Manila * Cavite * Laguna * Cebu * Cagayan De Oro * Davao

Since 1977

AT.3501 SOLIMAN/UY/AGUILA/RICAFRENTE
The Professional Practice of Accountancy October 2023

The Four (4) Sectors of Practice of Accountancy taxation or when he/she represents his/her employer
before government agencies on tax and other
1. Public Accountancy matters relating to accounting.
• Skilled in the knowledge, science, and practice of b. When he/she is appointed in an accounting
accounting and qualified to render professional professional group in government or in a
services as a CPA. Typical services include: government-owned and/or controlled corporation,
§ Audit/verification of financial transaction or including those performing proprietary functions,
records. where decision-making requires professional
§ Preparation, signing, or certification for clients knowledge in the science of accounting
reports of audit and other financial, accounting c. When he or she is involved in teaching of accounting,
and related statements or reports for various auditing, management advisory services, accounting
purposes. aspect of finance, business law, taxation and other
§ Design, installation, review and revision of technically related subjects.
accounting systems and controls. d. When a person is skilled in the knowledge, science
§ Preparation of income tax returns when related to and practice of accounting and as a qualified person
accounting procedures. to render professional services as a CPA
§ Representing clients before government agencies
on tax or accounting matters. 2. Which of the following statements about the sectors of
accounting practice is incorrect?
2. Commerce and Industry a. A person in the education/academe field teaching
• Involved in the decision-making requiring accounting, auditing, and tax subjects must be a
professional knowledge in accounting and accounting CPA.
aspects of finance and taxation. b. In commerce and industry, for a business with a
• Represents employer before government agencies on paid-up capital of at least P5 million and/or an
tax and accounting matters. annual revenue of at least P10 million, registered
• Employment or position requires that the holder must CPAs should occupy positions that require
be a CPA. supervising the recording of financial transactions
§ For a business or company with a paid-up capital and preparation of financial statements.
of at least P5 million and/or an annual revenue of c. In public accountancy, CPAs are skilled in the
at least P10 million, registered CPAs should occupy design, installation, review, and revision of
position which requires (a) supervising the accounting systems and controls.
recording of financial transactions and preparation d. A person who passes the licensure examination for
of financial statements, (b) coordinating with CPAs is exempted from taking the Civil Service
external auditors, and (c) other related functions. Exam given by the Civil Service Commission in the
practice of accounting in the government sector.
3. Education/Academe
• A person in an educational institution which involve ***
teaching of accounting, auditing, management
services, accounting aspect of finance, business law, The Professional Regulatory Board of Accountancy
tax, and other technically related subjects. (BOA)
• Business law (now RFBT) and tax subjects may be
taught by CPAs and by lawyers. The Professional Regulatory Board of Accountancy (BOA) is
• The position of either Dean or the department chair the official government agency empowered to enforce the
or its equivalent supervising the BSA program is provisions of R.A. 9298. It is the administrative supervision
deemed to be practice in academe. of the Professional Regulation Commission (PRC).

4. Government
• Holds or is appointed to a position in an accounting Composition
professional group in government or in a
government-owned and/or controlled corporation, The BOA shall be comprised of a Chairman and six (6)
including those performing proprietary functions, members to be appointed by the President of the
where decision making requires professional Philippines. The four sectors in the practice of accountancy
knowledge in the science of accounting, or shall as much as possible be equitably represented in the
• Civil service eligibility as a CPA is a prerequisite. BOA. The BOA shall elect a vice-chairman from among its
• A person who passes the LECPA is exempted from members for a term of one (1) year.
taking the Civil Service Exam given by the Civil
Service Commission.
Qualifications
***
Answer question nos. 1 to 2: 1. Must be a natural-born citizen and a resident of the
Philippines.
1. Practice of Public Accountancy shall constitute in a 2. Must be a duly registered CPA with AT LEAST 10 years
person: of work experience in any scope of practice of
a. When involved in decision making requiring accountancy.
professional knowledge in the science of accounting, 3. Must be of good moral character and must not have
as well as the accounting aspects of finance and been convicted of crimes involving moral turpitude.

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 EXCEL PROFESSIONAL SERVICES, INC.

