case of broad range of interests by the readers of assurance report, intended user may be limited to
major stockholders with significant and common interests.

Intended users may include either the practitioner or the responsible party.

Intended users may be identified by agreement between the practitioner and the responsible party or
engaging party, or by law

IncorrectQuestion 48
0 / 1 pts
If the application for registration to practice public accountancy of Chan and Co. CPAs, was approved on
July 31, 2018, the registration shall be renewed on or before

September 30, 2021

September 30, 2020

December 31, 2020

December 31, 2021

IncorrectQuestion 9
0 / 1 pts
Which of the following does not have representation in the Financial Reporting Standards Council (FRSC)?

Philippine Institute of CPAs (PICPA)

Board of Accountancy (BOA)

Board of Investments (BOI)

Bureau of Internal Revenue (BIR)

IncorrectQuestion 36
0 / 1 pts
Which is not a theoretical postulate framing an audit?

Financial data can be subjected to verification.

An audit benefits the public.

The auditor is independent of the client.

Long-term conflict between the auditor and client may exist.

IncorrectQuestion 49
0 / 1 pts
Which of the following helps prevent misunderstandings during audit planning?

Involvement of the client’s internal auditors in setting materiality levels and determining the scope of
audit tests.

A preliminary meeting conference with the client to discuss fees, timing, client assistance and related
issues.

Client involvement in determining specific audit planning issues.

Auditor involvement in the preparation of the client’s financial records.

Question 3
1 / 1 pts
If a change in the type of engagement from higher to lower of assurance is not justified, the auditor should:

Refuse to agree to management’s request on the change of engagement and continue with the
original engagement.

Question 4
1 / 1 pts
If the auditor concludes that there is reasonable justification for the change in engagement, the report to be
issued would

Include reference to any procedures that may have been performed in the original engagement

Not include reference to any procedures that may have been performed, particularly when the new
engagement is to undertake agreed-upon procedures

Be that appropriate for the revised terms of the engagement

Include reference to the original engagement

Question 5
1 / 1 pts
Which of the following statements does not describe a condition that creates a demand for auditing?

Users can directly assess the quality of information.

Question 6
1 / 1 pts
All of the following are grounds for suspension or removal of members of the board, except
Having a pecuniary interest, directly or indirectly, in any school, college or university

Final judgment of crimes involving moral turpitude

Violation or tolerance of any violation of RA 9298 and its implementing rules and regulations or the
Certified Public Accountant’s Code of Ethics and the technical and professional standards of practice for
certified public accountants

Neglect of duty or incompetence

Question 7
1 / 1 pts
Which of the following is not one of the functions of ETC?

Monitor the progress of the program on the study of accountancy and undertaking measures for the
attainment of a high quality of accountancy education in the country.

Establish teaching standards, including the qualifications of members of the faculty of schools and
colleges of accountancy.

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.

Determine a minimum standard curriculum for the study of accountancy to be implemented in all schools
offering accountancy as an undergraduate degree.

Question 8
1 / 1 pts
There is a broad range of engagements to provide a high or moderate level of assurance. Such
engagements may include
I. Engagements to report on a broad range of subject matters covering financial and non-financial
information
II. Attest and direct reporting engagements
III. Engagements to report internally and externally
IV. Engagements in the private and public sector

I, II, III and IV

I and II only
I, II and III

II only

Question 9
1 / 1 pts
Which of the following is not a financial statement assertion relating to account balances?

Rights and obligations.

Valuation and competence.

Existence.

Completeness.

Question 10
1 / 1 pts
The Board shall be composed of a chairman and six (6) members to be appointed by the President of the
Philippines from a list of <List A> for each position and ranked by the Commission, from a list of <List
B> nominees for each position submitted by the APO.

<List A> <List B>

Three (3) Five (5)

Five (5) Six (6)

Five (5) Three (3)

Six (6) Three (3)

Question 11
1 / 1 pts
Which is incorrect concerning evidence?

The higher the risk of material misstatement involved, the more is required.
The better the quality, the less is required.

The volume of evidence can compensate for its poor quality.

The reliability of evidence is influenced by its source and its nature.

Question 12
1 / 1 pts
Which of the following factors most likely would lead a CPA to conclude that a potential audit engagement
should be rejected?

It is unlikely that sufficient appropriate evidence is available to support an opinion on the financial
statements.

Internal control activities requiring the segregation of duties are subject to management override.

The details of most recorded transactions are not available after a specified period of time.

Management has a reputation for consulting with several accounting firms about significant accounting
issues.

Question 13
1 / 1 pts
The auditor’s responsibility in an audit engagement is limited to:

Expression of an opinion on the FSs

Opinion issued and fairness of presentation of FSs

Expression of opinion and inclusion of supplementary information, if necessary

Expression of an opinion on the FSs and adequacy of the notes to FSs

Question 14
1 / 1 pts
Which of the following criteria is unique to the independent auditor's attest function?
Familiarity with the particular industry of each client

Independence

General competence

Due professional care

Question 15
1 / 1 pts
Which of the following is not included in the seal used by a CPA?

Registration number

The title "CPA"

Professional tax receipt number

Name of the CPA

Question 16
1 / 1 pts
When one auditor succeeds another, the proposed auditor should request the

Previous auditor to submit a list of internal control weaknesses that have not been corrected.

Client to authorize the previous auditor to respond to inquiries.

Previous auditor to update the prior year’s report to the date of the change of auditors.

Client to instruct its attorney to send a letter of audit inquiry concerning the status of the prior year’s
litigation, claims, and assessments.

Question 17
1 / 1 pts
Which is not considered in deciding whether to accept an engagement?
Potential client’s reputation

Type of opinion to be issued

Ethical considerations

Competence of the audit team

Question 18
1 / 1 pts
Before accepting an engagement to audit a new client, a CPA is required to obtain

The prospective client’s signature to the engagement letter.

A preliminary understanding of the prospective client’s control environment.

The prospective client’s consent to make inquiries of the previous auditor, if any.

An understanding of the prospective client’s industry and business.

Question 19
1 / 1 pts
The powers and functions of the Board include the following, except

To administer oaths in connection with the administration of this Act

To remove a member of the Board upon due investigation from the Commission

To prescribe and adopt the rules and regulations necessary for carrying out the provisions of this Act

To supervise the registration, licensure and practice of accountancy in the Philippines

Question 21
1 / 1 pts
Which of the following statements refers to the definition of auditing?
A service activity which function is to provide quantitative information primarily financial in nature about
economic entities that is intended to be useful in making economic decisions.

The process of identifying, measuring and communicating economic information to permit informed
judgment and decisions by users of the information.

The art of recording, classifying and summarizing in a significant manner and in terms of money,
transactions and events which are in part at least of a financial character and interpreting the results
thereof.

A systematic process of objectively obtaining and evaluating evidence regarding assertions about
economic actions and events to ascertain the degree of correspondence between these assertions and
established criteria and communicating the results thereof.

Question 23
1 / 1 pts
Which statement below improperly describes the PSAs?

The measure the quality of auditor’s performance in audit engagement

They are interpretations of “generally accepted auditing standards”

They are minimum guidelines on which the auditor bases his professional judgment

They constitute set of procedures to be followed in the conduct of audit

Question 24
1 / 1 pts
Which of the following statements would least likely appear in an auditor’s engagement letter?

Management is responsible for making all financial records and related information available to us.

After performing our preliminary analytical procedures, we will discuss with you the other procedures we
consider necessary to complete the engagements.

Fees for our services are based on our regular per diem rates, plus travel and other out-of-pocket-
expenses.
Our engagement is subject to the risk that material errors or fraud, if they exist, will not be detected.

Question 25
1 / 1 pts
Which of the following statements is/are correct?
Statement 1: It shall be the primary duty of the Commission and the Board to effectively enforce the
provisions of RA 9298 and its Implementing Rules and Regulations.
Statement 2: Any person may bring before the Commission, Board, or the aforementioned officers of the
law, cases of illegal practice or violations of RA 9298 and its Implementing Rules and Regulations.

Only statement 1 is correct

Only statement 2 is correct

Both statements are correct

Both statements are incorrect

Question 26
1 / 1 pts
The following cannot be a suitable criteria for an assurance engagement, except?

Practitioner’s experience

Practitioner’s own expectations

Practitioner’s judgment

Agreement between the responsible party and the intended users

Question 27
1 / 1 pts
According to PSA 210, the auditor and the client should agree on the terms of engagement. The agreed
terms would need to be recorded in a(n)

Client representation letter

Comfort letter
Memo placed in the permanent section of the working papers

Engagement letter

Question 28
1 / 1 pts
Which of these circumstances would normally lead to a change in engagement?

Misunderstanding as to the nature of the engagement

Restrictions imposed by management

Auditor’s inability to gather evidence

Financial statements departing from GAAP

Question 29
1 / 1 pts
The BOA shall not refuse the registration of any person who successfully passed the CPA examinations if

Guilty of immoral and dishonorable conduct

Convicted by a court of competent jurisdiction of a criminal offense involving moral turpitude

None of the above.

Convicted for a political offense.

Question 30
1 / 1 pts
Set the following phases in proper order:
i. Pre-Engagement
ii. Internal Controls
iii. Evidence-Gathering
iv. Planning
v. Post-Audit Responsibilities
vi. Reporting
i, iv, ii, iii, v, vi

i, iv, ii, iii, vi, v

i, iv, iii, ii, v, vi

i, ii, iii, iv, v, vi

Question 31
1 / 1 pts
Which of the following factors most likely would cause a CPA to not accept a new audit engagement?

The prospective client has already completed its physical inventory count.

The prospective client is unwilling to make all financial records available to the CPA.

The CPA is unable to review the predecessor auditor's audit documentation.

The CPA lacks an understanding of the prospective client's operations and industry.

Question 32
1 / 1 pts
Which of the following does not constitute a practice of accountancy?

A person representing his/her employer before government agencies on tax and other accounting related
matters.

A person is appointed as a marketing director of a government-owned and controlled corporation.

A person in educational institution teaching accounting, auditing, business law, taxation or other
technically related subjects.

A person holding out himself as one skilled in the knowledge, science and practice of accounting and as
qualified person to render professional services as a CPA to more than one client.

Question 34
1 / 1 pts
Which of the following statements is incorrect?
Both certificate of registration and professional identification card shall be issued to a candidate who
passes the CPA Licensure examination.

The Board has the power to issue, suspend, revoke and/or reinstate the certificate of registration.

A certificate of registration is a certificate under seal with a validity of three (3) years, bearing a
registration number, issued to an individual, by the Commission, upon recommendation by the Board,
signifying that the individual has complied with all the legal and procedural requirements for such
issuance including, in appropriate cases, having successfully passed the CPA licensure examination.

