Cpa Review School of The Philippines: Manila
Cpa Review School of The Philippines: Manila
Cpa Review School of The Philippines: Manila
PREFACE
1. Which statement is incorrect regarding the Code of Ethics for Professional Accountants in the
Philippines?
a. Professional accountants refer to persons who are Certified Public Accountants (CPA) and who
hold a valid certificate issued by the Board of Accountancy.
b. Where a national statutory requirement is in conflict with a provision of the IFAC Code, the IFAC
Code requirement prevails.
c. The Code of Ethics for Professional Accountants in the Philippines is mandatory for all CPAs and is
applicable to professional services performed in the Philippines on or after January 1, 2004.
d. Professional accountants should consider the ethical requirements as the basic principles which
they should follow in performing their work.
2. Which statement is correct regarding the Code of Ethics for Professional Accountants in the Philippines?
a. Professional accountants refer to persons who are Certified Public Accountants (CPA) in public
practice and who hold a valid certificate issued by the Board of Accountancy.
b. It is practical to establish ethical requirements which apply to all situations and circumstances that
professional accountants may encounter.
c. Professional accountants should consider the ethical requirements as the ideal principles which
they should follow in performing their work.
d. All CPAs are expected to comply with the ethical requirements of the Code and other ethical
requirements that may be adopted and approved by IFAC. Apparent failure to do so may result in
an investigation into the CPA’s conduct.
4. The following are modifications to the IFAC Code to consider Philippine regulatory requirements and
circumstances, except
a. The period for rotation of the lead engagement partner was changed from five to seven years.
b. Advertising and solicitation by individual professional accountants in public practice were not
permitted in the Philippines.
c. Additional examples relating to anniversaries and websites wherein publicity is acceptable, as
provided in BOA Resolution 19, Series of 2000, were included.
d. Payment and receipt of commissions were not permitted in the Philippines.
DEFINITIONS
5. Assurance engagement include the following, except
a. An engagement conducted to provide a high level of assurance that the subject matter conforms
in all material respects with identified suitable criteria.
b. An engagement conducted to provide a moderate level of assurance that the subject matter is
plausible in the circumstances.
c. An engagement in accordance with the Philippine Standard on Assurance Engagement(s) issued
by the Philippine Auditing Standards and Practices Council as approved by the Board of
Accountancy/Professional Regulation Commission.
d. An engagement to perform agreed-upon procedures.
12. A financial interest beneficially owned through a collective investment vehicle, estate, trust or other
intermediary over which the individual or entity has no control.
a. Indirect financial interest c. Financial instrument
b. Direct financial interest d. Clients’ monies
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13. A combination of impartiality, intellectual honesty and a freedom from conflicts of interest.
a. Objectivity c. Professional skepticism
b. Independence of mind d. Independence
16. The Code of Ethics for Professional Accountants in the Philippines defined “practice” as
a. A distinct sub-group, whether organized on geographical or practice lines.
b. An entity under common control, ownership or management with the firm or any entity that a
reasonable and informed third party having knowledge of all relevant information would
reasonably conclude as being part of the firm nationally or internationally.
c. Any service requiring accountancy or related skills performed by a professional accountant
including accounting, auditing, taxation, management consulting and financial management
services.
d. A sole proprietor or a partnership of professional accountants which offers professional services
to the public.
17. The communication to the public of facts about a professional accountant which are not designed for
the deliberate promotion of that professional accountant.
a. Publicity c. Indirect promotion
b. Advertising d. Solicitation
20. The term professional accountant in public practice includes the following, except
a. A sole proprietor providing professional services to a client.
b. Each partner or person occupying a position similar to that of a partner staff in a practice
providing professional services to a client.
c. Professional accountants employed in the public sector having managerial responsibilities.
d. A firm of professional accountants in public practice.
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22. Related entity is an entity that has any of the following relationships with the client, except
a. An entity that has direct or indirect control over the client provided the client is material to such
entity.
b. An entity with a direct financial interest in the client even though such entity has no significant
influence over the client provided the interest in the client is material to such entity.
c. An entity over which the client has direct or indirect control.
d. An entity which is under common control with the client (referred to as a “sister entity”) provided
the sister entity and the client are both material to the entity that controls both the client and
sister entity.
