FAR EASTERN UNIVERSITY

INSTITUTEOF ACCOUNTS, BUSINESS AND FINANCE

Department of Accountancy & Internal Auditing

ASSURANCE PRINCIPLES
2nd Semester AY 2017-2018
QUIZ 4 – Professional Practice of Accountancy
Name Date
(Family Name) (First Name) (Middle Name) Section
Professor Day/Time
Stud. No. Score
Room Rating

ANSWER SHEET – PART 1 (45)

1. C 16. B 31. B SCORE SUMMARY

2. A 17. D 32. D Part Items Score
3. D 18. D 33. A 1 45
4. C 19. A 34. C 2 15
5. B 20. C 35. C Total 60
6. D 21. C 36. C Rating
7. D 22. C 37. B
8. C 23. B 38. A
9. A 24. C 39. A
10. C 25. C 40. A
11. D 26. Bonus 41. B
12. D 27. D 42. D
13. B 28. B 43. C
14. C 29. A 44. A
15. B 30. C 45. D

ANSWER SHEET – PART 2 (15 points) justification wrong

Explanation is not

Explanation does

Wrong choice of
word makes the
statement issue

not justify the

related to the

answer

No. Answer BRIEF explanation if the statement is FALSE

1. TRUE

2. TRUE

3. TRUE

4. FALSE Foreign CPAs are allowed to practice public accountancy

in the Philippines with any restriction IN ACCORDANCE
WITH Section 34 and 35 of RA 9298.

1
 justification wrong
Explanation is not

Explanation does

Wrong choice of
word makes the
statement issue

not justify the

related to the

answer
No. Answer BRIEF explanation if the statement is FALSE
5. TRUE

6. TRUE

7. FALSE The CPD may be earned by the individual professional in any

of the TWO years preceding the year of application for
accreditation for public practice of accountancy and
accounting education. IT IS THREE YEARS.

8. FALSE In view of expansion of the accounting profession, the BOA

has issued a resolution which now allows several forms of
advertising without any conditions. IT IS WITH CONDITIONS
PER BOA RESOLUTION NO. 126 Series of 2008.

9. FALSE The death of a partner in a CPA partnership firm shall be

reported to the BOA not later than sixty (60) days from the date
of death of such partner. IT IS 30 DAYS.

10. FALSE A CPA engaged in teaching general education subject in a

university is not considered to be engaged in the practice of
accounting. Being in education or academe, a CPA is
considered in the practice of accountancy.

11. FALSE No member of the Board of Accountancy shall serve more than
three (3) terms. Up to maximum of 4 terms or 12 years. The
statement given indicates open term which may be more than
12 years.

12. FALSE Conviction for a political offense is a ground for the refusal to
issue a certificate of registration and professional
identification card for CPA. That is not a ground for such case.

13. FALSE Objectivity means that a CPA should be straightforward and

honest in the performance of professional services. The
definition refers to INTERGRITY.

14. FALSE All licensed CPAs shall obtain and use a seal of a design
prescribed by PICPA, bearing the registrant’s name,
registration number and title. This is prescribed by BOA.

15. TRUE

2
 FAR EASTERN UNIVERSITY
INSTITUTEOF ACCOUNTS, BUSINESS AND FINANCE
Department of Accountancy & Internal Auditing

ASSURANCE PRINCIPLES
2nd Semester AY 2017-2018
QUIZ 4 – Professional Practice of Accountancy

Name Date
(Family Name) (First Name) (Middle Name) Section
Professor Day/Time
Stud. No. Score
Room Rating