Professional identification card is a card with validity of three (3) years, bearing the registration number,
date of issuance with an expiry date, due for periodic renewal, duly signed by the Chairperson of the
Commission issued by the PRC to a registered CPA up on payment of the annual registration fees for
three (3) years.

Question 35
1 / 1 pts
Characteristics of suitable criteria do not include

Understandability

Neutrality

Comparability

Relevance

Question 36
1 / 1 pts
Which of the following statements exemplifies positive assurance?

“In our opinion internal control is effective, in all material aspects, based on XYZ criteria.”

Neither A nor B

Both A and B
“Based on our work described in this report, nothing has come to our attention that causes us to believe
that internal control is not effective, in all material respects, based on XYZ criteria.”

Question 37
1 / 1 pts
Unless otherwise exempted, registered CPAs in the practice of accountancy who have not completed the
CPE requirements shall

Be dropped from the roster of CPAs.

Present evidence to the satisfaction of the Board that they have the necessary knowledge, skills and
experience to discharge their professional responsibility.

Not be allowed to renew their professional licenses.

Submit a letter addressed to the Board indicating the reasons for not complying with the CPE
requirements.

Question 38
1 / 1 pts
Meaningful experience shall be considered as satisfactory compliance with the requirements of Section 28
of RA No. 9298 if it is earned in

Academe/education and shall include teaching for at least three (3) trimesters or two (2) semesters
subjects in either financial accounting, business law and tax, auditing problems, auditing theory, financial
management and management services and the accumulated teaching experience on these subjects
shall not be less than three (3) school years.

Government and shall include significant involvement in general accounting, budgeting, tax
administration, internal auditing, liaison with external auditors or any other related functions

Public practice and shall include at least one year as auditor in charge and at least two years as audit
assistant of audit engagement covering full audit functions of significant clients.

Commerce and industry and shall include significant involvement in general accounting, budgeting, tax
administration, internal auditing, liaison with the Commission on Audit, representing his/her employer
before government agencies on tax and matters related to accounting or any other related functions.

Question 39
1 / 1 pts
Which statement does not accurately describe an assurance engagement?
Not all engagements performed by professional accountants are assurance engagements

The objective of an assurance engagement is for a professional accountant to evaluate or measure a

subject matter that is the responsibility of another party against identified suitable criteria, and to express
a conclusion that provides the intended user with a level of assurance about that subject matter

An engagement in form of agreed-upon procedures result in the expression of factual findings

A particular engagement, to be an assurance engagement, it depends upon whether it exhibits all the
following elements: a two-party relationship, a subject matter, suitable criteria, and a conclusion

Question 40
1 / 1 pts
If a company’s external auditor expresses an unqualified opinion as a result of the audit of the company’s
financial statements, readers of the audit report can assume that

The external auditor found no fraud

Internal control is effective

The company is financially sound and the financial statements are accurate

All material disagreements between the company and the auditor about the application of accounting
principles were resolved in the satisfaction of the external auditor.

Question 41
1 / 1 pts
The terms of the audit engagement shall include: (choose the exception)

The scope of the audit

The responsibilities of the auditor

The objective of the audit

The overall audit strategy

Question 42
1 / 1 pts
A proposed auditor makes specific inquiries of the previous auditor, prior to engagement acceptance, to

Inquire or significant subsequent events with respect to the prior period

Compare audit fees

Have knowledge whether PFRS has been consistently applied

Gain understanding on the reasons for the change of auditor

Question 43
1 / 1 pts
Which of the following should an auditor obtain from the previous auditor prior to accepting an audit
engagement?

Facts that might bear on the integrity of management.

Analysis of income statement accounts.

All matters of continuing accounting significance.

Analysis of balance sheet accounts.

Question 44
1 / 1 pts
The single feature that most clearly distinguishes auditing, attestation, and assurance is

CPA's approach to the service

Type of service

Training required to perform the service

Scope of services
Question 45
1 / 1 pts
Independence is required for which of the following types of engagements?
Compilation Review

Yes No

No No

No Yes

Yes Yes

Question 46
1 / 1 pts
Which of the following is not represented in the AASC?

Bureau of Internal Revenue

Board of Accountancy

Commission on Audit

Securities and Exchange Commission

Question 47
1 / 1 pts
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

Examination of prospective financial information

Management consulting

Compilation of financial or other information

Agreed-upon procedures
Question 49
1 / 1 pts
An objective of operational audit is to assess whether

Specific units of the entity are functioning effectively and efficiently

Financial statements fairly reflect the results of operations

Internal control structure is designed and implemented

An organization’s procedures adheres to specific procedures, rules or regulations set by an authoritative

body

Question 50
1 / 1 pts
Auditing is based on the assumption that the financial data are verifiable. Data are verifiable when two or
more qualified individuals,

Working together, can prove, beyond doubt, the accuracy of the data.

Working independently, each reach essentially similar conclusions.

Working independently, can prove, beyond reasonable doubt, the truthfulness of the data.

Working together, can agree upon the accuracy of the data.

---------------------------------------------------

Question 3
1 / 1 pts
As a participant, one credit hour of Continuing Professional Development program, activity or source shall
be equivalent to

3 credit units

1 credit unit

2 credit units
5 credit units

Question 4
1 / 1 pts
A person whose CPA certificate has been revoked

May be reinstated by the PRC after two years if he has acted in an exemplary manner

May be reinstated as a CPA by the Board of Accountancy after two years if he has acted in an exemplary
manner

Is automatically reinstated as a CPA after two years if the has acted in an exemplary manner

Can no longer be reinstated as a CPA

Question 5
1 / 1 pts
Audit procedures performed to obtain an understanding of the entity and its environment, including its
internal control, and to assess the risks of material misstatements at the financial statement and assertion
levels.

Substantive procedures

Tests of control

Analytical procedures

Risk assessment procedures

Question 7
1 / 1 pts
An engagement letter is best described as

A letter from the auditors to company management that specifies the responsibilities of both the company
and the auditors in completing the audit and the timing for its completion.

A letter from the company to the auditors specifying management’s expectations for completion of the
audit on a timely basis and the fees.
A letter from the auditors to company management specifying that management is responsible for the
financial statements, and the auditors will issue an opinion on the financial statements.

A letter from the Board of Directors’ audit committee to the auditor that indicates the auditor has been
engaged to perform the audit and the fees to be paid.

Question 8
1 / 1 pts
An auditor may achieve audit objectives related to particular assertions by:

Preparing audit documentation.

Increasing the level of detection risk.

Adhering to a system of quality control.

Performing analytical procedures.

Question 11
1 / 1 pts
Auditors must not only decide whether to accept new clients; they also should periodically review their list
of current clients and remove those clients the firm no longer wants to be associated with. Reasons for
discontinuing clients might include the following, except:

Inability to negotiate an acceptable increase in the audit fee.

Evidence indicating a client’s management has integrity.

Difficulty in working with client personnel.

Client need for specialized services the current firm is unable or unwilling to provide.

Question 15
1 / 1 pts
Acts to be performed in order to obtain audit evidence.

Audit strategy
Audit program

Audit standards

Audit procedures

Question 16
1 / 1 pts
Ultimately, the decision about whether or not an auditor is independent must be made by

Auditor

Public

Audit committee

Client’s management

Question 17
1 / 1 pts
Which statement is correct regarding the relationship between internal auditing and the external auditor?

The external audit function's objectives vary according to management's requirements.

The external auditor is responsible for the audit opinion expressed, however that responsibility may be
reduced by any use made of internal auditing.

Some judgments relating to the audit of the financial statements are those of the internal auditor.

Certain aspects of internal auditing may be useful in determining the nature, timing and extent of external
audit procedures.

Question 18
1 / 1 pts
A practitioner should accept an assurance engagement only if
The subject matter is in the form of financial information.

The practitioner's conclusion is to be contained in a written report.

The criteria to be used are not available to the intended users.

The subject matter is the responsibility of either the intended users or the practitioner.

Question 19
1 / 1 pts
Which is incorrect regarding internal auditing?

An internal audit department reports to the audit committee and senior management.

It provides assistance primarily to management and those charged with governance.

It can be performed only by internal auditors.

It encompasses both financial and operational auditing.

Question 20
1 / 1 pts
The Board shall, at the close of each calendar year, submit annual report that gives a detailed account of
its proceedings and accomplishments during the year to the

Secretary of Department of Justice

Professional Regulation Commission

Senate President and the Speaker of the House of Representatives

President of the Philippines

Question 21
1 / 1 pts
The independent auditor lends credibility to client financial statements by
Maintaining a clear-cut distinction between the management’s and the auditor’s representations

Stating in the auditor’s management letter that the examination was made in accordance with PSAs

Attaching an auditor’s opinion to the client’s FSs

Testifying under oath about client financial information

Question 23
1 / 1 pts
Which of the following factors most likely would influence an auditor’s determination of the auditability of
an entity’s financial statements?

The complexity of the accounting system.

The existence of related-party transactions.

The adequacy of the accounting records.

The operating effectiveness of control procedures.

Question 24
1 / 1 pts
The primary purpose of establishing quality control policies and procedures for deciding whether to accept
a new client is to

Enable the CPA firm to attest to the integrity of the client management.

Minimize the likelihood of association with clients whose management lacks integrity.

Anticipate before performing any field work whether an unmodified opinion can be expressed.

Satisfy the CPA firm’s duty to the public concerning the acceptance of new clients.

Question 26
1 / 1 pts
In "auditing" accounting data, the concern is with
Determining if fraud has occurred.

Determining whether recorded information properly reflects the economic events that occurred during the
accounting period.

Analyzing the financial information to be sure that it complies with government requirements.

Determining if taxable income has been calculated correctly.

Question 28
1 / 1 pts
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.

Reasonableness level

Tolerable level

Assurance level

Confidence level

Question 30
1 / 1 pts
Which statement is correct regarding CPE (Continuing Professional Education) requirements for renewal
of professional license?

Senior citizens are not exempted from CPD requirements.

A registered professional shall be permanently exempted from CPE requirements upon reaching the age
of 65 years old.

The total CPE credit units required for CPAs shall be sixty (60) units for three (3) years provided that a
minimum of fifteen (15) credit units shall be earned in each year.
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 has been out of the country for at least
one (2) year immediately prior to the date of renewal.

Question 34
1 / 1 pts
These refers to an assurance engagements in which the evaluation or measurement of the subject matter
is performed by the responsible party, and the subject matter information is in the form of an assertion by
the responsible party that is made available to the intended users.