INTRODUCTION
23. A profession is distinguished by certain characteristics including
I. Mastery of a particular intellectual skill, acquired by training and education.
II. Adherence by its members to a common code of values and conduct established by its
administrating body, including maintaining an outlook which is essentially objective.
III. Acceptance of a duty to society as a whole (usually in return for restrictions in use of a title or
in the granting of a qualification).
a. I, II and III c. III only
b. I and II only d. II and III only
OBJECTIVES
25. The Code recognizes that the objectives of the accountancy profession are to work to the highest
standards of professionalism, to attain the highest levels of performance and generally to meet the
public interest requirement set out above. These objectives require four basic needs to be met
including the following, except
a. Credibility c. Quality of Services
b. Professionalism d. Integrity
FUNDAMENTAL PRINCIPLES
26. In order to achieve the objectives of the accountancy profession, professional accountants have to
observe a number of prerequisites or fundamental principles. The fundamental principles include the
following, except
a. Objectivity
b. Professional Competence and due Care
c. Technical Standards
d. Confidence
b. Be fair and should not allow prejudice or bias, conflict of interest or influence of others to
override objectivity.
c. Perform professional services with due care, competence and diligence.
d. Act in a manner consistent with the good reputation of the profession and refrain from any
conduct which might bring discredit to the profession.
28. Which of the following is not explicitly referred to in the Code of Ethics as source of technical standards?
a. Commission on Audit (COA)
b. Auditing Standards and Practices Council (ASPC)
c. Securities and Exchange Commission (SEC)
d. Relevant legislation
THE CODE
29. Which statement is incorrect regarding the Code of Code of Ethics for Professional Accountants in the
Philippines?
a. The objectives as well as the fundamental principles are of a general nature and are not intended
to be used to solve a professional accountant’s ethical problems in a specific case.
b. The code is divided into two parts, part A and part B.
c. Part A applies to all professional accountants unless otherwise specified.
d. Part B applies only to those professional accountants in public practice.
33. Which of the following is the least required in attaining professional competence?
a. High standard of general education.
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SECTION 4 - Confidentiality
34. Which of the following is incorrect regarding confidentiality?
a. Professional accountants have an obligation to respect the confidentiality of information about a
client’s or employer’s affairs acquired in the course of professional services.
b. The duty of confidentiality ceases after the end of the relationship between the professional
accountant and the client or employer.
c. Confidentiality should always be observed by a professional accountant unless specific authority
has been given to disclose information or there is a legal or professional duty to disclose.
d. Confidentiality requires that a professional accountant acquiring information in the course of
performing professional services neither uses nor appear to use that information for personal
advantage or for the advantage of a third party.
35. A professional accountant has a professional duty or right to disclose confidential information in each of
the following, except
a. To comply with technical standards and ethics requirements.
b. To disclose to BIR fraudulent scheme committed by the client on payment of income tax.
c. To comply with the quality review of a member body or professional body
d. To respond to an inquiry or investigation by a member body or regulatory body.
38. When a professional accountant learns of a material error or omission in a tax return of a prior year, or
of the failure to file a required tax return, the professional accountant has a responsibility to do the
following, except
a. Promptly advise the client or employer of the error or omission and .recommend that disclosure
be made to the revenue authorities.
b. Immediately inform the revenue authorities.
c. Take reasonable steps to ensure that the error is not repeated in subsequent tax returns if the
professional accountant concludes that a professional relationship with the client or employer can
be continued.
d. Inform the client or the employer that it is not possible to act for them in connection with that
return or other related information submitted to the authorities if the client or the employer does
not correct the error.
39. When a professional accountant performs services in a country other than the home country and
differences on specific matters exist between ethical requirements of the two countries, the following
provisions should be applied
a. When the ethical requirements of the country in which the services are being performed are less
strict than the Code of Ethics of the Philippines, then the Code of Ethics of the Philippines should
be applied.
b. When the ethical requirements of the country in which services are being performed are stricter
than the Code of Ethics of the Philippines, then the ethical requirements in the country where
services are being performed should be applied.
c. When the ethical requirements of the home country are mandatory for services performed
outside that country and are stricter, then the ethical requirements of the home country should
be applied.
d. Any of the above.