PART 1 – MULTIPLE CHOICE c. Academe

Instructions: Choose the correct answer among d. Commerce and Industry.
the given choices. Write the letter of your choice
that corresponds to your answer on the Answer 7. Dina Tinag, a CPA with Masteral Degree in Public
Administration, is a COA Auditor and a part-time
Sheet for this part of the examination. Use professor of Far Western University. To what
CAPITAL LETTER. Use only BLACK INK. sector of accounting practice she belongs?
LIQUID PAPER is not allowed. There will be no a. Government
credit for not following instructions. b. Academe
c. Public Practice
1. All of the following are attributes that make d. Answer not given
accountancy a profession, except:
a. Acceptance of a duty to society as a whole. Explanation:
b. Adherence by its members to a common code She belongs to both Government and Academe
of values and conduct. sectors. This is allowed provided there is no
c. Management expertise. conflict of interest and her integrity is not affected.
d. Mastery of a particular intellectual skills.
8. One of the services offered by this sector of
2. This refers to those persons who hold a valid accounting is the audit or verification of financial
certificate issued by the Board of Accountancy. transaction and accounting records.
a. Professional Accountant a. Government
b. Professional Accountant in Public Practice b. Private practice
c. Senior Accounting practice c. Public practice
d. Audit Associate d. Academe

3. Regulation of the accounting profession include: Explanation:

a. Public regulation as provided for in the What is described above is FS auditing which
Philippine Accountancy Act of 2004. belongs to public practice sector of accounting.
b. Regulation within the profession, through the
implementation of the Code of Ethics. 9. The paid-up capital ABC Corporation is P
c. Regulation within the firm, through the 6,000,000. During its first year of operations, its
implementation of the Code of Ethics. annual revenue is P 2,000,000, and it is expected
d. All of these to increase to P 2,500,000 during its second year
of operations. Which of the following statements is
4. Which sector of accounting practice Maria, the correct?
vice president for finance of a multinational a. ABC Corporation must employ a registered
company, belongs? CPA to occupy position in its Accounting and
a. Government Finance Department.
b. Public practice b. ABC Corporation may employ a registered
c. Private practice CPA to occupy position in its Accounting and
d. Academe Finance Department.
c. ABC Corporation must not employ a
Explanation: registered CPA to occupy position in its
Private Practice is the same as commerce and Accounting and Finance Department.
industry. d. All statements are correct.

5. Tata Lino, CPA, is an accounting and auditing Explanation:

professor of Far Western University. To which Section 4 of IRR of RA 9298 states that “In this
sector of accounting practice he belongs? connection, any position in any business or
a. Government company in the private sector which requires
b. Academe supervising the recording of financial transactions,
c. Private practice preparation of financial statements, coordinating
d. Public Practice with the external auditors for the audit of such
financial statements and other related functions
6. Cory Pot, a CPA, is the Chief Financial Officer of shall be occupied only by a duly registered CPA.
Far Western University. To which sector of Provided, that the business or company where the
accounting practice she belongs? above position exists has a paid -up capital of at
a. Public Practice least Five Million Pesos (P5,000,000.00) and/or an
b. Government

