CHAPTER 2

1. 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 every
a. 2 years b. 3 years c. 4 years d. 5 years

2. The BOA shall submit to the PRC the ratings obtained by each candidate within how many calendar days after
the examination?

a. 5 days b. 10 days c. 15 days d. 30 days

3. A Professional Identification Card bearing the registration number, date of issuance, expiry date, duly signed by
the chairperson of the Commission, shall be issued to every registrant renewable every
a. Two years b. Three years c. Four years d. Five years

4. The BOA shall not refuse the registration of any person who successfully passed the CPA examinations if
a. Convicted by a court of competent jurisdiction of a criminal offense involving moral turpitude
b. Convicted for a political offense.
c. Guilty of immoral and dishonorable conduct
d. None of the above.

5. These statements are issued to provide practical assistance to auditors in implementing the PSAs
a. Interpretations b. SASP c. PAPS d. SPA

6. A body that is created through the Philippine Accountancy Act of 2004 and is intended to replace the ASPC.
a. Auditing and Assurance Standards Council (AASC)
b. Financial Reporting Standards Council (FRSC)
c. Education Technical Council (ETC)
d. Philippine Institute of Certified Public Accountants (PICPA)

7. Which of the following government agencies is represented both to the Auditing Standards and Practices
Council and the Auditing and Assurance Standards Council?
a. Bangko Sentral ng Pilipinas c. Securities and Exchange Commission
b. Bureau of Internal Revenue d. Commission on Higher Education

8. Which of the following is not normally a service rendered by public accountants?

a. Management consultation service c. Internal auditing
b. Attest function d. Taxation

9. A CPA firm offers management advisory services to clients. Its primary purpose is to
a. Furnish professional advice and assistance which will enable the client to improve operations.
b. Keep the CPA firm competitive with other firms.
c. Establish the firm as a consultant, thus ensuring its future expansion and growth.
d. Permit the firms staff members to acquire expertise in other areas of practice.
10. In the absence of pronouncements issued by the ASPC and the PICPA, published statements and guidelines
issued by other authoritative bodies like AICPA, IAASB and AFA are the bases of determining generally accepted
auditing standards (GAAS). What effect do these pronouncements provide in determining the GAAS?
a. Authoritative b. Persuasive c. Parallel d. Alternative
11. A basic objective of a CPA firm is to provide professional services that conform with professional standards.
Reasonable assurance of achieving this basic objective is provided through
a. A system of peer review.
b. Continuing professional education.
c. A system of quality controls.
d. Compliance with generally accepted reporting standards.

12. The examination by CPAs of a CPA firms auditing practices to ascertain compliance with its quality control
system
a. Compliance audit c. Peer review
b. Examination d. Quality control audit

13. The firm is to be staffed by personnel who have attained and maintained the technical standards and
professional competence required to enable them to fulfill their responsibilities with due care is the objective of
what quality control policy?
a. Professional Requirements c. Assignment
b. Skills and Competence d. Delegation

14. In connection with the element of professional development, a CPA firms system of quality control should
ordinarily provide that all personnel
a. Have the knowledge required to enable them to fulfill responsibilities assigned.
b. Possess judgment, motivation, and adequate experience.
c. Seek assistance from persons having appropriate levels of knowledge, judgment, and authority.
d. Demonstrate compliance with peer review directives.

15. Within the context of quality control, the primary purpose of continuing professional education and training
activities, is to enable a CPA firm to provide personnel within the firm with:
a. Technical training that assures proficiency as an auditor.
b. Professional education that is required in order to perform with due professional care.
c. Knowledge required to fulfill assigned responsibilities and to progress within the firm.
d. Knowledge required in order to perform a peer review.

16. In pursuing its quality control objectives with respect to assigning personnel to engagements, a public
accounting firm may use policies and procedures such as
a. Rotating employees from assignment to assignment on a random basis to aid in the staff training effort.
b. Requiring timely identification of the staffing requirements of specific engagements so that enough
qualified personnel can be made available.
c. Allowing staff to select the assignments of their choice to promote better client relationships.
d. Assigning a number of employees to each engagement in excess of the number required so as not to
overburden the staff and interfere with the quality of the audit work performed.

17. A CPA firms personnel partner periodically studies the CPA firms personnel advancement experience to
ascertain whether individuals meeting stated criteria are assigned increased degrees of responsibility. This is
evidence of the CPA firms adherence to prescribed standards of
a. Quality control. c. Supervision and review.
b. Due professional care. d. Fieldwork.

18. The firms evaluation of the performance of its personnel and advising them of their progress is a quality control
procedure that relates to
 a. Promotion c. Monitoring
b. Advancement d. Directing

19. Which of the following relate to skills and competence as an objective of quality control policies?

a. Advancement b. Professional development c. Hiring d. All of these

20. Which of the following is not likely a quality control procedure on consultation?
a. Identifies areas and specialized situations where consultation is required and encourage personnel to consult
with or in use authoritative sources on other complex matters.
b. Designates individuals as specialists to serve as authoritative sources and define their authority in consultative
situations.
c. Assigns an appropriate person or persons to be responsible for assigning personnel to audits.
d. Specifies the extent of documentation to be provided for the result of consultation in those areas and
specialized situations where consultation is required.