SECTION 7 - Publicity
40. In the marketing and promotion of themselves and their work, professional accountants should
a. Not use means which brings the profession into disrepute.
b. Not make exaggerated claims for the services they are able to offer, the qualifications they
possess, or experience they have gained.
c. Not denigrate the work of other accountants.
d. All of the above.
42. There is a broad range of engagements to provide a high or moderate level of assurance. Such
engagements may include
I. Engagements to report on a broad range of subject matters covering financial and non-
financial information
II. Attest and direct reporting engagements
III. Engagements to report internally and externally
IV. Engagements in the private and public sector
a. I, II, III and IV c. II only
b. I, II and III d. I and II only
43. Not all engagements performed by professional accountants are assurance engagements. Other
engagements frequently performed by professional accountants that are not assurance engagements
include the following, except
a. Agreed-upon procedures
b. Compilation of financial or other information
c. Management consulting
d. Examination of prospective financial information
44. For assurance engagements provided to an audit client, the following should be independent of
the client
a b c d
The members of the assurance team Yes Yes Yes Yes
The firm Yes Yes No No
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45. For assurance engagements provided to clients that are not audit clients, when the report is not
expressly restricted for use by identified users, the following should be independent of the client
a b c d
The members of the assurance team Yes Yes Yes Yes
The firm Yes Yes No No
Network firms Yes No No Yes
46. For assurance engagements provided to clients that are not audit clients, when the assurance
report is expressly restricted for use by identified users, the following should be independent of
the client
a b c d
The members of the assurance team Yes Yes Yes Yes
The firm Yes Yes No No
Network firms Yes No No Yes
47. The firm should be independent of the client in the following engagements
a b c d
Assurance engagements provided to an audit client Yes Yes Yes Yes
Assurance engagements provided to clients that are Yes Yes No No
not audit clients, when the report is not expressly
restricted for use by identified users
Assurance engagements provided to clients that are Yes No No Yes
not audit clients, when the assurance report is
expressly restricted for use by identified users
49. Occurs when a firm or a member of the assurance team could benefit from a financial interest in, or
other self-interest conflict with, an assurance client.
a. Self-interest threat c. Advocacy threat
b. Self-review threat d. Familiarity threat
52. Occurs when any product or judgment of a previous assurance engagement or non-assurance
engagement needs to be re-evaluated in reaching conclusions on the assurance engagement or when a
member of the assurance team was previously a director or officer of the assurance client, or was an
employee in a position to exert direct and significant influence over the subject matter of the assurance
engagement.
a. Self-interest threat c. Advocacy threat
b. Self-review threat d. Familiarity threat
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53. Examples of circumstances that may create self-review threat least likely include
a. Preparation of original data used to generate financial statements or preparation of other records
that are the subject matter of the assurance engagement.
b. A member of the assurance team being, or having recently been, an employee of the assurance
client in a position to exert direct and significant influence over the subject matter of the
assurance engagement.
c. Performing services for an assurance client that directly affect the subject matter of the assurance
engagement.
d. Potential employment with an assurance client.
54. Occurs when a firm, or a member of the assurance team, promotes, or may be perceived to promote,
an assurance client’s position or opinion to the point that objectivity may, or may be perceived to be,
compromised. Such may be the case if a firm or a member of the assurance team were to subordinate
their judgment to that of the client.
a. Self-interest threat c. Advocacy threat
b. Self-review threat d. Familiarity threat
55. A CPA-lawyer, acting as a legal counsel to one of his audit client, is an example of
a. Self-interest threat c. Advocacy threat
b. Self-review threat d. Familiarity threat
56. Occurs when, by virtue of a close relationship with an assurance client, its directors, officers or
employees, a firm or a member of the assurance team becomes too sympathetic to the client’s
interests.
a. Self-interest threat c. Advocacy threat
b. Self-review threat d. Familiarity threat
57. Examples of circumstances that may create familiarity threat least likely include
a. A member of the assurance team having an immediate family member or close family member
who is a director or officer of the assurance client.
b. A member of the assurance team having an immediate family member or close family member
who, as an employee of the assurance client, is in a position to exert direct and significant
influence over the subject matter of the assurance engagement.
c. A former partner of the firm being a director, officer of the assurance client or an employee in a
position to exert direct and significant influence over the subject matter of the assurance
engagement.
d. Dealing in, or being a promoter of, share or other securities in an assurance client.
