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1.

The code of professional ethics for CPAs promulgated by the Board of Accountancy applies to
a. All CPAs in public practice.
b. All CPAs in government.
c. All CPAs in public practice and employed in private business.
d. All CPAs in public practice employed in private business and industry, in the government,
and in education.
2. The underlying reason for a code of professional ethics is
a. That it is required by legislation.
b. To provide the licensing agencies with a basis for measuring the performance of the
practitioners.
c. The need for public confidence in the quality of service of the profession.
d. That it provides a safeguard against unscrupulous people.
3. The principle of professional competence and due care imposes certain obligations on
professional accountants. Which of the following is not one of those obligations required by this
principle?
a. To act diligently in accordance with applicable technical and professional standards.
b. To be fair, intellectually honest and free of conflict of interest.
c. To become aware and understand relevant technical, professional and business
developments.
d. To obtain professional knowledge and experience to enable them to fulfil their
responsibilities.
4. Competence as a certified public accountant includes all of the following except
a. Having the technical qualifications to perform an engagement.
b. Possessing the ability to supervise and evaluate the quality of staff work.
c. Warranting the infallibility of the work performed.
d. Consulting others if additional technical information is needed.
5. An auditor who accepts an audit engagement and does not possess the industry expertise of the
business entity should
a. Engage financial experts familiar with nature of the business entity
b. Obtain knowledge of matters that relate to the nature of the entitys business
c. Refer a substantial portion of the audit to another CPA who will act as the principal auditor
d. First inform management that an unqualified opinion cannot be issued
6. Professional competence should include
Attainment of professional competence Maintenance of professional competence
a. YES YES
b. NO YES
c. NO NO
d. YES NO
7. The essence of the due care principle is that the auditor should not be guilty of:
a. Bias
b. Errors in judgment
c. Fraud
d. Negligence
8. The principle of confidentiality applies to:
a. Professional accountants in public practice
b. Professional accountants in commerce and industry
c. Professional accountants in government
d. All professional accountants
9. The principle of confidentiality imposes an obligation on professional accountants to refrain
from:
a. Disclosing confidential information to another party even if the client authorizes the
disclosure.
b. Using confidential information acquired as a result of professional and business
relationships to their personal advantage or the advantage of third parties.
c. Disclosing information to defend themselves in case of litigation
d. Responding to an inquiry or investigation conducted by the Professional Regulatory Board of
Accountancy.
10. A CPA shall not disclose confidential information obtained during an audit engagement in which
one of the following situations?
a. When the security of the state requires.
b. With the consent of the client.
c. In defense of himself when sued by his client.
d. To a successor auditor without the clients persmission.
11. The Code of Ethics for Professional Accountants states that a CPA shall not disclose any
confidential information obtained in the course of a professional engagement except with the
consent of his client. In which of the situations given below would a CPA be in violation of the
principle of confidentiality?
a. Disclosing confidential information in order to properly discharge the CPAs responsibilities in
accordance with his professional standards.
b. Disclosing confidential information in compliance with a subpoena issued by a court.
c. Disclosing confidential information to another accountant interested in purchasing the CPAs
practice.
d. Disclosing confidential information in an investigation conducted by the PRC thru the Board
of Accountancy.
12. Which of the following is considered a violation of rules on confidentiality?
a. The CPA discloses information to protect his own interest in the course of legal proceedings.
b. The CPA discloses information to a successor auditor after obtaining the clients permission.
c. The CPA discloses information to another CPA in compliance with a quality control review
conducted by the Quality Review Committee (QRC).
d. The CPA divulges information disclosed by to him by a prospective client.
13. In which of the following circumstances would a CPA be bound by ethics to refrain from
disclosing any confidential information obtained during the course of a professional
engagement?
a. The CPA is issued a summon enforceable by a court order which orders the CPA to present
confidential information.