21. Monitoring, as an element of quality control policies of a firm, requires:

a. Providing reasonable assurance that the firms other quality control policies and procedures are effectively
operating.
b. Designates individuals as specialists to serve as authoritative sources and define their authority in consultative
situations.
c. Ensuring that personnel are sufficiently directed, supervised and their work being reviewed adequately.
d. Identify the right personnel to be assigned in an audit engagement.

22. Which of the following quality control procedures is a monitoring activity?

a. Evaluates the firms independence and its ability to serve the prospective client
b. Reviews and tests compliance with the firms general quality control policies and procedures.
c. Designates individuals as specialists to serve as authoritative sources and define their authority in consultative
situations.
d. Monitors continuing professional education programs and maintain appropriate records, both on a firm and
an individual audit engagement basis.

23. Which of the following is not an element of professional requirements as prescribed by Quality Control Policies
for an audit firm?
a. Independence c. Confidentiality
b. Integrity d. Prudence

24. Which of the following is an element of directing an audit assistant objective?

a. Identifying in advance the staffing requirements of a particular audit engagement.
b. Informing assistants of their responsibilities and the objectives of the procedures they are to perform.
c. Resolving any differences in professional judgment between audit personnel.
d. Resolution of differences in audit findings.

25. It involves informing assistants of their responsibilities and the objectives of the procedures they have to
perform:
a. Supervision b. Monitoring c. Directing d. Consultation

26. Which of the following are Reporting Standard, except

a. GAAP
b. Inconsistency
 c. Notes to F/S
d. None of the above

27. Issuance of draft on standards by AASC to be approved by how many members?

a. 9
b. Majority
c. 8
d. None of the above

28. System of quality control includes policies and procedures that requires audit to be reviewed whether its
effectively implemented
a. monitoring
b. supervision
c. review
d. None of the above

29. Which of the following are false, except

a. GAAS measures quality of audit should the auditors adhere
b. Auditor should not depart from PSA
c. Non-CPA may perform and sign audit report.
d. None of the above

30. 5. Independence in appearance means

a. how people perceives the auditor
b independence in mind
c. honest mind
d. independence in total

31. Engagement performance not includes the following, except

a. commitment to competence
b. control environment
c. supervision
d. none of the above

32. System of quality control does include, except

a. human resources
b. acceptance or otherwise
c. consultacy
d. independence

33. Finalization of standards to be approved by how many members?

a. 9
b. Majority
c. 8
d. none of the above

34. Reporting Standards includes

a. PSA
b. System of quality control
 c. none of the choices
d. appropriate issuance of opinion
35. System of quality control requires the auditor to be independent in
a. total
b. fact
c. appearance
d. either b or c but need not both

36. Chris Celestial a CPA and an auditor of Apple and he owns .01 % of his client shares, hes not being dependent
to his client in mind. He impairs
a. independence in fact
b. independence in appearance
c. either b or c
d. none of the above

37. Initial engagement should assess the integrity of the client, which SQC would most likely consider when doing
this?
a. acceptance or otherwise
b. monitoring
c. supervision
d. competence

38. Free from conflict of interest, being intellectually honest and free from bias is one of
a. ethical requirements
b. engagement performance
c. independence
d. None of the above

39. Acceptance and non-acceptance includes, except

a. assessing integrity of clients management
b. assessing clients capability
c. how much would be the fee?
d. None of the above.

40. General Standards includes the following but one

a. Proficiency
b. Independence
c. Adequacy of disclosures
d. None of the above

41. GAAS includes

a. General Standards
b. Fieldwork standards
c. Reporting standards
d. All of the above

42. Sales journal record complements wit related invoice is an example of

a. internal control
b, Corroborative evidence
 c. output
d. None of the above

43. Doing the audit recklessly would be prevented by which standards

a. General Standards
b. Fieldwork standards
c. Reporting standards
d. All of the above

44. Policies and procedures that requires the professional auditor to conform with
a. SQC
b. GAAP
c. FRSC
d. IFRIC

45. When the auditor involves to a potential client whose lack of integrity, he must
a. Withdraw
b. Accept because the fee is high
c. Issued a disclaimer opinion
d. do whatever he wants to, it doesnt matter

46. An audit is said to be irrelevant when the client has no internal control
a. Yes
B. Nope.
c. IDK
d. Perhaps

47. S1. External auditor must be independent either in fact or appearance

S2. Internal auditor only need to be independent in fact
a. S2 true
b. both true
c. both false
d. S2 False

48. S1. Audit Procedures must be conducted only by adhering to PSA

S2. Auditor must not depart from PSA
a. S2 true
b. both true
c. both false
d. S2 False

49. Who signs the audit report?

A, managing partner
b. engagement partner
c. senior auditor
d. audit assistant

50. Who performs specific audt procedure?

A, managing partner
b. engagement partner
c. senior auditor
d. audit assistant