60. When threats to independence that are not clearly insignificant are identified, the following are
appropriate, except
a. Professional judgment is used to determine the appropriate safeguards to eliminate threats to
independence or to reduce them to an acceptable level.
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b. In situations when no safeguards are available to reduce the threat to an acceptable level, the
only possible actions are to eliminate the activities or interest creating the threat, or to refuse to
accept or continue the assurance engagement.
c. When the firm decides to accept or continue the assurance engagement, the decision need not
be documented provided the threats identified were eliminated.
d. The evaluation of the significance of any threats to independence and the safeguards necessary to
reduce any threats to an acceptable level, takes into account the public interest.
61. Consideration of the nature of the safeguards to be applied will be affected by matters such as
the
a b c d
Significance of the threat Yes Yes Yes Yes
Nature of the assurance engagement Yes Yes Yes No
Intended users of the assurance report Yes Yes No Yes
Structure of the firm Yes No No No
62. The safeguards available to eliminate the threats or reduce them to an acceptable level include
a b c d
Safeguards created by the profession, legislation or Yes Yes Yes Yes
regulation
Safeguards within the assurance client Yes Yes No No
Safeguards within the firm’s own systems and Yes No No Yes
procedures
63. Safeguards created by the profession, legislation or regulation, include the following, except
a. Educational, training and experience requirements for entry into the profession.
b. Continuing education requirements.
c. Legislation governing the independence requirements of the firm.
d. Policies and procedures that emphasize the assurance client’s commitment to fair financial
reporting.
64. Safeguards within the assurance client, include the following, except
a. Professional standards and monitoring and disciplinary processes.
b. The assurance client has competent employees to make managerial decisions.
c. Internal procedures that ensure objective choices in commissioning non-assurance engagements.
d. A corporate governance structure, such as an audit committee, that provides appropriate
oversight and communications regarding a firm’s services.
65. Safeguards within the firm’s own systems and procedures, include the following, except
a. Firm leadership that stresses the importance of independence and the expectation that members
of assurance teams will act in the public interest.
b. External review of a firm’s quality control system.
c. Policies and procedures to implement and monitor quality control of assurance engagements.
d. Policies and procedures that will enable the identification of interests or relationships between
the firm or members of the assurance team and assurance clients.
66. When the safeguards available are insufficient to eliminate the threats to independence or to reduce
them to an acceptable level, or when a firm chooses not to eliminate the activities or interest creating
the threat, the only course of action available will be the
a. Issuance of an adverse opinion.
b. Issuance of qualified opinion or disclaimer of opinion.
c. Issuance of unqualified opinion with explanatory paragraph.
d. Refusal to perform, or withdrawal from, the assurance engagement.
b. If the assurance engagement is expected to recur, the period of the assurance engagement ends
with the notification by either party that the professional relationship has terminated or the
issuance of the final assurance report, whichever is earlier.
c. In the case of an audit engagement, the engagement period includes the period covered by the
financial statements reported on by the firm.
d. When an entity becomes an audit client during or after the period covered by the financial
statements that the firm will report on, the firm should consider whether any threats to
independence may be created by previous services provided to the audit client.
69. If a member of the assurance team, or their immediate family member receives, by way of, for example,
an inheritance, gift or, as a result of a merger, a direct financial interest or a material indirect financial
interest in the assurance client, a self-interest threat would be created. The following safeguards should
be applied to eliminate the threat or reduce it to an acceptable level:
a. Disposing of the financial interest at the earliest practical date.
b. Removing the member of the assurance team from the assurance engagement.
c. Either a or b.
d. Neither a nor b.
70. When a member of the assurance team knows that his or her close family member has a direct financial
interest or a material indirect financial interest in the assurance client, a self-interest threat may be
created. Safeguards least likely include:
a. The close family member disposing of all or a sufficient portion of the financial interest at the
earliest practical date.
b. Discussing the matter with those charged with governance, such as the audit committee.
c. Involving a professional accountant who took part in the assurance engagement to review the
work done by the member of the assurance team with the close family relationship or otherwise
advise as necessary.
d. Removing the individual from the assurance engagement.