Direct reporting engagement

Assertion-based engagement

Indirect reporting engagement

Reasonable assurance engagement

Question 38
1 / 1 pts
The three types of attestation services are:

Audits, review, and compilations

Audits, reviews, and other attestation services

Reviews, compilations, and other attestation services

Audits, compilations, and other attestation services

Question 40
1 / 1 pts
Management of a company is responsible for

Independence and obtaining evidence

The audit workpapers

Preparing the financial statements

Hiring the auditor

Question 41
1 / 1 pts
Which of the following terms best describe the audit of a taxpayer’s return by a BIR auditor?

Compliance audit

Operational audit

Government audit

Internal audit

Question 44
1 / 1 pts
The overall objectives of the auditor in conducting an audit of financial statements are
I. To obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether caused by fraud or error.
II. To report on the financial statements.
III. To obtain conclusive rather than persuasive evidence.
IV. To detect all misstatements, whether due to fraud or error.

I and II only

I, II, III and IV

II and IV only

I, II and III only

Question 47
1 / 1 pts
The primary goal of the CPA in performing the attest function is to

Determine whether the client's assertions are fairly stated

Examine individual transactions so that the auditor may certify as to their validity

Assure the consistent application of correct accounting procedures

Detect fraud

Question 48
1 / 1 pts
Practitioners who perform assurance engagements is governed by the following, except

Philippine Standards on Quality Control

Philippine Financial Reporting Standards

The Framework to Assurance Engagements

Code of ethics for Professional Accountants in the Philippines

While performing procedures for the audit engagement, the auditor was asked to change the engagement
to review. Assuming the change is not justifiable, which of these statements does not concur?

The auditor provides negative assurance on the new report.

The auditor continues to perform audit procedures.

The auditor withdraws from the audit engagement.

The auditor communicates the matter to an appropriate level of management.

Question 2
1 / 1 pts
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.

Tolerable level

Reasonableness level
Assurance level

Confidence level

Question 3
1 / 1 pts
The overall objectives of the auditor in conducting an audit of financial statements are
I. To obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether caused by fraud or error.
II. To report on the financial statements.
III. To obtain conclusive rather than persuasive evidence.
IV. To detect all misstatements, whether due to fraud or error.

I, II and III only

I, II, III and IV

I and II only

II and IV only

IncorrectQuestion 4
0 / 1 pts
The need for an independent audit arises due to the following reasons. (Choose the expectation)

Remoteness of users

Competing interests

Complexity of decision-making

Expertise of auditors

Question 5
1 / 1 pts
If permission from the client to discuss its affairs with the proposed auditor is denied by the client, the
predecessor auditor should:

Disclose adequately to proposed auditor all noncompliance made by the client

Keep silent of the denial

Disclose the fact that the permission to disclosure is denied by the client

Seek legal advice before responding to the proposed auditor

Question 6
1 / 1 pts
If a company’s external auditor expresses an unqualified opinion as a result of the audit of the company’s
financial statements, readers of the audit report can assume that

Internal control is effective

The external auditor found no fraud

All material disagreements between the company and the auditor about the application of accounting
principles were resolved in the satisfaction of the external auditor.

The company is financially sound and the financial statements are accurate

Question 7
1 / 1 pts
All of the following are grounds for suspension or removal of members of the board, except

Final judgment of crimes involving moral turpitude

Violation or tolerance of any violation of RA 9298 and its implementing rules and regulations or the
Certified Public Accountant’s Code of Ethics and the technical and professional standards of practice for
certified public accountants

Having a pecuniary interest, directly or indirectly, in any school, college or university

Neglect of duty or incompetence

Question 8
1 / 1 pts
The Philippine Standards on Assurance Engagements (PSAEs) are to be applied in
The audit or review of historical financial information.

Assurance engagements dealing with subject matters other than historical financial information.

Compilation engagements and agreements to apply agreed-upon procedures to information.

Assurance engagements dealing with historical financial information.

Question 9
1 / 1 pts
Which of the following statements would least likely appear in an auditor’s engagement letter?

Fees for our services are based on our regular per diem rates, plus travel and other out-of-pocket-
expenses.

Our engagement is subject to the risk that material errors or fraud, if they exist, will not be detected.

After performing our preliminary analytical procedures, we will discuss with you the other procedures we
consider necessary to complete the engagements.

Management is responsible for making all financial records and related information available to us.

Question 10
1 / 1 pts
Characteristics of suitable criteria do not include

Neutrality

Relevance

Comparability

Understandability

Question 11
1 / 1 pts
The primary goal of the CPA in performing the attest function is to

Examine individual transactions so that the auditor may certify as to their validity
Determine whether the client's assertions are fairly stated

Detect fraud

Assure the consistent application of correct accounting procedures

Question 12
1 / 1 pts
The terms of the audit engagement shall include: (choose the exception)

The objective of the audit

The responsibilities of the auditor

The overall audit strategy

The scope of the audit

Question 13
1 / 1 pts
Which is not a theoretical postulate framing an audit?

Long-term conflict between the auditor and client may exist.

The auditor is independent of the client.

An audit benefits the public.

Financial data can be subjected to verification.

Question 14
1 / 1 pts
An objective of operational audit is to assess whether

Financial statements fairly reflect the results of operations

Specific units of the entity are functioning effectively and efficiently

Internal control structure is designed and implemented

An organization’s procedures adheres to specific procedures, rules or regulations set by an authoritative

body

Question 15
1 / 1 pts
If the application for registration to practice public accountancy of Ramos and Co. CPAs, was approved on
July 31, 2018, the registration shall expire on

September 30, 2020

December 31, 2021

September 30, 2021

December 31,2020

Question 16
1 / 1 pts
The subject matter of an assurance engagement may include

Internal controls

Financial information

Compliance with regulation

All of these

Question 17
1 / 1 pts
Which statement is correct regarding the relationship between internal auditing and the external auditor?

Certain aspects of internal auditing may be useful in determining the nature, timing and extent of external
audit procedures.

The external audit function's objectives vary according to management's requirements.

The external auditor is responsible for the audit opinion expressed, however that responsibility may be
reduced by any use made of internal auditing.

Some judgments relating to the audit of the financial statements are those of the internal auditor.

Question 18
1 / 1 pts
The primary purpose of establishing quality control policies and procedures for deciding whether to accept
a new client is to

Minimize the likelihood of association with clients whose management lacks integrity.

Enable the CPA firm to attest to the integrity of the client management.

Satisfy the CPA firm’s duty to the public concerning the acceptance of new clients.

Anticipate before performing any field work whether an unmodified opinion can be expressed.

Question 19
1 / 1 pts
Which of the following factors most likely would cause a CPA to not accept a new audit engagement?

The CPA is unable to review the predecessor auditor's audit documentation.

The prospective client is unwilling to make all financial records available to the CPA.

The prospective client has already completed its physical inventory count.

The CPA lacks an understanding of the prospective client's operations and industry.

Question 20
1 / 1 pts
When one auditor succeeds another, the proposed auditor should request the

Previous auditor to update the prior year’s report to the date of the change of auditors.

Client to authorize the previous auditor to respond to inquiries.

Previous auditor to submit a list of internal control weaknesses that have not been corrected.

Client to instruct its attorney to send a letter of audit inquiry concerning the status of the prior year’s
litigation, claims, and assessments.

IncorrectQuestion 21
0 / 1 pts
The following relates to intended users, choose the exception:

Intended users may include either the practitioner or the responsible party.

In case of broad range of interests by the readers of assurance report, intended user may be limited to
major stockholders with significant and common interests.

Intended users are the person/s for whom the practitioner prepares the assurance report

Intended users may be identified by agreement between the practitioner and the responsible party or
engaging party, or by law

Question 22
1 / 1 pts
Management of a company is responsible for

The audit workpapers

Preparing the financial statements

Independence and obtaining evidence

Hiring the auditor

Question 23
1 / 1 pts
Which of the following statements is incorrect?

A certificate of registration is a certificate under seal with a validity of three (3) years, bearing a
registration number, issued to an individual, by the Commission, upon recommendation by the Board,
signifying that the individual has complied with all the legal and procedural requirements for such
issuance including, in appropriate cases, having successfully passed the CPA licensure examination.
Professional identification card is a card with validity of three (3) years, bearing the registration number,
date of issuance with an expiry date, due for periodic renewal, duly signed by the Chairperson of the
Commission issued by the PRC to a registered CPA up on payment of the annual registration fees for
three (3) years.

Both certificate of registration and professional identification card shall be issued to a candidate who
passes the CPA Licensure examination.

The Board has the power to issue, suspend, revoke and/or reinstate the certificate of registration.

Question 24
1 / 1 pts
Which of the following statements refers to the definition of auditing?

The process of identifying, measuring and communicating economic information to permit informed
judgment and decisions by users of the information.

The art of recording, classifying and summarizing in a significant manner and in terms of money,
transactions and events which are in part at least of a financial character and interpreting the results
thereof.

A service activity which function is to provide quantitative information primarily financial in nature about
economic entities that is intended to be useful in making economic decisions.

A systematic process of objectively obtaining and evaluating evidence regarding assertions about
economic actions and events to ascertain the degree of correspondence between these assertions and
established criteria and communicating the results thereof.

Question 25
1 / 1 pts
In "auditing" accounting data, the concern is with

Analyzing the financial information to be sure that it complies with government requirements.

Determining if taxable income has been calculated correctly.

Determining if fraud has occurred.

Determining whether recorded information properly reflects the economic events that occurred during the
accounting period.
Question 26
1 / 1 pts
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 to perform agreed-upon procedures.

An engagement in accordance with the Philippine Standard on Assurance Engagement(s) issued by the
Auditing and Assurance Standard Council as approved by the Board of Accountancy/Professional
Regulation Commission.

An engagement conducted to provide a moderate level of assurance that the subject matter is plausible in
the circumstances.

Question 27
1 / 1 pts
A firm has obtained information that would have caused it to decline an engagement had the information
been available earlier. Actions available to the auditor would include the following, except:

Issue a disclaimer of opinion

Withdraw from the engagement

Withdraw from the client relationship

Reporting the information and its implications to the person/s who appointed the CPA

Question 28
1 / 1 pts
The following cannot be a suitable criteria for an assurance engagement, except?

Practitioner’s own expectations

Practitioner’s judgment

Agreement between the responsible party and the intended users

Practitioner’s experience

Question 29
1 / 1 pts
The following ratings were obtained by an examinee during the October 2019 examination:

FAR 96 Taxation 64
AFAR 94 RFBT 74
MAS 94

Based on the above information, the examinee is considered

Topnotcher

Passed

Failed

Conditional

Question 30
1 / 1 pts
The powers and functions of the Board include the following, except

To administer oaths in connection with the administration of this Act

To prescribe and adopt the rules and regulations necessary for carrying out the provisions of this Act

To supervise the registration, licensure and practice of accountancy in the Philippines

To remove a member of the Board upon due investigation from the Commission

Question 31
1 / 1 pts
Which of the following is not a financial statement assertion relating to account balances?

