Code of Ethics

1. Statement 1: The 2018 edition of the Code is completely rewritten under a new structure
and drafting convention that makes the Code easier to navigate, use and enforce.
Statement 2: Another improvement to the IESBA Code is the inclusion of an enhanced
framework and clearer provisions pertaining to safeguards to threats of compliance
with independence requirements.
a. True, True
b. True, False
c. False, True
d. False, False

2. Which of the following sections of the Code applies to all professional accountants?
a. Part 1
b. Part 2
c. Part 3
d. Parts 4A and 4B
e. All of the above.

3. The distinguishing mark of the accountancy profession stated in the IESBA Code which
is the foundation of the fundamental principles to be complied by all professional
accountants is
a. The ability to conduct assurance engagements and sign audit reports as an
independent practitioner.
b. The competency required to provide reliable financial reports and perform
engagements in accordance with auditing and accounting standards.
c. The commitment to serve an employer or client beyond contractual
agreements.
d. The acceptance of the responsibility to act in the public interest.

4. This is a fundamental principle of ethics which is characterized as “to comply with

relevant laws and regulations and avoid any conduct that the professional accountant
knows or should know might discredit the profession.”
a. Integrity
b. Professional Behavior
c. Professional Competence and Due Care
d. Objectivity

5. A professional accountant shall not be knowingly associated with information that the
accountant believes to:
a. Relate to entities with going concern issues.
b. Contain materially false or misleading statement.
c. Represent reasonable and fair presentation.
d. Omits or obscures optional information.

6. The conceptual framework specifies an approach for a professional accountant to:

a. Identify threats to compliance with the fundamental principles.
b. Evaluate the threats identified.
c. Address the threats by eliminating or reducing them to an acceptable level.
d. All of the above.
7. It refers to the threat that a professional accountant will not appropriately evaluate the
results of a previous judgment made; or an activity performed by the accountant, or by
another individual within the accountant's firm or employing organization, on which the
accountant will rely when forming a judgment as part of performing a current activity.
a. Self-review threat
b. Familiarity threat
c. Intimidation threat
d. Self-interest threat

8. The reasonable and informed third party test

a. Considers whether different conclusions would likely be reached by another
party.
b. Is based on facts and events subsequent to the conclusion reached.
c. Needs to be from a professional accountant.
d. Is from a perspective that weighs all relevant facts and circumstances.

9. A professional accountant in business who is responsible for the financial reporting of

the employing organization when an immediate or close family member employed by
the organization makes decisions that affect the financial reporting of the organization
may create
a. Intimidation threat
b. Self-interest threat
c. Self-review threat
d. Familiarity threat

10. A professional accountant or immediate or close family member facing the threat of
dismissal or replacement over a disagreement about the application of an accounting
principle may create
a. Intimidation threat
b. Self-interest threat
c. Self-review threat
d. Familiarity threat

11. The following are instances that may create conflicts of interest except
a. Serving in a management or governance position for two employing
organizations and acquiring confidential information from one organization that
might be used by the professional accountant to the advantage or
disadvantage of the other organization.
b. Undertaking a professional activity for each of two parties in a partnership, where
both parties are employing the accountant to assist them to dissolve their
partnership.
c. Serving in a governance capacity in an employing organization that is approving
certain investments for the company where one of those investments will
increase the value of the investment portfolio of the accountant or an immediate
family member.
d. Being responsible for selecting a vendor for the employing organization when
the professional accountant or a former colleague might benefit financially from
the transaction.

12. A professional accountant determining the appropriate accounting treatment for a

business combination after performing the feasibility study supporting the purchase
decision may lead to:
a. Intimidation threat
b. Self-interest threat
c. Self-review threat
d. Familiarity threat
13. If a professional accountant pays or receives a referral fee or receives a commission
relating to a client, a self-interest threat to which principles is created?
a. Objectivity and professional competence and due care
b. Confidentiality and integrity
c. Objectivity and integrity
d. Professional competence and due care and integrity

14. The main difference between a close family member and an immediate family
member as defined in the IESBA Code, is that a close family member is
a. Not a dependent of the professional accountant.
b. A spouse or a child/child of the professional accountant.
c. Referred to more often in the Code, especially for direct or material indirect
financial interest in an audit client.
d. May be a sibling or parent, as long as they are dependents of the professional
accountant.

15. Which of the following is considered a related entity to a listed entity when
determining independence requirements for performing assurance engagements?
a. An entity over which the client has direct or indirect control.
b. An entity with a direct financial interest in the client if that entity has significant
influence over the client and the interest in the client is not material to such
entity.
c. An entity in which the client, or an entity related to the client under (Option a)
above, has a direct financial interest that gives it significant influence over such
entity and the interest is not material to the client and its related entity in (Option
a).
d. An entity which is under common control with the client (a “sister entity”) if the
client is material to the entity that controls both the client and sister entity,
regardless of whether the sister entity is material or immaterial to the controlling
entity.

16. Existing accountant, as defined in the Code of Ethics, means

a. A professional accountant employed in industry, commerce, the public sector
or education.
b. A professional accountant in public practice currently holding an audit
appointment or carrying out accounting, taxation, consulting or similar
professional services for a client.
c. Those persons who hold a valid certificate issued by the Board of Accountancy.
d. A sole proprietor, or each partner or person occupying a position similar to that
of a partner and each staff in a practice providing professional services to a
client irrespective of their functional classification (e.g., audit, tax or consulting)
and professional accountants in a practice having managerial responsibilities.

17. For audit of public interest entities (PIE), Key Audit Partner (KAP) roles are not allowed
to act in any such role, or a combination thereof, for a period more than _________
cumulative years (time-on period).
a. Seven
b. Five
c. Three
d. Two
18. Long association may create familiarity and self-interest threats. As such, for non-pie
(Public Interest Entity) clients, to eliminate/reduce the threats created, the individual may be
rotated off the audit team for a period of
a. 3 years
b. 5 years
c. 7 years
d. As appropriate determined by the firm.

19. Statement 1: For audit clients which become a PIE, the 7-year time-on period should
take into account the years served before it become a PIE.
Statement 2: The cooling off-period for an audit partner who served as a key audit
partner other than being the engagement partner and engagement quality control
reviewer is two years.
a. True, True
b. True, False
c. False, True
d. False, False

20. According to Revised SRC Rule 68, The independent auditors or in the case of an
audit firm, the signing partner, of the regulated entities shall be rotated after every
_________ years of engagement.
a. Seven
b. Five
c. Three
d. Two