71. When a firm or a member of the assurance team holds a direct financial interest or a material indirect
financial interest in the assurance client as a trustee, a self-interest threat may be created by the
possible influence of the trust over the assurance client. Accordingly, such an interest cannot be held
when:
a. The member of the assurance team, an immediate family member of the member of the
assurance team, and the firm are beneficiaries of the trust.
b. The interest held by the trust in the assurance client is not material to the trust.
c. The trust is not able to exercise significant influence over the assurance client.
d. The member of the assurance team or the firm does not have significant influence over any
investment decision involving a financial interest in the assurance client.
72. An inadvertent violation of the Independence rules as it relates to a financial interest in an assurance
client would not impair the independence of the firm, the network firm or a member of the assurance
team when:
a. The firm, and the network firm, has established policies and procedures that require all
professionals to report promptly to the firm any breaches resulting from the purchase,
inheritance or other acquisition of a financial interest in the assurance client.
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b. The firm, and the network firm, promptly notifies the professional that the financial interest
should be disposed of.
c. The disposal occurs at the earliest practical date after identification of the issue, or the
professional is removed from the assurance team.
d. All of the above.
74. The following self-interest threat created would be so significant no safeguard could reduce the threat
to an acceptable level, except
a. If a firm, or a network firm, has a direct financial interest in an audit client of the firm.
b. If a firm, or a network firm, has a material indirect financial interest in an audit client of the firm.
c. If a firm, or a network firm, has a material financial interest in an entity that has a controlling
interest in an audit client.
d. If the retirement benefit plan of a firm, or network firm, has a financial interest in an audit client
78. An inadvertent violation of the rules on family and personal relationships would not impair the
independence of a firm or a member of the assurance team when:
a. The firm has established policies and procedures that require all professionals to report promptly
to the firm any breaches resulting from changes in the employment status of their immediate or
close family members or other personal relationships that create threats to independence.
b. Either the responsibilities of the assurance team are re-structured so that the professional does
not deal with matters that are within the responsibility of the person with whom he or she is
related or has a personal relationship, or, if this is not possible, the firm promptly removes the
professional from the assurance engagement.
c. Additional care is given to reviewing the work of the professional.
d. All of the above.
80. If a member of the assurance team, partner or former partner of the firm has joined the assurance
client, the significance of the self-interest, familiarity or intimidation threats created is least likely
affected by
a. The position the individual has taken at the assurance client.
b. The amount of any involvement the individual will have with the assurance team.
c. The length of time that the individual was a member of the assurance team or firm.
d. The former position of the individual within the assurance team or firm.
Long Association of Senior Personnel with Assurance Clients – Audit Clients that are Listed Entities
84. Which statement is incorrect regarding long association of senior personnel with audit clients that are
listed entities?
a. Using the same lead engagement partner on an audit over a prolonged period may create a
familiarity threat.
b. The lead engagement partner should be rotated after a pre-defined period, normally no more
than seven (7) years.
c. A partner rotating after a pre-defined period should not resume the lead engagement partner
role until a further period of time, normally two years, has elapsed.
d. When audit client becomes a listed entity the length of time the lead engagement partner has
served the audit client in that capacity should be considered in determining when the partner
should rotated.
85. The partner may continue to serve as the lead engagement partner before rotating off the engagement
for how many years after audit client becomes a listed entity?
a. One year c. Three years
b. Two years d. Four years
86. While the lead engagement partner should be rotated after such a pre-defined period, some degree of
flexibility over timing of rotation may be necessary in certain circumstances. Examples of such
circumstances include:
a. Situations when the lead engagement partner’s continuity is especially important to the audit
client, for example, when there will be major changes to the audit client’s structure that would
otherwise coincide with the rotation of the lead engagement partner.
b. Situations when, due to the size of the firm, rotation is not possible or does not constitute an
appropriate safeguard.
c. Both a and b.
d. Neither a nor b.