Completeness.
Rights and obligations.

Valuation and competence.

Existence.

Question 32
1 / 1 pts
Before accepting an engagement to audit a new client, a CPA is required to obtain

The prospective client’s signature to the engagement letter.

An understanding of the prospective client’s industry and business.

A preliminary understanding of the prospective client’s control environment.

The prospective client’s consent to make inquiries of the previous auditor, if any.

Question 33
1 / 1 pts
A person whose CPA certificate has been revoked

May be reinstated by the PRC after two years if he has acted in an exemplary manner

May be reinstated as a CPA by the Board of Accountancy after two years if he has acted in an exemplary
manner

Is automatically reinstated as a CPA after two years if the has acted in an exemplary manner

Can no longer be reinstated as a CPA

Question 34
1 / 1 pts
Which statement is correct regarding CPE (Continuing Professional Education) requirements for renewal
of professional license?

A registered professional shall be permanently exempted from CPE requirements upon reaching the age
of 65 years old.
The total CPE credit units required for CPAs shall be sixty (60) units for three (3) years provided that a
minimum of fifteen (15) credit units shall be earned in each year.

Senior citizens are not exempted from CPD requirements.

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 has been out of the country for at least
one (2) year immediately prior to the date of renewal.

Question 35
1 / 1 pts
The single feature that most clearly distinguishes auditing, attestation, and assurance is

Training required to perform the service

Type of service

CPA's approach to the service

Scope of services

Question 36
1 / 1 pts
The Philippine Framework for Assurance Engagements

Defines and describes the elements and objectives of an assurance engagement, and identifies
engagements to which PSAs, PSREs, and PSAEs apply.

Contains basic principles, essential procedures and related guidance for the performance of assurance
engagements.

Establishes standards and provides procedural requirements for the performance of assurance
engagements.

Provides a frame of reference for CPAs in public practice when performing audits, reviews, and
compilations of historical financial information.

Question 37
1 / 1 pts
The Board, subject to the approval of the Commission, may revise or exclude any of the subjects and their
syllabi, and add new ones as the need arises provided that the change shall not be more often than once
every

Two years

Three years

Four years

Five years

Question 38
1 / 1 pts
Which of the following is not an assurance engagement?

Audit of prospective financial statements

Comprehensive audit

Preparation of tax returns that use estimates

Review of interim historical financial statements

Question 39
1 / 1 pts
Which of the following criteria is unique to the independent auditor's attest function?

Due professional care

General competence

Familiarity with the particular industry of each client

Independence

Question 40
1 / 1 pts
It is the use by management of an acceptable financial reporting framework (e.g. PFRS) in the preparation
of the financial statements and the agreement of management and, where appropriate, those charged with
governance to the premise on which an audit is conducted.

Fair presentation

Written representation

Engagement letter

Preconditions for an audit

Question 41
1 / 1 pts
The BOA shall not refuse the registration of any person who successfully passed the CPA examinations if

Convicted by a court of competent jurisdiction of a criminal offense involving moral turpitude

None of the above.

Convicted for a political offense.

Guilty of immoral and dishonorable conduct

Question 42
1 / 1 pts
Select the incorrect statement from the following generalization on the reliability of evidence.

Evidence provided by original documents is more reliable than evidence provided by photocopies or
facsimiles.

Evidence that is generated internally is more reliable when the related controls are effective.

Evidence obtained directly by the practitioner is more reliable than when obtained indirectly, even if the
source is not competent.

Evidence is more reliable when it is obtained from independent sources outside the entity.

Question 43
1 / 1 pts
These audits are similar in most respects.

Operational and government

Financial and compliance

Financial and operational

Operational and compliance

Question 44
1 / 1 pts
Which statement below improperly describes the PSAs?

They are minimum guidelines on which the auditor bases his professional judgment

They constitute set of procedures to be followed in the conduct of audit

The measure the quality of auditor’s performance in audit engagement

They are interpretations of “generally accepted auditing standards”

Question 45
1 / 1 pts
Who appoints the members of the COA?

The President, with the concurrence of the Commission on Appointments

The Chairman of the Professional Board of Accountancy

The commissioner of the Professional Regulatory Commission

The Chairman of the Auditing and Assurance Standards Council

Question 46
1 / 1 pts
Which of the following statements is/are correct?
Statement 1: It shall be the primary duty of the Commission and the Board to effectively enforce the
provisions of RA 9298 and its Implementing Rules and Regulations.
Statement 2: Any person may bring before the Commission, Board, or the aforementioned officers of the
law, cases of illegal practice or violations of RA 9298 and its Implementing Rules and Regulations.

Both statements are incorrect

Only statement 2 is correct

Both statements are correct

Only statement 1 is correct

Question 47
1 / 1 pts
Meaningful experience shall be considered as satisfactory compliance with the requirements of Section 28
of RA No. 9298 if it is earned in

Public practice and shall include at least one year as auditor in charge and at least two years as audit
assistant of audit engagement covering full audit functions of significant clients.

Commerce and industry and shall include significant involvement in general accounting, budgeting, tax
administration, internal auditing, liaison with the Commission on Audit, representing his/her employer
before government agencies on tax and matters related to accounting or any other related functions.

Academe/education and shall include teaching for at least three (3) trimesters or two (2) semesters
subjects in either financial accounting, business law and tax, auditing problems, auditing theory, financial
management and management services and the accumulated teaching experience on these subjects
shall not be less than three (3) school years.

Government and shall include significant involvement in general accounting, budgeting, tax
administration, internal auditing, liaison with external auditors or any other related functions

IncorrectQuestion 48
0 / 1 pts
An auditor may most likely decide not to accept a new audit engagement when

The prospective client’s CEO is also the chairman of the governing board

The CPA has knowledge of the prospective client’s disregard of its responsibilities concerning internal
controls
The CPA has knowledge that the prospective client has too many related-party transactions

The prospective client’s system is highly automated and the auditor lacks understanding of such system

Question 49
1 / 1 pts
Which of the following does not constitute a practice of accountancy?

A person is appointed as a marketing director of a government-owned and controlled corporation.

A person representing his/her employer before government agencies on tax and other accounting related
matters.

A person in educational institution teaching accounting, auditing, business law, taxation or other
technically related subjects.

A person holding out himself as one skilled in the knowledge, science and practice of accounting and as
qualified person to render professional services as a CPA to more than one client.

Question 50
1 / 1 pts
Unless otherwise exempted, registered CPAs in the practice of accountancy who have not completed the
CPE requirements shall

Be dropped from the roster of CPAs.

Present evidence to the satisfaction of the Board that they have the necessary knowledge, skills and
experience to discharge their professional responsibility.

Not be allowed to renew their professional licenses.

Submit a letter addressed to the Board indicating the reasons for not complying with the CPE
requirements.

IncorrectQuestion 1
0 / 1 pts
Which is not a theoretical postulate framing an audit?
Financial data can be subjected to verification.

The auditor is independent of the client.

Long-term conflict between the auditor and client may exist.

An audit benefits the public.

Question 2
1 / 1 pts
Which of the following statements refers to the definition of auditing?

The process of identifying, measuring and communicating economic information to permit informed
judgment and decisions by users of the information.

The art of recording, classifying and summarizing in a significant manner and in terms of money,
transactions and events which are in part at least of a financial character and interpreting the results
thereof.

A systematic process of objectively obtaining and evaluating evidence regarding assertions about
economic actions and events to ascertain the degree of correspondence between these assertions and
established criteria and communicating the results thereof.

A service activity which function is to provide quantitative information primarily financial in nature about
economic entities that is intended to be useful in making economic decisions.

IncorrectQuestion 3
0 / 1 pts
The following relates to intended users, choose the exception:

In case of broad range of interests by the readers of assurance report, intended user may be limited to
major stockholders with significant and common interests.

Intended users are the person/s for whom the practitioner prepares the assurance report

Intended users may include either the practitioner or the responsible party.

Intended users may be identified by agreement between the practitioner and the responsible party or
engaging party, or by law
IncorrectQuestion 4
0 / 1 pts
AAA Corp. has engaged a public accounting firm to issue a report on the accuracy of product quality
specifications included in trade sales agreements. This is an example of a (an):

Operational audit

Attestation service

Compliance audit

Financial statement audit

Question 5
1 / 1 pts
Which of these circumstances would normally lead to a change in engagement?

Restrictions imposed by management

Financial statements departing from GAAP

Auditor’s inability to gather evidence

Misunderstanding as to the nature of the engagement

Question 6
1 / 1 pts
One of the first things that the auditor will do after accepting a new client is:

Tour the client’s facilities.

Study the client’s internal control structure.

Communicate with the predecessor auditor.

Contact the client’s attorney to discover legal obligations.

Question 7
1 / 1 pts
A practitioner should accept an assurance engagement only if

The practitioner's conclusion is to be contained in a written report.

The subject matter is in the form of financial information.

The criteria to be used are not available to the intended users.

The subject matter is the responsibility of either the intended users or the practitioner.

Question 8
1 / 1 pts
Which of the following is not one of the functions of ETC?

Determine a minimum standard curriculum for the study of accountancy to be implemented in all schools
offering accountancy as an undergraduate degree.

Establish teaching standards, including the qualifications of members of the faculty of schools and
colleges of accountancy.

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.

Monitor the progress of the program on the study of accountancy and undertaking measures for the
attainment of a high quality of accountancy education in the country.

Question 9
1 / 1 pts
The following cannot be a suitable criteria for an assurance engagement, except?

Agreement between the responsible party and the intended users

Practitioner’s experience
Practitioner’s judgment

Practitioner’s own expectations

Question 10
1 / 1 pts
Choose the incorrect statement.

Appointment to fill up an unexpired term is to be considered as a complete term.

Any vacancy occurring within the term of a member shall be filled up for the unexpired portion of the term
only.

No person who has served two successive complete terms as chairman or member shall be eligible for
reappointment as chairman or member until the lapse of one year.

No person shall serve in the Board for more than twelve (12) years.

Question 11
1 / 1 pts
Which of the following statements is/are correct?
Statement 1: It shall be the primary duty of the Commission and the Board to effectively enforce the
provisions of RA 9298 and its Implementing Rules and Regulations.
Statement 2: Any person may bring before the Commission, Board, or the aforementioned officers of the
law, cases of illegal practice or violations of RA 9298 and its Implementing Rules and Regulations.

