Accounting 15 (Public Acctg.

Practice and Assurance)

Coverage – Chapter 5-9
November 15, 2020

A. Objective
1. It is a branch of philosophy that deals with the study of the rightness or wrongness of
human actions. What is it? ETHICS
2. What do you call an entity whose shares, stock or debt are quoted on a recognized stock
exchange? Listed
3. Who signs the audit report in a public accounting firm organization? Audit Partner
4. What kind of threat is incurred if the fee quoted by a professional accountant is so low that
it may be difficult to perform the engagement in accordance with applicable technical and
professional standards for that price? Self Interest
5. It is a fundamental principle of the accountancy professional where information acquired as
a result of business relationships should not be disclosed to third parties without proper or
specific authority. Confidentiality
6. The firm’s leadership and the examples it sets have everything to do with what the internal
culture of the firm is. What do you call that term? Tone of the top
7. Public accountants must maintain a high degree of independence from their clients though
they should see to it that they should act always to the general interest of whom? General
Interest of the public
8. A corporate form of CPA firm is advantageous than a partnership since a corporation is
treated as a separate entity from its owners and thus should not be liable for it corporate
debts. True or False FALSE because of the corporate form
9. What term describes the role of persons entrusted with the supervision, control and
direction of an entity? It ensures that the entity achieves its objectives. Corporate
Governance
10. If evaluated threats are other than clearly insignificant, safeguards should be considered and
applied as necessary to eliminate them. What is the other option to the public practitioner
in dealing with perceived threats? Reduce the threat from the acceptable level

B. Multiple Choice
1. There are two reasons why people act unethically, except –
a. The person’s ethical standards are different from those of society as a whole
b. People are exposed to temptations
c. Person chooses to act differently from others
2. The firm’s system of quality control shall include policies and procedures addressing the
following elements, except –
a. Adequacy of information technology infrastructure
b. Leadership responsibilities for quality with the firm
c. Ethical requirements
d. Acceptance and continuance of client relationships
e. Human resources
3. The firm shall establish policies and procedures for the acceptance and continuance of client
relationships designed to provide it with reasonable assurance that it will only undertake or
continue the engagement where it, except –
a. It is competent to perform the engagement and has the capabilities, time and resources
to do so
b. Can comply with ethical requirements
c. It has at the same time a consulting arrangement with the client
d. It has considered the integrity of the client
4. The Philippine Ethics Code establishes the fundamental principles of professional ethics,
which include, except –
a. Integrity
b. Objectivity
c. Professional diversity
d. Confidentiality
e. Professional behavior
5. Financial statement assertions are assertions by management, explicit or otherwise, that are
embodied in the financial statements and can be categorized as follows, except –
a. Existence
b. Leadership values
c. Rights and obligations
d. Occurrence
e. Completeness
6. In which of the following situations would a public accounting firm have violated the Code of
Ethics in determining its fee?
a. A fee is to be established at a later date by the bankruptcy court
b. A fee is based upon the nature of the engagement rather than upon the actual time
spent of the engagement
c. A fee is based on the fee charged by the client’s former auditors
d. A fee is based on whether or not the public accounting firm’s audit report leads to the
approval of the client’s application for bank financing
7. The subject matter of an assurance engagement can take the following forms, except –
a. Historical or prospective financial statement
b. Performance of an entity that could indicate efficiency and effectiveness
c. The entity’s internal control
d. Evaluation of a capital investment proposal
8. Which is the following is responsible for the fairness of the representation made in the
financial
statement?
a. Audit Committee
b. Independent auditor
c. Accounting Department
d. Client’s management
9. Assurance engagements should exhibit the following elements except -
a. A subject matter
b. Suitable criteria
 c. An engagement process
d. Appropriate professional fees

10. Which of the following is not an element of quality control that should be considered by a
firm of independent auditors?
a. Assigning personnel to engagements
b. Consultation with appropriate persons
c. Keeping records of quality control policies and procedures
d. Supervision