89. These following services are considered to be a normal part of the audit process and do not, under
circumstances, threaten independence, except
a. Analyzing and accumulating information for regulatory reporting.
b. Assisting in the preparation of consolidated financial statements.
c. Drafting disclosure items.
d. Having custody of an assurance client’s assets.
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Preparing Accounting Records and Financial Statements – Audit Clients that are not Listed Entities
91. The firm, or a network firm, may provide an audit client that is not a listed entity with accounting and
bookkeeping services, including payroll services, of a routine or mechanical nature, provided any self-
review threat created is reduced to an acceptable level. Examples of such services least likely include:
a. Recording transactions for which the audit client has determined or approved the appropriate
account classification.
b. Posting coded transactions to the audit client’s general ledger.
c. Preparing financial statements based on information in the trial balance.
d. Determining and posting journal entries without obtaining the approval of the audit client.
92. The safeguards necessary to reduce the threat, created by providing accounting and bookkeeping
services to an audit client that is not a listed entity, to an acceptable level might include the following,
except
a. Making arrangements so such services are not performed by a member of the assurance team.
b. Implementing policies and procedures to prohibit the individual providing such services from
making any managerial decisions on behalf of the audit client.
c. Requiring the source data for the accounting entries to be originated by the assurance team.
d. Obtaining audit client approval for any proposed journal entries or other changes affecting the
financial statements.
Preparing Accounting Records and Financial Statements – Audit Clients that are Listed Entities
93. The provision of accounting and bookkeeping services of a routine or mechanical nature to divisions or
subsidiaries of listed audit clients would not be seen as impairing independence with respect to the
audit client provided that the following conditions are met, except
a. The services do not involve the exercise of judgment.
b. The divisions or subsidiaries for which the service is provided are collectively immaterial to the
audit client.
c. The services provided are collectively immaterial to the division or subsidiary.
d. The fees to the firm, or network firm, from such services are collectively significant.
Valuation Services
95. If the valuation services involves the valuation of matters material to the financial statements and the
valuation involves a significant degree of subjectivity, the self-review threat created (choose the
incorrect one)
a. Could not be reduced to an acceptable level by the application of any safeguard.
b. Could be reduced to an acceptable level by the application of safeguards.
c. Such valuation services should not be provided.
d. The assurance team should withdraw from the audit engagement, if the team opted to perform
the valuation services.
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96. The following would not generally create a significant threat to independence, except
a. When a firm, or a network firm, performs a valuation service for an audit client for the purposes
of making a filing or return to a tax authority.
b. The firm provides formal taxation opinions and assistance in the resolution of tax disputes to an
audit client.
c. The firm renders internal services involving an extension of the procedures required to conduct
an audit in accordance with Philippine Standards on Auditing to an audit client.
d. When the firm, or a network firm, provides assistance in the performance of a client’s internal
audit activities or undertakes the outsourcing of some of the activities.
98. Which of the following is least likely considered to create a threat to independence?
a. The provision of services by a firm or network firm to an audit client which involve either the
design or the implementation of financial information technology systems that are used to
generate information forming part of a client’s financial statements.
b. The provision of services in connection with the assessment, design and implementation of
internal accounting controls and risk management controls.
c. The lending of staff by a firm, or network firm, to an audit client when the individual is in a
position to influence the preparation of a client’s accounts or financial statements.
d. The provision of litigation support services to an audit client, which include the estimation of the
possible outcome and thereby affects the amounts or disclosures to be reflected in the financial
statements.
100. Which of the following threats to independence can be eliminated or reduced to an acceptable level?
a. Acting for an audit client in the resolution of a dispute or litigation in such circumstances when
the amounts involved are material in relation to the financial statements of the audit client.
b. When a firm is asked to act in an advocacy role for an audit client in the resolution of a dispute or
litigation in circumstances when the amounts involved are not material to the financial
statements of the audit client.
c. The appointment of a partner or an employee of the firm or network firm as General Counsel for
legal affairs to an audit client.
d. Both a and c.