b. A major stockholder of a client company seeks accounting information from the CPA after
the management declined to disclose the requested information
c. Confidential client information is made available with the clients permission
d. An inquiry by the Professional Regulation Commission and the CPA needs the disclosure to
defend himself
14. The Philippine Code of Ethics for professional accountants requires independence
Of mind In appearance
a. YES YES
b. YES NO
c. NO NO
d. NO YES
15. The Code of Professional Ethics provides the categories of threats that could compromise or
could be perceived to compromise a professional accountants compliance with the
fundamental principles. The threat that the professional accountant will not appropriately
evaluate the results of a previous judgment made or service performed on which the accountant
will rely when forming a judgment as a part of providing a current service is known as
a. Advocacy threat
b. Self-interest threat
c. Self-review threat
d. Familiarity threat
16. The Code of Professional Ethics provides the categories of threats that could compromise or
could be perceived to compromise a professional accountants compliance with the
fundamental principles. The threat that a professional accountant will promote a clients
position to the point of compromising his/her objectivity is known as
a. Self-interest threat
b. Advocacy threat
c. Familiarity threat
d. Self-review threat
17. The Code of Professional Ethics provides the categories of threats that could compromise or
could be perceived to compromise a professional accountants compliance with the
fundamental principles. The threat that a professional accountant will be too sympathetic to the
client or too accepting of their work due to a long and close relationship is known as
a. Self-interest threat
b. Advocacy threat
c. Familiarity threat
d. Intimidation threat
18. The Code of Professional Ethics provides the categories of threats that could compromise or
could be perceived to compromise a professional accountants compliance with the
fundamental principles. The threat that a professional accountant will be deterred from acting
objectively because of actual or perceived pressures from the client is known as
a. Intimidation threat
b. Familiarity threat
c. Self-interest threat
d. Advocacy threat
19. Which of the following will not create self-interest threats for a professional accountant in
public practice?
a. The possibility of losing a significant client
b. Direct financial interest in the assurance client
c. Undue dependence on total fees from client
d. Preparing the original data used to generate records that are the subject matter of the
assurance engagement
20. The following circumstances create advocacy threats for a professional accountant in public
practice except
a. Promoting shares in an audit client.
b. Acting as an advocate on behalf of an audit client in litigation or disputes with third parties.
c. Acting as campaign manager for the president of a client who is running for a public office.
d. Discovery of a significant error during a re-evaluation of his work.
21. Familiarity threat could be created under the following circumstances except
a. A professional accountant accepting gifts from a client whose value is inconsequential or
trivial
b. Senior personnel of the engagement team having a long association with the assurance
client
c. A member of the engagement team is the spouse of one of the directors of the client
d. A member of the engagement team is the spouse of the chief accountant of the client
22. Intimidation threat could be created under the following circumstances except
a. A firm being threatened with litigation by the client.
b. A firm being pressured to reduce inappropriately the extent of work performed in order to
reduce fees.
c. A professional accountant being informed by a partner of the firm that he would not be
promoted unless he agrees with an audit clients inappropriate accounting treatment.
d. A firm entering into a contingent fee arrangement relating to an assurance engagement.
23. Which of the following statements best describes why the profession of certified public
accountants has deemed it essential to promulgate a code of professional conduct and to
establish a mechanism for enforcing observation of the code?
a. A distinguishing mark of a profession is its acceptance of responsibility to the public.
b. A prerequisite to success is the establishment of an ethical code that primarily defines the
professionals responsibility to client and colleagues.
c. A requirement of most state laws calls for the profession to establish a code of ethics.
d. An essential means of self-protection for the profession is the establishment of flexible
ethical standards by the professions.
24. Competence as a certified public accountant includes all of the following except
a. Having the technical qualifications to perform an engagement.
b. Possessing the ability to supervise and evaluate the quality of staff work.
c. Warranting the infallibility of the work performed.
d. Consulting others if additional technical information is needed.
25. Diaz, a CPA firms personnel partner, periodically studies the CPA firms personnel advancement
record to ascertain whether individuals meeting stated criteria are assigned increased degrees
of responsibility. This is evidence of the CPA firms adherence to prescribed
a. Standards of due professional care.
b. Quality control standards.
c. Supervision and review standards.
d. Standards of field work.
26. A CPAs retention of client records as a means of enforcing payment of an overdue audit fee is
an action that is:
a. Considered acceptable by the Code of Ethics.
b. Ill advised since it would impair the CPAs independence with respect to the client.
c. Considered discreditable to the profession.
d. A violation of the standards on auditing.
27. A public accounting firm would least likely be considered in violation of the independence rules
in which of the following instances?
a. A partners checking account, which is fully insured by the Philippine Deposit Insurance
Corporation, is held at a financial institution for which the public accounting firm performs
attest services.
b. A manager of the firm donates service as vice president of a charitable organization that is
an audit client of the firm.
c. An attest client owes the firm fees for this and last years annual engagements.
d. A covered members dependent son owns stock in an attest client.