3
 annual revenue of at least Ten Million Pesos
(P10,000,000.00). Answer is letter A.”
10. CPA practitioners
a. Are viewed a guardians of public interest.
b. Serve as the connecting between the financial
statements prepared by management, and
the public.
c. Both A and B
d. Neither A nor B
11. Which of the following statements is correct?
a. A CPA is not allowed to practice in more than
one sector of accounting practice.
b. A person who passes the CPA Board
Examination must also take Civil Service
Examination if the intention is to work in any
government offices.
c. Taxation subjects must only be taught by
CPAs.
d. A CPA in private practice may also teach
accounting subjects during night classes.
Explanation:
Letter A is incorrect because a CPA is allowed to
practice in more than one sector of accounting
practice provided there is no impairment in the
integrity, objectivity, or independence of the
CPA.
Letter B is incorrect because passing the CPA
Examination is equivalent to passing he civil
service exam.
Letter C is incorrect because taxation may also be
taught by a lawyer.
Letter is correct because a CPA is allowed to
practice in more than one sector of accounting
practice provided there is no impairment in the
integrity, objectivity, or independence of the
CPA.
12. The accountancy act of 2004 is also called RA
9298. Which of the following is not among the
objectives of this law?
a. The standardization and regulation of
accounting education.
b. The examination for registration of CPAs
c. The supervision, control and regulation of the
practice of accountancy in the Philippines.
d. None of the above
Explanation:
Letters A, B and C are to objectives of Section 3
of RA 9298.
13. One of these is not among the regulations of
accountancy profession. This is
a. Self-regulation through a system of quality
control.
b. BIR Rulings
c. RA 9298
d. Adoption of the Code of Ethics in the
Philippines.
Explanation:
BIR Rulings are not among the regulations of the
accountancy profession. (Letter B).
14. Which of the following government agency will not
affect accountancy?
a. Securities and Exchange Commission
b. Bureau of Internal Revenue
c. Cooperative Development Authority
d. Commission on Audit
Explanation:
SEC, BIR and CDA will affect accountancy but not
the CDA. (Letter C).
SEC regulates the registration and operations of
corporations, partnerships, and other forms of
association in the Philippines.
BIR Aims to raise revenues for the government
through the effective and efficient collection of
taxes, provide quality service to taxpayer, and
enforce tax laws in an impartial and uniform
manner.
COA is the highest and final authority in state
auditing. Its jurisdiction and responsibility is
defined by the Constitution.
15. The official government agency empowered to
enforce RA 9298.
a. PICPA
b. Professional Regulatory BOA
c. ACPAPP
d. Securities and Exchange Commission
Explanation:
BOA is the regulatory body empowered to enforce
RA 9298 in accordance also to such republic act.
16. The officers of the Professional Regulatory Board
of Accountancy are appointed by
a. The PRC Chairman
b. The President of the Republic of the
Philippines
c. PICPA Chairman
d. All Philippine CPAs
Explanation:
Letter is in accordance with Section 5 of A 9298
which states that The Professional Regulatory
Board of Accountancy, hereinafter referred to as
the Board, under the supervision and
administrative control of the Professional
Regulation Commission, hereinafter referred to as
the Commission, shall be composed of a chairman
and six (6) members to be appointed by the
President of the Philippines from a list of three (3)
recommendees for each position and ranked by
the Commission, from a list of five (5) nominees
for each position submitted by the accredited
national professional organization of certified
public accountants.
17. BOA Members shall serve for three years term but
should not exceed
a. 3 years
b. 6 years
c. 9 years
d. 12 years
18. Which of the following is not mentioned as the
power of the Board of Accountancy?
a. To supervise the registration, licensure and
practice of accountancy.
b. To issue, suspend, revoke, or reinstate the
certificate of registration for the practice of the
accountancy profession.
c. To monitor the conditions affecting the
practice of accountancy.
4
 d. To sentence to imprisonment CPAs who have
been found guilty of violations of the
Accountancy Act.
Explanation:
It is not the duty of the Board to sentence
imprisonment CPAs who have been found guilty of
violations of the Accountancy because it is the
court who has the power to do this.
19. Who has the authority to suspend or remove a
PRBOA member on valid grounds and after due
process?
a. The President of the Republic of the
Philippines
b. The Chairman of the Professional Regulatory
Board of Accountancy, unless he is the one
who is under investigation.
c. The Chairman and the remaining members of
the PRBOA by majority decision.
d. The Commissioner of the Professional