Both statements are correct

Only statement 2 is correct

Both statements are incorrect

Only statement 1 is correct

IncorrectQuestion 12
0 / 1 pts
Which statement does not accurately describe an assurance engagement?
A particular engagement, to be an assurance engagement, it depends upon whether it exhibits all the
following elements: a two-party relationship, a subject matter, suitable criteria, and a conclusion

Not all engagements performed by professional accountants are assurance engagements

The objective of an assurance engagement is for a professional accountant to evaluate or measure a

subject matter that is the responsibility of another party against identified suitable criteria, and to express
a conclusion that provides the intended user with a level of assurance about that subject matter

An engagement in form of agreed-upon procedures result in the expression of factual findings

Question 13
1 / 1 pts
Which statement is correct regarding the relationship between internal auditing and the external auditor?

The external audit function's objectives vary according to management's requirements.

The external auditor is responsible for the audit opinion expressed, however that responsibility may be
reduced by any use made of internal auditing.

Some judgments relating to the audit of the financial statements are those of the internal auditor.

Certain aspects of internal auditing may be useful in determining the nature, timing and extent of external
audit procedures.

Question 14
1 / 1 pts
An engagement letter is best described as

A letter from the company to the auditors specifying management’s expectations for completion of the
audit on a timely basis and the fees.

A letter from the auditors to company management specifying that management is responsible for the
financial statements, and the auditors will issue an opinion on the financial statements.

A letter from the auditors to company management that specifies the responsibilities of both the company
and the auditors in completing the audit and the timing for its completion.

A letter from the Board of Directors’ audit committee to the auditor that indicates the auditor has been
engaged to perform the audit and the fees to be paid.
Question 15
1 / 1 pts
Which of the following does not constitute a practice of accountancy?

A person representing his/her employer before government agencies on tax and other accounting related
matters.

A person is appointed as a marketing director of a government-owned and controlled corporation.

A person holding out himself as one skilled in the knowledge, science and practice of accounting and as
qualified person to render professional services as a CPA to more than one client.

A person in educational institution teaching accounting, auditing, business law, taxation or other
technically related subjects.

Question 16
1 / 1 pts
The Board shall be composed of a chairman and six (6) members to be appointed by the President of the
Philippines from a list of <List A> for each position and ranked by the Commission, from a list of <List
B> nominees for each position submitted by the APO.

<List A> <List B>

Five (5) Six (6)

Six (6) Three (3)

Three (3) Five (5)

Five (5) Three (3)

IncorrectQuestion 17
0 / 1 pts
Which of the following should an auditor obtain from the previous auditor prior to accepting an audit
engagement?

Analysis of income statement accounts.

All matters of continuing accounting significance.

Facts that might bear on the integrity of management.

Analysis of balance sheet accounts.

Question 18
1 / 1 pts
Auditing is based on the assumption that the financial data are verifiable. Data are verifiable when two or
more qualified individuals,

Working independently, can prove, beyond reasonable doubt, the truthfulness of the data.

Working together, can prove, beyond doubt, the accuracy of the data.

Working together, can agree upon the accuracy of the data.

Working independently, each reach essentially similar conclusions.

Question 19
1 / 1 pts
Engagement letters are widely used in practice for:

Related services only

Audits only

Professional engagements of all types

Assurance engagements only

Question 20
1 / 1 pts
If a change in the type of engagement from higher to lower of assurance is not justified, the auditor should:

Refuse to agree to management’s request on the change of engagement and continue with the original
engagement.
Withdraw from the engagement.

Qualify the report on the original engagement.

Continue with the revised engagement, but make explicit reference about the original engagement.

Question 21
1 / 1 pts
All of the following are grounds for suspension or removal of members of the board, except

Neglect of duty or incompetence

Violation or tolerance of any violation of RA 9298 and its implementing rules and regulations or the
Certified Public Accountant’s Code of Ethics and the technical and professional standards of practice for
certified public accountants

Final judgment of crimes involving moral turpitude

Having a pecuniary interest, directly or indirectly, in any school, college or university

Question 22
1 / 1 pts
The Board shall, at the close of each calendar year, submit annual report that gives a detailed account of
its proceedings and accomplishments during the year to the

President of the Philippines

Professional Regulation Commission

Secretary of Department of Justice

Senate President and the Speaker of the House of Representatives

Question 23
1 / 1 pts
The BOA shall not refuse the registration of any person who successfully passed the CPA examinations if

Convicted for a political offense.

None of the above.

Guilty of immoral and dishonorable conduct

Convicted by a court of competent jurisdiction of a criminal offense involving moral turpitude

IncorrectQuestion 24
0 / 1 pts
Which of the following does not have representation in the Financial Reporting Standards Council (FRSC)?

Philippine Institute of CPAs (PICPA)

Board of Accountancy (BOA)

Bureau of Internal Revenue (BIR)

Board of Investments (BOI)

Question 25
1 / 1 pts
On an audit engagement performed by a CPA firm with one office, at the minimum, knowledge of the
relevant professional accounting and auditing standards should be held by:

All professionals working upon the audit.

All professionals working upon the audit and the partner in charge of the CPA firm.

The auditor with final responsibility for the audit.

All professionals working in the office.

IncorrectQuestion 26
0 / 1 pts
Audit procedures to test the operating effectiveness of controls in preventing or detecting and correcting
material misstatements at the assertion level.
Risk assessment procedures

Tests of control

Analytical procedures

Substantive procedures

IncorrectQuestion 27
0 / 1 pts
The need for an independent audit arises due to the following reasons. (Choose the expectation)

Complexity of decision-making

Expertise of auditors

Remoteness of users

Competing interests

Question 28
1 / 1 pts
Professional skepticism dictates that when management makes a statement to the auditors, the auditors
should

Believe the statement in order to maintain the professional client-auditor relationship

Require that the statement be put in writing

Disregard the statement because it ranks low of the evidence quality scale

Corroborate the evidence with other supporting documentation whenever possible

Question 29
1 / 1 pts
Which statement below improperly describes the PSAs?
The measure the quality of auditor’s performance in audit engagement

They are minimum guidelines on which the auditor bases his professional judgment

They constitute set of procedures to be followed in the conduct of audit

They are interpretations of “generally accepted auditing standards”

Question 30
1 / 1 pts
Set the following phases in proper order:
i. Pre-Engagement
ii. Internal Controls
iii. Evidence-Gathering
iv. Planning
v. Post-Audit Responsibilities
vi. Reporting

i, ii, iii, iv, v, vi

i, iv, iii, ii, v, vi

i, iv, ii, iii, vi, v

i, iv, ii, iii, v, vi

Question 31
1 / 1 pts
Which of the following criteria is unique to the independent auditor's attest function?

Due professional care

Familiarity with the particular industry of each client

General competence

Independence

Question 32
1 / 1 pts
The overall objectives of the auditor in conducting an audit of financial statements are
I. To obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether caused by fraud or error.
II. To report on the financial statements.
III. To obtain conclusive rather than persuasive evidence.
IV. To detect all misstatements, whether due to fraud or error.

I and II only

II and IV only

I, II and III only

I, II, III and IV

Question 33
1 / 1 pts
It is the use by management of an acceptable financial reporting framework (e.g. PFRS) in the preparation
of the financial statements and the agreement of management and, where appropriate, those charged with
governance to the premise on which an audit is conducted.

Preconditions for an audit

Fair presentation

Engagement letter

Written representation

Question 34
1 / 1 pts
An auditor may achieve audit objectives related to particular assertions by:

Performing analytical procedures.

Increasing the level of detection risk.

Preparing audit documentation.

Adhering to a system of quality control.

Question 35
1 / 1 pts
All, except one, are elements of an assurance engagement.

Written report

Independence

Subject matter

Sufficient appropriate evidence

Question 36
1 / 1 pts
Unless otherwise exempted, registered CPAs in the practice of accountancy who have not completed the
CPE requirements shall

Submit a letter addressed to the Board indicating the reasons for not complying with the CPE
requirements.

Not be allowed to renew their professional licenses.

Present evidence to the satisfaction of the Board that they have the necessary knowledge, skills and
experience to discharge their professional responsibility.

Be dropped from the roster of CPAs.

Question 37
1 / 1 pts
A firm has obtained information that would have caused it to decline an engagement had the information
been available earlier. Actions available to the auditor would include the following, except:

Withdraw from the client relationship

Withdraw from the engagement

Issue a disclaimer of opinion

Reporting the information and its implications to the person/s who appointed the CPA

Question 38
1 / 1 pts
If the application for registration to practice public accountancy of Chan and Co. CPAs, was approved on
July 31, 2018, the registration shall be renewed on or before

September 30, 2020

September 30, 2021

December 31, 2020

December 31, 2021

Question 39
1 / 1 pts
To provide for the greatest degree of independence in performing internal auditing functions, an internal
auditor most likely should report to

Board of Directors.

Corporate Stockholders.

Corporate Controller.

Vice-President for Finance.

Question 40
1 / 1 pts
The standard setting body created by the Board of Accountancy to promulgate auditing standards that will
be generally accepted in the Philippines is known as

Accounting Standards Council (ASC)

Auditing Standards and Practices Council (ASPC)

Financial Reporting Standards Council (FRSC)

Auditing and Assurance Standards Council (AASC)

Question 41
1 / 1 pts
The independent auditor lends credibility to client financial statements by

Attaching an auditor’s opinion to the client’s FSs

Testifying under oath about client financial information

Maintaining a clear-cut distinction between the management’s and the auditor’s representations

Stating in the auditor’s management letter that the examination was made in accordance with PSAs

IncorrectQuestion 42
0 / 1 pts
While performing procedures for the audit engagement, the auditor was asked to change the engagement
to review. Assuming the change is not justifiable, which of these statements does not concur?

The auditor continues to perform audit procedures.

The auditor withdraws from the audit engagement.

The auditor communicates the matter to an appropriate level of management.

The auditor provides negative assurance on the new report.

Question 43
1 / 1 pts
If permission from the client to discuss its affairs with the proposed auditor is denied by the client, the
predecessor auditor should:
Keep silent of the denial

Seek legal advice before responding to the proposed auditor

Disclose the fact that the permission to disclosure is denied by the client

Disclose adequately to proposed auditor all noncompliance made by the client

Question 44
1 / 1 pts
Which of the following statements would least likely appear in an auditor’s engagement letter?

Fees for our services are based on our regular per diem rates, plus travel and other out-of-pocket-
expenses.

Management is responsible for making all financial records and related information available to us.

Our engagement is subject to the risk that material errors or fraud, if they exist, will not be detected.

After performing our preliminary analytical procedures, we will discuss with you the other procedures we
consider necessary to complete the engagements.

Question 45
1 / 1 pts
The following ratings were obtained by an examinee during the October 2019 examination:

FAR 96 Taxation 64
AFAR 94 RFBT 74
MAS 94

Based on the above information, the examinee is considered

Failed

Topnotcher

Conditional

Passed
Question 46
1 / 1 pts
Which of the following is not represented in the AASC?