28. Which of the following is a violation of the code of ethics for professional accountants in the
Philippines?
a. A CPA permits his/her name to be used in a clients advertising as having verified financial
data and/or statistical facts with respect to the clients product.
b. Based on information obtained in an audit, a CPA reports an illegal act of his client to
government authorities.
c. Three years after a partner has retired, the remaining partners continue to practice under a
firm name that includes the name of the retired partner. The retired partner has severed all
connections with the CPA firm.
d. A CPA running for public office uses the professional designation CPA after his name on
posters employed in connection with his election campaign.
29. CPAs should not be liable to any party if they perform their services with:
a. Ordinary negligence
b. Regulatory providence
c. Due professional care
d. Good faith
30. The Code of Ethics would be violated if a CPA accepted a fee for services and the fee was
a. Fixed by a public authority.
b. Based on a price quotation submitted in competitive bidding.
c. Based on the results of judicial proceedings in a tax matter.
d. Payable after a specified finding was attained in a review of financial statements.
31. The Code of Ethics for Professional Accountants in the Philippines states, in part, that a CPA
should maintain a high degree of integrity and objectivity in all his actuations. Objectivity in said
Code refers to a CPAs ability.
a. To maintain an impartial attitude on all matters which come under the CPAs review.
b. To independently distinguishing between accounting practices that are acceptable and
those that are not.
c. To be unyielding in all matter dealing with auditing procedures.
d. To independently choose between alternate accounting principles and auditing standards.
32. The Code of Ethics states that a CPA shall not disclose any confidential information obtained in
the course of a professional engagement except with the consent of his client. In which of the
situations given below would disclosure by a CPA be in violation of the code?
a. Disclosing confidential information in order to properly discharge the CPAs responsibilities
in accordance with his professions standards.
b. Disclosing confidential information in compliance with a subpoena issued by a court.
c. Disclosing confidential information to another accountant interested in purchasing the CPAs
practice.
d. Disclosing confidential information in a review of the CPAs professional practice by the
Quality Review Committee.
33. A CPA in public accounting is prohibited from performing which of the following actions?
a. Permit the publication of his being the author of a book.
b. Be a party to a stratagem which permits a non-CPA to practice accountancy.
c. Allow his wife to acquire shares in a corporations capital stock which is not an audit client.
d. Act as a stock and transfer agent of a non-audit client.
34. According to the Code of Ethics, a CPA who has a financial interest in a partnership that invests
in a potential client is considered to have
a. An indirect financial interest in the client
b. A direct financial interest in the client
c. No financial interest in the client
d. A partial financial interest in the client
35. The Code of Ethics contains both general ethical principles that are aspirational in character and
also a
a. List of violations that would cause the automatic suspension c the CPAs license.
b. Set of specific, mandatory rules describing levels of conduct the CPA must observe.
c. Description of the CPAs procedures for responding to an inquiry from a trial board.
d. List of specific crimes that would be considered as acts discreditable to the profession.
36. Which of the following is not a qualification for applicants for CPA examinations?
a. The candidate should be a Filipino citizen
b. The candidate is of good moral character
c. The candidate is a holder of the degree of Bachelor of Science in Accountancy
d. The candidate is of a sound mind
37. Which of the following is not a ground for refusal to issue certificate of registration and
professional ID?
a. Criminal offense involving moral turpitude
b. Unprofessional or unethical conduct
c. Person of unsound mind
d. The person is guilty of immoral and dishonorable conduct
38. How many CPE units are required for an accountant to undertake for 3 years?
a. 50
b. 60
c. 70
d. 80
39. This requires a professional accountant to identify, evaluate and address threats to compliance
with the fundamental principles, rather than merely comply with a set of specific rules which
may be arbitrary is, therefore, in the public interest.
a. Fundamental Principle Approach
b. Conceptual Framework Approach
c. Professional Competence Approach
d. None of the above
40. A professional accountant should not be associated with information which he/she believes:
bonus
a. Contains a materially false or misleading statement;
b. Contains statements or information furnished recklessly; or
c. Omits or obscures information required to be included where such omission or obscurity
would be misleading.
d. None of the above