Regulatory Commission.
Explanation:
It is the President of the Philippines who has the
authority to suspend or remove a PRBOA member
on valid grounds and after due process because
he is the one who appoints such PRBOA member.
20. The following are the grounds for the removal or
suspension of PRBOA members, except:
a. Final judgment of crimes involving moral
turpitude.
b. Negligence in the performance of duties, or
lack of professional competence.
c. Intolerance of violations of the RA 9298.
d. Rigging of the CPA licensure examination.
21. The function of this council is to assist the BOA in
continuously upgrading accounting education in
the Philippines.
a. Quality Review Committee
b. PRC CPD Council
c. Education Technical Council
d. Commission on Higher Education
22. A CPA is required to complete how many CPD
units within three years to renew his PRC license?
a. 60
b. 90
c. 120
d. 150
Explanation:
Under the new law, it is no longer 60 CPD units
but 120 CPD units or credit hours within three
years.
23. It formalizes the auditing standard-setting function
in the Philippines.
a. FRSC
b. AASC
c. IASB
d. IAASB
24. These are created in pursuant to the provision of
the IRR to RA No. 9298.
a. FRSC and IAASB
b. AASC and IASB
c. FRSC and AASC
d. IASB and IAASB
Explanation:
Section 9 of IRR of RA 9298 states that “The
Commission upon the recommendation of the
Board shall within ninety (90) days from the
effectivity of this IRR, create an accounting
standard setting body to be known as the Financial
Reporting Standards Council (FRSC) and an
auditing standard setting body to 8 be known as
the Auditing and Assurance Standards Council
(AASC) to assist the Board in carrying out its
powers and functions provided in Rule II, Section
7 (g).
25. The mission of International Federation of
Accountants (IFAC) is
a. To serve the people.
b. To serve the government.
c. To serve the public interest.
d. All of the above
26. The ASEAN Member states include the following
except:
a. Republic of Singapore
b. Kingdom of Thailand
c. Republic of the Philippines
d. Union of Malaysia
NOTES:
This is a bonus question. The choices are all
members of ASEAN.
27. Which is not the objective of ASEAN Mutual
Recognition Agreement (MRA)?
a. To facilitate the mobility of accountancy
services professional across ASEAN member
states.
b. To enhance the current regime for the
provision of accountancy services in the
ASEAN Member States.
c. To exchange information in order to promote
adoption of best practices on standards and
qualifications.
d. To enforce RA 9298 and Code of Ethics to
CPAs across ASEAN member states.
28. CPAs whose applications have passed the
ASEAN Chartered Professional Accountant
Coordinating Committee (ACPACC) are accorded
the title
a. CPA
b. ACPA
c. No title is accorded
d. Chartered Accountant
29. The Chairman and members of the FRSC and
AASC shall be appointed by the
a. PRC
b. President of the Philippines
c. BOA
d. ACPACC
Explanation:
Section 9(A) of IRR of RA 9298 states that “The
Chairman and members of the FRSC and AASC
shall be appointed by the Commission upon the
recommendation of the Board in coordination with
the APO. The FRSC and the AASC shall make an
annual review of the composition of their
respective councils and may recommend to the
Board and the Commission a more suitable
representation thereto as they may deem fit.”
30. The Chairman and the members of the FRSC and
AASC shall have a term of
a. Two years only.
b. Three years only.
c. Three years and renewable for another term
d. Two years and renewable for another term.
5
 Explanation:
Section 9(A) of IRR of RA 9298 states that “The
Chairman and the members of the FRSC and
AASC shall have a term of three (3) years
renewable for another term.”
31. It is the national accredited and integrated
professional organization for accountancy in the
Philippines.
a. ACPAPP
b. PICPA
c. FRSC
d. AASC
32. Which is not a title of the new subjects in the
Philippine CPA Board Examination effective May,
2016?
a. Regulatory Framework for Business
Transactions
b. Management Advisory Services
c. Financial Accounting and Reporting
d. Practical Accounting II
33. Juan dela Cruz received his grades from the
recent Philippine CPA Board Examination – 74,
74, 74, 74, 74, and 74. What is the result of his
examination?
a. Failed
b. Passed
c. Conditioned
d. Cannot be determined
Explanation:
Section 16 of IRR of RA 9298 states that “To be
qualified as having passed the licensure
examination for accountants, a candidate must
obtain a general average of seventy- five percent
(75%), with no grades lower than sixty- five
percent (65%) in any given subject. In the event a
candidate obtains the rating of seventy- five
percent (75%) and above in at least a majority of
subjects as provided for in this Act, he/she shall
receive a conditional credit for the subjects
passed.”
34. Maria Makiling’s grades in the Philippine CPA
Board Examinations are as follows: 95, 88, 80, 71,
64, and 62. What is the result of her examination?