Board of Accountancy

Bureau of Internal Revenue

Commission on Audit

Securities and Exchange Commission

Question 47
1 / 1 pts
The Philippine Standards on Assurance Engagements (PSAEs) are to be applied in

Assurance engagements dealing with subject matters other than historical financial information.

Compilation engagements and agreements to apply agreed-upon procedures to information.

Assurance engagements dealing with historical financial information.

The audit or review of historical financial information.

Question 48
1 / 1 pts
Which is incorrect regarding internal auditing?

It can be performed only by internal auditors.

It provides assistance primarily to management and those charged with governance.

It encompasses both financial and operational auditing.

An internal audit department reports to the audit committee and senior management.
Question 49
1 / 1 pts
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

Agreed-upon procedures

Management consulting

Compilation of financial or other information

Examination of prospective financial information

Question 50
1 / 1 pts
If the auditor concludes that there is reasonable justification for the change in engagement, the report to be
issued would

Not include reference to any procedures that may have been performed, particularly when the new
engagement is to undertake agreed-upon procedures

Include reference to any procedures that may have been performed in the original engagement

Be that appropriate for the revised terms of the engagement

Include reference to the original engagement

Question 1
1 / 1 pts
Which of the following is not included in the seal used by a CPA?

Name of the CPA

Registration number

The title "CPA"

Professional tax receipt number

IncorrectQuestion 2
0 / 1 pts
Which of the following is not suitable criteria in the context of audit?

GAAP

IFRS

PSA

PFRS for SME

Question 3
1 / 1 pts
Which of the following factors most likely would influence an auditor’s determination of the auditability of
an entity’s financial statements?

The adequacy of the accounting records.

The operating effectiveness of control procedures.

The existence of related-party transactions.

The complexity of the accounting system.

Question 4
1 / 1 pts
An auditor may achieve audit objectives related to particular assertions by:

Adhering to a system of quality control.

Increasing the level of detection risk.

Preparing audit documentation.

Performing analytical procedures.

Question 5
1 / 1 pts
Which statement below improperly describes the PSAs?

They constitute set of procedures to be followed in the conduct of audit

They are minimum guidelines on which the auditor bases his professional judgment

The measure the quality of auditor’s performance in audit engagement

They are interpretations of “generally accepted auditing standards”

Question 6
1 / 1 pts
Which of these circumstances would normally lead to a change in engagement?

Financial statements departing from GAAP

Misunderstanding as to the nature of the engagement

Restrictions imposed by management

Auditor’s inability to gather evidence

Question 7
1 / 1 pts
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.

Assurance level

Confidence level

Reasonableness level
Tolerable level

Question 8
1 / 1 pts
While performing procedures for the audit engagement, the auditor was asked to change the engagement
to review. Assuming the change is not justifiable, which of these statements does not concur?

The auditor provides negative assurance on the new report.

The auditor continues to perform audit procedures.

The auditor communicates the matter to an appropriate level of management.

The auditor withdraws from the audit engagement.

Question 9
1 / 1 pts
The terms of the audit engagement shall include: (choose the exception)

The objective of the audit

The scope of the audit

The responsibilities of the auditor

The overall audit strategy

Question 10
1 / 1 pts
In "auditing" accounting data, the concern is with

Determining if fraud has occurred.

Analyzing the financial information to be sure that it complies with government requirements.

Determining if taxable income has been calculated correctly.

Determining whether recorded information properly reflects the economic events that occurred during the
accounting period.

Question 11
1 / 1 pts
Which of the following is not an assurance engagement?

Comprehensive audit

Review of interim historical financial statements

Audit of prospective financial statements

Preparation of tax returns that use estimates

Question 12
1 / 1 pts
The three types of attestation services are:

Audits, review, and compilations

Audits, compilations, and other attestation services

Audits, reviews, and other attestation services

Reviews, compilations, and other attestation services

Question 13
1 / 1 pts
Which of the following statements is/are correct?
Statement 1: It shall be the primary duty of the Commission and the Board to effectively enforce the
provisions of RA 9298 and its Implementing Rules and Regulations.
Statement 2: Any person may bring before the Commission, Board, or the aforementioned officers of the
law, cases of illegal practice or violations of RA 9298 and its Implementing Rules and Regulations.

Both statements are correct

Only statement 2 is correct

Both statements are incorrect

Only statement 1 is correct

Question 14
1 / 1 pts
Which of the following is not one of the functions of ETC?

Determine a minimum standard curriculum for the study of accountancy to be implemented in all schools
offering accountancy as an undergraduate degree.

Establish teaching standards, including the qualifications of members of the faculty of schools and
colleges of accountancy.

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.

Monitor the progress of the program on the study of accountancy and undertaking measures for the
attainment of a high quality of accountancy education in the country.

Question 15
1 / 1 pts
The PRC CPE Council shall be composed of:

A chairperson and 2 members

A Chairperson and 3 members

A chairperson, vice-chairperson and 3 members

A chairperson, vice-chairperson and 2 members

Question 16
1 / 1 pts
Auditors must not only decide whether to accept new clients; they also should periodically review their list
of current clients and remove those clients the firm no longer wants to be associated with. Reasons for
discontinuing clients might include the following, except:
Client need for specialized services the current firm is unable or unwilling to provide.

Evidence indicating a client’s management has integrity.

Difficulty in working with client personnel.

Inability to negotiate an acceptable increase in the audit fee.

Question 17
1 / 1 pts
Management of a company is responsible for

Hiring the auditor

The audit workpapers

Independence and obtaining evidence

Preparing the financial statements

Question 18
1 / 1 pts
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. Provided (choose the incorrect one)

The above provision shall not result to deprivation of the employment of incumbents to the position.

That the business or company where the above position exists has a paid-up capital of at least
P5,000,000 and/or an annual revenue of at least P10,000,000.

The above provision shall apply only to persons to be employed after the effectivity of the Implementing
Rules and Regulations of RA 9298.

That the business or company where the above position exists has an annual revenue of at least
P5,000,000 and/or paid-up capital of at least P10,000,000.
Question 19
1 / 1 pts
The Financial Reporting Standards Council shall be composed of

17 members

14 members

15 members

8 members

Question 20
1 / 1 pts
Which statement is correct regarding CPE (Continuing Professional Education) requirements for renewal
of professional license?

Senior citizens are not exempted from CPD requirements.

A registered professional shall be permanently exempted from CPE requirements upon reaching the age
of 65 years old.

The total CPE credit units required for CPAs shall be sixty (60) units for three (3) years provided that a
minimum of fifteen (15) credit units shall be earned in each year.

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 has been out of the country for at least
one (2) year immediately prior to the date of renewal.

Question 21
1 / 1 pts
The APO shall submit its nominations with complete documentation to the Commission not later than ____
prior to the expiry of the term of an incumbent chairman or member.

120 days

60 days
90 days

30 days

Question 22
1 / 1 pts
A proposed auditor makes specific inquiries of the previous auditor, prior to engagement acceptance, to

Inquire or significant subsequent events with respect to the prior period

Gain understanding on the reasons for the change of auditor

Compare audit fees

Have knowledge whether PFRS has been consistently applied

Question 23
1 / 1 pts
On an audit engagement performed by a CPA firm with one office, at the minimum, knowledge of the
relevant professional accounting and auditing standards should be held by:

All professionals working in the office.

The auditor with final responsibility for the audit.

All professionals working upon the audit and the partner in charge of the CPA firm.

All professionals working upon the audit.

Question 24
1 / 1 pts
If the application for registration to practice public accountancy of Ramos and Co. CPAs, was approved on
July 31, 2018, the registration shall expire on

December 31, 2021

September 30, 2020

September 30, 2021

December 31,2020

Question 25
1 / 1 pts
Which of the following is not a financial statement assertion relating to account balances?

Rights and obligations.

Valuation and competence.

Completeness.

Existence.

Question 26
1 / 1 pts
Practitioners who perform assurance engagements is governed by the following, except

Philippine Standards on Quality Control

Philippine Financial Reporting Standards

Code of ethics for Professional Accountants in the Philippines

The Framework to Assurance Engagements

IncorrectQuestion 27
0 / 1 pts
If permission from the client to discuss its affairs with the proposed auditor is denied by the client, the
predecessor auditor should:

Disclose the fact that the permission to disclosure is denied by the client

Seek legal advice before responding to the proposed auditor

Keep silent of the denial

Disclose adequately to proposed auditor all noncompliance made by the client

Question 28
1 / 1 pts
The following relates to intended users, choose the exception:

Intended users are the person/s for whom the practitioner prepares the assurance report

In case of broad range of interests by the readers of assurance report, intended user may be limited to
major stockholders with significant and common interests.

Intended users may include either the practitioner or the responsible party.

Intended users may be identified by agreement between the practitioner and the responsible party or
engaging party, or by law

Question 29
1 / 1 pts
Assurance engagement include the following, except

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
Auditing and Assurance Standard Council as approved by the Board of Accountancy/Professional
Regulation Commission.

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 to perform agreed-upon procedures.

Question 30
1 / 1 pts
Set the following phases in proper order:
i. Pre-Engagement
ii. Internal Controls
iii. Evidence-Gathering
iv. Planning
v. Post-Audit Responsibilities
vi. Reporting

i, ii, iii, iv, v, vi

i, iv, ii, iii, v, vi

i, iv, iii, ii, v, vi

i, iv, ii, iii, vi, v

IncorrectQuestion 31
0 / 1 pts
An auditor may most likely decide not to accept a new audit engagement when

The CPA has knowledge of the prospective client’s disregard of its responsibilities concerning internal
controls

The prospective client’s CEO is also the chairman of the governing board

The CPA has knowledge that the prospective client has too many related-party transactions

The prospective client’s system is highly automated and the auditor lacks understanding of such system

Question 32
1 / 1 pts
The Board shall, at the close of each calendar year, submit annual report that gives a detailed account of
its proceedings and accomplishments during the year to the

Senate President and the Speaker of the House of Representatives

President of the Philippines

Professional Regulation Commission

Secretary of Department of Justice

Question 33
1 / 1 pts
Which of the following should an auditor obtain from the previous auditor prior to accepting an audit
engagement?

Analysis of balance sheet accounts.

Facts that might bear on the integrity of management.

All matters of continuing accounting significance.

Analysis of income statement accounts.

Question 34
1 / 1 pts
Which of the following statements would least likely appear in an auditor’s engagement letter?

Management is responsible for making all financial records and related information available to us.

Our engagement is subject to the risk that material errors or fraud, if they exist, will not be detected.

Fees for our services are based on our regular per diem rates, plus travel and other out-of-pocket-
expenses.