104. A client company has not paid its 2003 audit fees. According to the Code of Professional Conduct, for
the auditor to be considered independent with respect to the 2004 audit, the 2003 audit fees must be
paid before the
a. 2003 report is issued c. 2004 report is issued
b. 2004 field work is started d. 2005 field work is started
105. Fees calculated on a predetermined basis relating to the outcome or result of a transaction or the
result of the work preformed.
a.Contingent fees c. Flat sum fees
b.Retainer fees d. Per diem fees
110. The Rules of Conduct will ordinarily be considered to have been violated when the professional
accountant represents that specific consulting services will be performed for a stated fee and it is
apparent at the time of the representation that the
a.Actual fee would be substantially higher.
b.Actual fee would be substantially lower than the fees charged by other professional accountants for
comparable services
c. Fee was a competitive bid.
d.Professional accountant would not be independent.
111. Which of the following fee arrangements would violate the Code of Professional Conduct?
a. A fee based on the approval of a bank loan.
b. A fee based on the outcome of a bankruptcy proceeding.
c. A per hour fee that includes out-of-pocket expenses.
d. A fee based on the complexity of the engagement.
112. Which of the following actions by a professional accountant in public practice will not result in
violation of the Code of Ethics regarding commissions?
a. Accepting commission for referring a client to a third party.
b. Accepting commission for the referral of the products or services of others.
c. Receipt of referral fees by the referring accountant when no services are performed by the
referring accountant.
d. Entering into an arrangement for the purchase of the whole or part of an accounting practice
requiring payments to individuals formerly engaged in the practice or payments to their heirs or
estates.
116. Communication between the receiving accountant and existing accountant is not intended
a. To protect a professional accountant in public practice from accepting an appointment in
circumstances where all the pertinent facts are not known.
b. To protect the minority proprietors of a business who may not be fully informed of the
circumstances in which the change is proposed.
c. To protect the interests of the existing accountant when the proposed change arises from, or is an
attempt to interfere with, the conscientious exercise of the existing accountant's duty to act as an
independent professional.
d. To restrict the client’s freedom to choose their professional advisers and to change to others.
117. The existing accountant, on receipt of the communication from the proposed professional accountant
in public practice, should not
a. Reply, preferably in writing, advising whether there are any professional reasons why the
proposed professional accountant in public practice should not accept the appointment.
b. Ensure that the client has given permission to give details of this information to the proposed
professional accountant in public practice.
c. Report the fact, that the permission is not granted, to the proposed professional accountant in
public practice.
d. Disclose all information needed by the proposed professional accountant in public practice to be
able to decide whether or not to accept the appointment, if permission is not granted.
122. Professional accountant who author books or articles on professional subjects, may state
a B c d
His or her name Yes Yes Yes Yes
Professional qualifications Yes Yes Yes No
Name of organization Yes Yes No No
Information as to the services his or her firm
provide Yes No No No
123. A professional accountant may invite the following to attend training courses or seminars
conducted for the assistance of staff
a B c d
Clients Yes Yes No No
Staff Yes Yes Yes Yes
Other professional accountants Yes Yes No No
Potential clients Yes No Yes No
- end -
Page 21 of 21
Answer
1. B 41. D 83. C
2. D 42. A 84. B
3. D 43. D 85. B
4. A 44. A 86. C
45. B 87.
5. D
46. C 88. D
6. D
47. B 89. D
7. A 48. A 90. B
8. D 49. A 91. D
9. B 50. D 92. C
10. D 51. D 93. D
11. D 52. B 94. D
12. A 53. D 95. B
13. A 54. C 96. D
14. A 55. C 97. B
15. A 56. D 98. B
16. D 57. D 99. D
17. A 58. B 100. B
18. C 59. D 101. B
19. B 60. C 102. A
20. C 61. A 103. D
21. D 62. A 104. C
22. B 63. D 105. A
23. A 64. A 106. C
24. C 65. B 107. D
25. B 66. D 108. A
26. D 67. B 109. D
27. D 68. D 110. A
28. A 69. C 111. A
29. B 70. C 112. D
30. D 71. A 113. C
31. C 72. D 114. D
32. A 73. A 115. D
33. D 74. D 116. D
34. B 75. D 117. D
35. B 76. D 118. B
36. C 77. B 119. A
37. D 78. D 120. C
38. B 79. B 121. B
39. D 80. C 122. B
40. D 81. C 123. B
82. D 124. A