a. Conditioned
b. Passed
c. Failed
d. Cannot be determined
Explanation:
Although the average rating is 76.67 but it is still
failed. Section 16 of IRR of RA 9298 states that
“To be qualified as having passed the licensure
examination for accountants, a candidate must
obtain a general average of seventy- five percent
(75%), with no grades lower than sixty- five
percent (65%) in any given subject. In the event a
candidate obtains the rating of seventy- five
percent (75%) and above in at least a majority of
subjects as provided for in this Act, he/she shall
receive a conditional credit for the subjects
passed.”
35. Which of the following are issued to successful
candidates in the Philippines CPA Examination?
a. CPA Certificate only
b. PRC ID only
c. CPA Certificate and PRC ID
d. CPA Certificate, PRC ID and Certificate of
Accreditation
Explanation:
Letter C is in accordance with Section 20 of IRR of
RA 9298.
36. Due to overjoy for passing, the recent Philippine
CPA Board Examination, Val Liw, was sent to
Philippine Mental Hospital and required to be
confined for at least one year. Which of the
following statement is correct?
a. Val Liw will be refused to issue CPA
Certificate but not the PRC ID.
b. Vali Liw will be refused to issue PRC ID but
not the CPA Certificate.
c. Vali Liw will be refused to issue both PRC ID
and CPA Certificate.
d. Vali Liw will be issued both PRC ID and CPA
Certificate.
Explanation:
Val Liw is of unsound mind in this case. Section 23
of IRR of RA 9298 states that “The Board shall not
register and issue a Certificate of Registration and
Professional Identification Card to any successful
examinee convicted by a court of competent
jurisdiction of a criminal offense involving moral
turpitude or guilty of immoral and dishonorable
conduct or to any person of unsound mind.
37. Foreign CPAs are
a. Not allowed to practice his profession in the
Philippines regardless of reasons.
b. Allowed to practice his profession in the
Philippines through reciprocity provision.
c. Allowed to practice his profession in the
Philippines whether through reciprocity
provision or not.
d. Answer not given
Explanation:
Letter B is in accordance with Section 34 of IRR of
RA 9298 which states that “Subjects or citizens of
foreign countries may be allowed to practice
Accountancy in the Philippines in accordance with
the provisions of existing laws, international treaty
obligations including mutual recognition
agreements entered into by the Philippine
government with other countries.
38. Which of the following is not among the
fundamental principles that must be observed by
a professional accountant in the performance of
professional responsibilities?
a. Neutrality
b. Integrity
c. Objectivity
d. Confidentiality
Explanation:
The five fundamental principles that must be
observed by a professional accountant in the
performance of professional responsibilities
include integrity, objectivity, professional
competence and due care, confidentiality, and
professional behavior. Neutrality is not included.
(Letter A)
39. Which of the following is not correct about
generally accepted auditing standards?
a. For CPAs to have a clear idea on what a
maximum standard or level of performance is
required of them.
b. For a clear definition of the responsibilities of
a professional accountant with respect to a
particular judgment.
6
 c. A cornerstone for a successful defense
against allegations of negligence in the
performance of the engagement.
d. None of the above
Explanation:
Letter A is not correct because standards are
provided for CPAs to have a clear idea on what a
minimum (and not maximum) standard or level of
performance is required of them.
40. Which is incorrect about AASC Standards?
a. These contains ideal principles and essential
procedures together with related guidance in
the form of explanatory and other material,
including appendices.
b. These require CPAs to exercise professional
judgment in applying them.
c. Both A and B
d. Neither A nor B
Explanation:
Letter A is not correct because AASC Standards
does not contain ideal principles and essential
procedures but basic principles and essential
procedures.
41. In exceptional cases, a CPA may judge it
necessary to depart from a basic principle or
essential procedure of an Engagement Standard
to achieve the objective of the engagement. What
would be the requirement for CPAs in this kind of
situation?
a. Justify the departure from GAAPs.
b. Justify the departure from PSAs.
c. No requirement is necessary.
d. Answer not given
42. Registered CPA professionals who are exempted
from CPD requirements are as follows except:
a. Those with age of 65 years old and above
b. Those practicing his profession abroad.
c. Those who furthering his studies abroad.
d. None of the above
Explanation:
Letter A, B and C are all exempted from CPD
requirements. But for those working or practicing
abroad, their profession, or furthering studies
abroad, it is a provision that they are out of the