After performing our preliminary analytical procedures, we will discuss with you the other procedures we
consider necessary to complete the engagements.

IncorrectQuestion 35
0 / 1 pts
Select the incorrect statement from the following generalization on the reliability of evidence.

Evidence is more reliable when it is obtained from independent sources outside the entity.

Evidence obtained directly by the practitioner is more reliable than when obtained indirectly, even if the
source is not competent.

Evidence provided by original documents is more reliable than evidence provided by photocopies or
facsimiles.
Evidence that is generated internally is more reliable when the related controls are effective.

Question 36
1 / 1 pts
Which is incorrect regarding internal auditing?

It provides assistance primarily to management and those charged with governance.

It encompasses both financial and operational auditing.

It can be performed only by internal auditors.

An internal audit department reports to the audit committee and senior management.

Question 37
1 / 1 pts
Third-party users of the audit report expect the auditor to do all of the following except:

To provide a biased evaluation of the FSs

To evaluate measurements and disclosures made by management

To gather sufficient evidence to support their opinion

To determine whether financial statements are presented in accordance with GAAP

Question 38
1 / 1 pts
Any candidate who fails in ________ complete CPA Board Examinations shall be disqualified from taking
another set of examinations unless he/she submits evidence to the satisfaction of the BOA that he/she
enrolled in and completed at least________ of subjects given in the licensure examination.

3, 15 units per year for a total of 60 units

2, 24 units
3, 24 units

2, 15 units/year, total of 30 units

Question 39
1 / 1 pts
Which of the following statements correctly defines the term reasonable assurance?

An absolute level of assurance to allow an auditor to detect a material misstatement.

A high, but not absolute, level of assurance to allow an auditor to detect a material misstatement.

A substantial level of assurance to allow an auditor to detect a material misstatement.

A significant level of assurance to allow an auditor to detect a material misstatement.

Question 40
1 / 1 pts
A firm has obtained information that would have caused it to decline an engagement had the information
been available earlier. Actions available to the auditor would include the following, except:

Withdraw from the client relationship

Issue a disclaimer of opinion

Withdraw from the engagement

Reporting the information and its implications to the person/s who appointed the CPA

Question 41
1 / 1 pts
The subject matter of an assurance engagement may include

Internal controls

Financial information
All of these

Compliance with regulation

Question 42
1 / 1 pts
Meaningful experience shall be considered as satisfactory compliance with the requirements of Section 28
of RA No. 9298 if it is earned in

Academe/education and shall include teaching for at least three (3) trimesters or two (2) semesters
subjects in either financial accounting, business law and tax, auditing problems, auditing theory, financial
management and management services and the accumulated teaching experience on these subjects
shall not be less than three (3) school years.

Commerce and industry and shall include significant involvement in general accounting, budgeting, tax
administration, internal auditing, liaison with the Commission on Audit, representing his/her employer
before government agencies on tax and matters related to accounting or any other related functions.

Government and shall include significant involvement in general accounting, budgeting, tax
administration, internal auditing, liaison with external auditors or any other related functions

Public practice and shall include at least one year as auditor in charge and at least two years as audit
assistant of audit engagement covering full audit functions of significant clients.

Question 43
1 / 1 pts
Which of the following does not constitute a practice of accountancy?

A person in educational institution teaching accounting, auditing, business law, taxation or other
technically related subjects.

A person holding out himself as one skilled in the knowledge, science and practice of accounting and as
qualified person to render professional services as a CPA to more than one client.

A person representing his/her employer before government agencies on tax and other accounting related
matters.

A person is appointed as a marketing director of a government-owned and controlled corporation.

Question 44
1 / 1 pts
Characteristics of suitable criteria do not include

Neutrality

Understandability

Relevance

Comparability

Question 45
1 / 1 pts
Which of the following statements refers to the definition of auditing?

A systematic process of objectively obtaining and evaluating evidence regarding assertions about
economic actions and events to ascertain the degree of correspondence between these assertions and
established criteria and communicating the results thereof.

A service activity which function is to provide quantitative information primarily financial in nature about
economic entities that is intended to be useful in making economic decisions.

The process of identifying, measuring and communicating economic information to permit informed
judgment and decisions by users of the information.

The art of recording, classifying and summarizing in a significant manner and in terms of money,
transactions and events which are in part at least of a financial character and interpreting the results
thereof.

Question 46
1 / 1 pts
Auditing is based on the assumption that the financial data are verifiable. Data are verifiable when two or
more qualified individuals,

Working independently, can prove, beyond reasonable doubt, the truthfulness of the data.

Working independently, each reach essentially similar conclusions.

Working together, can agree upon the accuracy of the data.

Working together, can prove, beyond doubt, the accuracy of the data.

Question 47
1 / 1 pts
The primary goal of the CPA in performing the attest function is to

Assure the consistent application of correct accounting procedures

Detect fraud

Determine whether the client's assertions are fairly stated

Examine individual transactions so that the auditor may certify as to their validity

Question 48
1 / 1 pts
According to PSA 210, the auditor and the client should agree on the terms of engagement. The agreed
terms would need to be recorded in a(n)

Comfort letter

Engagement letter

Client representation letter

Memo placed in the permanent section of the working papers

Question 49
1 / 1 pts
Which of the following is not represented in the AASC?

Commission on Audit

Bureau of Internal Revenue

Securities and Exchange Commission

Board of Accountancy

Question 50
1 / 1 pts
The single feature that most clearly distinguishes auditing, attestation, and assurance is

CPA's approach to the service

Type of service

Training required to perform the service

Scope of services

Question 1
1 / 1 pts
A practitioner should accept an assurance engagement only if

The criteria to be used are not available to the intended users.

The subject matter is the responsibility of either the intended users or the practitioner.

The practitioner's conclusion is to be contained in a written report.

The subject matter is in the form of financial information.

Question 2
1 / 1 pts
Which of the following should an auditor obtain from the previous auditor prior to accepting an audit
engagement?

Analysis of income statement accounts.

All matters of continuing accounting significance.

Facts that might bear on the integrity of management.

Analysis of balance sheet accounts.

Question 3
1 / 1 pts
There is a broad range of engagements to provide a high or moderate level of assurance. Such
engagements may include
I. Engagements to report on a broad range of subject matters covering financial and non-financial
information
II. Attest and direct reporting engagements
III. Engagements to report internally and externally
IV. Engagements in the private and public sector

II only

I and II only

I, II and III

I, II, III and IV

Question 4
1 / 1 pts
The primary goal of the CPA in performing the attest function is to

Assure the consistent application of correct accounting procedures

Examine individual transactions so that the auditor may certify as to their validity

Detect fraud

Determine whether the client's assertions are fairly stated

IncorrectQuestion 5
0 / 1 pts
Which is not a theoretical postulate framing an audit?

An audit benefits the public.

Long-term conflict between the auditor and client may exist.

The auditor is independent of the client.

Financial data can be subjected to verification.

Question 6
1 / 1 pts
Which of the following is incorrect regarding the general principles of an audit?

The auditor should comply with the "Code of Ethics for Professional Ethics for Certified Public
Accountants" promulgated by the Philippine Professional Regulation Commission.

The auditor should plan and perform an audit with an attitude of professional skepticism recognizing that
circumstances may exist that cause the financial statements to be materially misstated.

The auditor would ordinarily expect to find evidence to support management representations and assume
they are necessarily correct.

The auditor should conduct an audit in accordance with PSAs.

Question 7
1 / 1 pts
If a company’s external auditor expresses an unqualified opinion as a result of the audit of the company’s
financial statements, readers of the audit report can assume that

All material disagreements between the company and the auditor about the application of accounting
principles were resolved in the satisfaction of the external auditor.

Internal control is effective

The external auditor found no fraud

The company is financially sound and the financial statements are accurate

Question 8
1 / 1 pts
The PRC CPE Council shall be composed of:

A chairperson and 2 members

A chairperson, vice-chairperson and 2 members

A chairperson, vice-chairperson and 3 members

A Chairperson and 3 members

Question 9
1 / 1 pts
When one auditor succeeds another, the proposed auditor should request the

Client to authorize the previous auditor to respond to inquiries.

Previous auditor to submit a list of internal control weaknesses that have not been corrected.

Client to instruct its attorney to send a letter of audit inquiry concerning the status of the prior year’s
litigation, claims, and assessments.

Previous auditor to update the prior year’s report to the date of the change of auditors.

Question 10
1 / 1 pts
The three types of attestation services are:

Reviews, compilations, and other attestation services

Audits, reviews, and other attestation services

Audits, compilations, and other attestation services

Audits, review, and compilations

Question 11
1 / 1 pts
The BOA shall not refuse the registration of any person who successfully passed the CPA examinations if

Convicted by a court of competent jurisdiction of a criminal offense involving moral turpitude

Guilty of immoral and dishonorable conduct

Convicted for a political offense.

None of the above.

IncorrectQuestion 12
0 / 1 pts
The need for an independent audit arises due to the following reasons. (Choose the expectation)

Competing interests

Remoteness of users

Expertise of auditors

Complexity of decision-making

Question 13
1 / 1 pts
The following relates to intended users, choose the exception:

In case of broad range of interests by the readers of assurance report, intended user may be limited to
major stockholders with significant and common interests.

Intended users may include either the practitioner or the responsible party.

Intended users may be identified by agreement between the practitioner and the responsible party or
engaging party, or by law

Intended users are the person/s for whom the practitioner prepares the assurance report

Question 14
1 / 1 pts
To provide for the greatest degree of independence in performing internal auditing functions, an internal
auditor most likely should report to

Corporate Controller.

Vice-President for Finance.

Board of Directors.

Corporate Stockholders.

Question 15
1 / 1 pts
Engagement letters are widely used in practice for:
Audits only

Related services only

Professional engagements of all types

Assurance engagements only

Question 16
1 / 1 pts
If the application for registration to practice public accountancy of Ramos and Co. CPAs, was approved on
July 31, 2018, the registration shall expire on

September 30, 2020

December 31, 2021

December 31,2020

September 30, 2021

Question 17
1 / 1 pts
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 to perform agreed-upon procedures.

An engagement in accordance with the Philippine Standard on Assurance Engagement(s) issued by the
Auditing and Assurance Standard Council as approved by the Board of Accountancy/Professional
Regulation Commission.

Question 18
1 / 1 pts
A firm has obtained information that would have caused it to decline an engagement had the information
been available earlier. Actions available to the auditor would include the following, except:
Withdraw from the client relationship

Issue a disclaimer of opinion

Withdraw from the engagement

Reporting the information and its implications to the person/s who appointed the CPA

Question 19
1 / 1 pts
Which of the following best describes the objective of an audit of financial statements?

To express an opinion whether the financial statements are prepared, in all material respect, in
accordance with an identified financial reporting framework.

To express an opinion whether the financial statements are prepared in accordance with prescribed
criteria.

To express an assurance as to the future viability of the entity whose financial statements are being
audited.

To express an assurance about the management's efficiency or effectiveness in conducting the

operations of entity.

Question 20
1 / 1 pts
The standard setting body created by the Board of Accountancy to promulgate auditing standards that will
be generally accepted in the Philippines is known as

Accounting Standards Council (ASC)

Auditing Standards and Practices Council (ASPC)

Financial Reporting Standards Council (FRSC)

Auditing and Assurance Standards Council (AASC)

Question 21
1 / 1 pts
It is the use by management of an acceptable financial reporting framework (e.g. PFRS) in the preparation
of the financial statements and the agreement of management and, where appropriate, those charged with
governance to the premise on which an audit is conducted.

Fair presentation

Written representation

Preconditions for an audit

Engagement letter

Question 22
1 / 1 pts
The Philippine Framework for Assurance Engagements

Contains basic principles, essential procedures and related guidance for the performance of assurance
engagements.

Establishes standards and provides procedural requirements for the performance of assurance
engagements.

Defines and describes the elements and objectives of an assurance engagement, and identifies
engagements to which PSAs, PSREs, and PSAEs apply.

Provides a frame of reference for CPAs in public practice when performing audits, reviews, and
compilations of historical financial information.

Question 23
1 / 1 pts
All of the following are grounds for suspension or removal of members of the board, except

Having a pecuniary interest, directly or indirectly, in any school, college or university

Neglect of duty or incompetence

Final judgment of crimes involving moral turpitude

Violation or tolerance of any violation of RA 9298 and its implementing rules and regulations or the
Certified Public Accountant’s Code of Ethics and the technical and professional standards of practice for
certified public accountants
Question 24
1 / 1 pts
If the application for registration to practice public accountancy of Chan and Co. CPAs, was approved on
July 31, 2018, the registration shall be renewed on or before

September 30, 2020

December 31, 2020

September 30, 2021

December 31, 2021

Question 25
1 / 1 pts
Which of the following is not one of the specified objectives of the Accountancy Act of 2004?

The standardization and regulation of accounting education.

Integration of the practice of accountancy

The supervision, control, and regulation of the practice of accountancy in the Philippines.

The examination for registration of certified public accountants.

Question 26
1 / 1 pts
An engagement letter is best described as

A letter from the company to the auditors specifying management’s expectations for completion of the
audit on a timely basis and the fees.

A letter from the auditors to company management specifying that management is responsible for the
financial statements, and the auditors will issue an opinion on the financial statements.

A letter from the auditors to company management that specifies the responsibilities of both the company
and the auditors in completing the audit and the timing for its completion.

A letter from the Board of Directors’ audit committee to the auditor that indicates the auditor has been
engaged to perform the audit and the fees to be paid.
IncorrectQuestion 27
0 / 1 pts
The Philippine Standards on Assurance Engagements (PSAEs) are to be applied in

The audit or review of historical financial information.

Assurance engagements dealing with subject matters other than historical financial information.

Compilation engagements and agreements to apply agreed-upon procedures to information.

Assurance engagements dealing with historical financial information.

Question 28
1 / 1 pts
The following cannot be a suitable criteria for an assurance engagement, except?

Agreement between the responsible party and the intended users

Practitioner’s judgment

Practitioner’s own expectations

Practitioner’s experience

Question 29
1 / 1 pts
Characteristics of suitable criteria do not include

Neutrality

Understandability

Comparability

Relevance

Question 30
1 / 1 pts
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
Compilation of financial or other information

Management consulting

Agreed-upon procedures

Examination of prospective financial information

Question 31
1 / 1 pts
Which of the following statements is incorrect?

Both certificate of registration and professional identification card shall be issued to a candidate who
passes the CPA Licensure examination.

The Board has the power to issue, suspend, revoke and/or reinstate the certificate of registration.

A certificate of registration is a certificate under seal with a validity of three (3) years, bearing a
registration number, issued to an individual, by the Commission, upon recommendation by the Board,
signifying that the individual has complied with all the legal and procedural requirements for such
issuance including, in appropriate cases, having successfully passed the CPA licensure examination.

Professional identification card is a card with validity of three (3) years, bearing the registration number,
date of issuance with an expiry date, due for periodic renewal, duly signed by the Chairperson of the
Commission issued by the PRC to a registered CPA up on payment of the annual registration fees for
three (3) years.

Question 32
1 / 1 pts
Which of the following statements is/are correct?
Statement 1: It shall be the primary duty of the Commission and the Board to effectively enforce the
provisions of RA 9298 and its Implementing Rules and Regulations.
Statement 2: Any person may bring before the Commission, Board, or the aforementioned officers of the
law, cases of illegal practice or violations of RA 9298 and its Implementing Rules and Regulations.

Only statement 2 is correct

Only statement 1 is correct

Both statements are correct

Both statements are incorrect

Question 33
1 / 1 pts
Third-party users of the audit report expect the auditor to do all of the following except:

To gather sufficient evidence to support their opinion

To evaluate measurements and disclosures made by management

To determine whether financial statements are presented in accordance with GAAP

To provide a biased evaluation of the FSs

Question 34
1 / 1 pts
Which of the following statements does not describe a condition that creates a demand for auditing?

Expertise is often required for information preparation and verification.

Conflict between an information preparer and a user can result in biased information.

Users can directly assess the quality of information.

Information can have substantial economic consequences for a decision maker.

Question 35
1 / 1 pts
Meaningful experience shall be considered as satisfactory compliance with the requirements of Section 28
of RA No. 9298 if it is earned in

Academe/education and shall include teaching for at least three (3) trimesters or two (2) semesters
subjects in either financial accounting, business law and tax, auditing problems, auditing theory, financial
management and management services and the accumulated teaching experience on these subjects
shall not be less than three (3) school years.

Commerce and industry and shall include significant involvement in general accounting, budgeting, tax
administration, internal auditing, liaison with the Commission on Audit, representing his/her employer
before government agencies on tax and matters related to accounting or any other related functions.

Government and shall include significant involvement in general accounting, budgeting, tax
administration, internal auditing, liaison with external auditors or any other related functions
Public practice and shall include at least one year as auditor in charge and at least two years as audit
assistant of audit engagement covering full audit functions of significant clients.

Question 36
1 / 1 pts
Ultimately, the decision about whether or not an auditor is independent must be made by

Client’s management

Audit committee

Public

Auditor

Question 37
1 / 1 pts
Which statement is correct regarding the relationship between internal auditing and the external auditor?

Some judgments relating to the audit of the financial statements are those of the internal auditor.

Certain aspects of internal auditing may be useful in determining the nature, timing and extent of external
audit procedures.

The external audit function's objectives vary according to management's requirements.

The external auditor is responsible for the audit opinion expressed, however that responsibility may be
reduced by any use made of internal auditing.

Question 38
1 / 1 pts
Which of these circumstances would normally lead to a change in engagement?

Restrictions imposed by management

Misunderstanding as to the nature of the engagement

Financial statements departing from GAAP

Auditor’s inability to gather evidence

Question 39
1 / 1 pts
An objective of operational audit is to assess whether

An organization’s procedures adheres to specific procedures, rules or regulations set by an authoritative

body

Financial statements fairly reflect the results of operations

Specific units of the entity are functioning effectively and efficiently

Internal control structure is designed and implemented

Question 40
1 / 1 pts
Which of the following criteria is unique to the independent auditor's attest function?

Due professional care

General competence

Familiarity with the particular industry of each client

Independence

Question 41
1 / 1 pts
Select the incorrect statement from the following generalization on the reliability of evidence.

Evidence is more reliable when it is obtained from independent sources outside the entity.

Evidence provided by original documents is more reliable than evidence provided by photocopies or
facsimiles.

Evidence that is generated internally is more reliable when the related controls are effective.

Evidence obtained directly by the practitioner is more reliable than when obtained indirectly, even if the
source is not competent.

Question 42
1 / 1 pts
The powers and functions of the Board include the following, except

To remove a member of the Board upon due investigation from the Commission

To supervise the registration, licensure and practice of accountancy in the Philippines

To prescribe and adopt the rules and regulations necessary for carrying out the provisions of this Act

To administer oaths in connection with the administration of this Act

Question 43
1 / 1 pts
Set the following phases in proper order:
i. Pre-Engagement
ii. Internal Controls
iii. Evidence-Gathering
iv. Planning
v. Post-Audit Responsibilities
vi. Reporting

i, ii, iii, iv, v, vi

i, iv, ii, iii, vi, v

i, iv, iii, ii, v, vi

i, iv, ii, iii, v, vi

Question 44
1 / 1 pts
The Board, subject to the approval of the Commission, may revise or exclude any of the subjects and their
syllabi, and add new ones as the need arises provided that the change shall not be more often than once
every

Four years

Two years

Three years

Five years
IncorrectQuestion 45
0 / 1 pts
Which of the following helps prevent misunderstandings during audit planning?

Auditor involvement in the preparation of the client’s financial records.

Involvement of the client’s internal auditors in setting materiality levels and determining the scope of
audit tests.

A preliminary meeting conference with the client to discuss fees, timing, client assistance and related
issues.

Client involvement in determining specific audit planning issues.

Question 46
1 / 1 pts
All, except one, are elements of an assurance engagement.

Subject matter

Independence

Written report

Sufficient appropriate evidence

IncorrectQuestion 47
0 / 1 pts
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. Provided (choose the incorrect one)

That the business or company where the above position exists has an annual revenue of at least
P5,000,000 and/or paid-up capital of at least P10,000,000.

The above provision shall not result to deprivation of the employment of incumbents to the position.

The above provision shall apply only to persons to be employed after the effectivity of the Implementing
Rules and Regulations of RA 9298.

That the business or company where the above position exists has a paid-up capital of at least
P5,000,000 and/or an annual revenue of at least P10,000,000.
Question 48
1 / 1 pts
Which of the following is not included in the seal used by a CPA?

Name of the CPA

The title "CPA"

Registration number

Professional tax receipt number

Question 49
1 / 1 pts
According to PSA 210, the auditor and the client should agree on the terms of engagement. The agreed
terms would need to be recorded in a(n)

Client representation letter

Comfort letter

Engagement letter

Memo placed in the permanent section of the working papers

Question 50
1 / 1 pts
Which of the following statements correctly defines the term reasonable assurance?

A significant level of assurance to allow an auditor to detect a material misstatement.

A high, but not absolute, level of assurance to allow an auditor to detect a material misstatement.

A substantial level of assurance to allow an auditor to detect a material misstatement.

An absolute level of assurance to allow an auditor to detect a material misstatement.