country for at least two (2) years immediately prior
to the date of renewal. Answer is Letter D – none
of given.
43. Fraudulent financial reporting is most likely to be
committed by whom?
a. Line employees of the company.
b. Outside members of the company’s board of
directors.
c. Company management.
d. The company’s auditors.
44. Which of the following is incorrect regarding
professional competence?
a. Professional accountants may portray
themselves as having expertise or experience
they do not possess.
b. Professional competence may be divided into
two separate phases.
c. The attainment of professional competence
requires initially a high standard of general
education.
d. The maintenance of professional competence
requires a continuing awareness of
development in the accountancy profession.
45. Which statement is correct regarding AASC?
a. The AASC shall be composed of 15 members
plus a Chairman.
b. The chairman and members of the AASC
shall be appointed by the President of the
Philippines upon the recommendation of
PRC.
c. The chairman and members of the AASC
shall have a non-renewable term of 3 years.
d. The chairman should have been or presently
a senior practitioner in public accountancy.
Explanation:
Section 9A of IRR of RA 9298 states that “The
FRSC and AASC shall be composed of fifteen (15)
members with a Chairman, who had been or
presently a senior accounting practitioner in any of
the scope of accounting practice and fourteen (14)
representatives. Letter A is not correct.
Section 9A of IRR of RA 9298 states that “The
Chairman and members of the FRSC and AASC
shall be appointed by the Commission (and not by
the president of the Philippines) upon the
recommendation of the Board in coordination with
the APO.” Letter B is incorrect.
Section 9A of IRR of RA 9298 states that The
Chairman and the members of the FRSC and
AASC shall have a term of three (3) years
renewable for another term. Letter C is not correct
because the given stated that the term is non-
renewable for 3 years.
Letter D is correct because according to Section
9A of IRR of RA 9298, “The AASC shall be
composed of fifteen (15) members with a
Chairman, who had been or presently a senior
practitioner in public accountancy.”
PART 2 – TRUE OR FALSE (10 points)
Instructions: State whether the following statements
are TRUE or FALSE. In case the statement is FALSE,
explain briefly what makes the statement false.
WRONG EXPLANATION MEANS WRONG ANSWER
EVEN IF THE ANSWER IS FALSE. Write clearly your
answer on the Answer Sheet for this part of the quiz.
Use only BLACK INK. LIQUID PAPER is not allowed.
There will be no credit for not following instructions.
1. To merit public trust and confidence, the
professional person must convince the public that
he will place public service ahead of personal
reward. (TRUE)
2. A CPA certificate is evidence of basic competence
in the discipline of accounting at the time the
certificate is granted. (TRUE)
3. A code of professional conduct is one of the most
important distinguishing characteristics of a
profession. (TRUE)
4. Foreign CPAs are allowed to practice public
accountancy in the Philippines without any
restriction. (FALSE)
5. Foreign CPAs must not own CPA firm in the
Philippines unless he/she qualifies to practice in
the Philippines under Sections 34 and 35 of RA
9298, and other relevant laws and bilateral and
multilateral agreement of treaties. (TRUE)
7
6. There is no complete definition of meaningful
experience for accreditation purposes but IRR has
clarified what constitutes meaningful experience in
the practice of accountancy. (TRUE)

7. The CPD may be earned by the individual

professional in any of the two years preceding the
year of application for accreditation for public
practice of accountancy and accounting
education. (FALSE)

8. In view of expansion of the accounting profession,

the BOA has issued a resolution which now allows
several forms of advertising without any
conditions. (FALSE)

9. The death of a partner in a CPA partnership firm

shall be reported to the BOA not later than sixty
(60) days from the date of death of such partner.
(FALSE)

10. A CPA engaged in teaching general education

subject in a university is not considered to be
engaged in the practice of accounting. (FALSE)

11. No member of the Board of Accountancy shall

serve more than three (3) terms. (FALSE – 4
terms or 12 years)

12. Conviction for a political offense is a ground for the

refusal to issue a certificate of registration and
professional identification card for CPA. (FALSE –
That is not a ground)

13. Objectivity means that a CPA should be

straightforward and honest in the performance of
professional services.(FALSE - Integrity)

14. All licensed CPAs shall obtain and use a seal of a

design prescribed by PICPA, bearing the
registrant’s name, registration number and title.
(FALSE – BOA)

15. Affixing the CPA’s seal and signature is an

indication of compliance by the CPA of the
requisite accounting and auditing standards and
rules. (TRUE)