4. Must not have any pecuniary interest, directly or

indirectly, in any school, college, university, or 7. The following are the powers, functions and
institution conferring an academic degree necessary for responsibilities of the Board of Accountancy (also known
admission to the practice of accountancy or where as the Board)
review classes in preparation for the licensure a. To prescribe and/or adopt a Code of Ethics for the
examination are being offered or conducted, nor shall practice of accountancy
he/she be a member of the faculty or administration b. To prescribe and adopt the rules and regulations
thereof at the time of his/her appointment to the BOA. necessary for carrying out the provisions of RA 9298
5. Must not be a Director or Officer of the Accredited c. To prepare, adopt, issue or amend the syllabi of the
National Professional Organization (APO) at the time of subjects for examinations in consultation with the
his/her appointment. academe, determine and prepare questions for the
licensure examination which shall strictly be within
the scope of the syllabi of the subjects for
Terms of Office examinations as well as administer, correct and
release the results of the licensure examinations
The Chairman and members of the BOA shall hold office for d. All of the above
a term of three (3) years. Any vacancy occurring within the
term of a member shall be filled up for the unexpired portion 8. The creation of FSRSC and AASC is intended to assist
of the term only. No person who has served two (2) the BOA in carrying out its function to
successive complete terms shall be eligible for a. To monitor the conditions affecting the practice of
reappointment until the lapse of one (1) year. Appointment accountancy and adopt such measures, rules and
to fill up the unexpired term is not to be considered as a regulations and best practices as may be deemed
complete term. No person shall serve in the Board for more proper for the enhancement and maintenance of
than twelve (12) years. high professional, ethical, accounting and auditing
standards.
*** b. To supervise the registration, licensure and practice
Answer question nos. 3 to 8: of accountancy in the Philippines.
c. To prescribe and adopt the rules and regulations
3. The following statements relate to the Board of necessary for carrying out the provisions of RA
Accountancy and its composition. Which statement is 9298.
incorrect? d. To prepare, adopt, issue or amend the syllabi of
a. The Board consists of a Chairman and six members the subjects for examinations.
b. The Chairman and members are appointed by PRC
upon recommendation of APO by the President of the Philippines ***
c. The Board shall elect a vice-chairman from among
its members. The Licensure Examination for Certified Public
d. The four (4) sectors in the practice of accountancy Accountants
shall as much as possible be equitably represented
in the Board The Licensure Examination for Certified Public Accountants
or LECPA is administered by the Professional Regulatory
4. Which of the following is incorrect regarding the Board of Accountancy (BOA) under the supervision of
qualifications of members of the Board of Accountancy? Professional Regulation Commission (PRC). The LECPA is
a. Must be a natural-born citizen and resident of the given over a three-day period twice a year, usually May and
Philippines October. It covers six (6) subjects as follows:
10 b. Must be a duly registered Certified Public
Accountant with at least fifteen (15) years of work Subject No. of
years
experience in any scope of practice of accountancy Items
c. Must be of good moral character and must not have 1. Management Services (MS) 70
been convicted of crimes involving moral turpitude 2. Auditing (AUD) 70
d. Must not have any pecuniary interest, directly or
indirectly, in any school, college, university where 3. Taxation (TAX) 70
review classes in preparation for the licensure 4. Regulatory Framework for Business 100
examination are being offered or conducted Transactions (RFBT
5. Financial Accounting and Reporting 70
5. Which of the following statements is incorrect according (FAR)
to Section 7 of the Philippine Accountancy Act of 2004 6. Advanced Financial Accounting and 70
(RA 9298)? Reporting (AFAR)
a. The Chairman and the members of the Professional
Regulatory Board of Accountancy (PRBOA) shall
hold office for a term of three (3) years. Qualifications to take the LECPA
b. No person who has served two (2) successive terms
shall be eligible for reappointment until the lapse of 1. Filipino citizen.
one (1) year. 2. Good moral character.
c. Any vacancy occurring within the term of a member 3. Holder of the degree of Bachelor of Science in
shall be filled up for the unexpired portion of the Accountancy (BSA).
term only. 4. Not convicted of any criminal offence involving moral
d. Appointment to fill up an unexpired term is turpitude.
considered as a complete term.

6. No person shall serve the Professional Regulatory Board

of Accountancy for more than
a. 3 years c. 9 years
b. 6 years d. 12 years

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EXCEL PROFESSIONAL SERVICES, INC.

Ratings in the CPA Examination • Regulatory Framework for Business Transactions

(RFBT): 75%
Status Criteria • Taxation (TAX): 80% total average: 75%
1. PASSED • General average of at least
75%, AND Based on the criteria above, what is Aloha's examination
• No grades lower than 65% in status?
any given subject. a. Passed
2. CONDITIONED • Did not meet any or both b. Conditioned
criteria above but obtained at c. Failed
least 75% in majority of the d. Need more information
subjects taken (at least 4
subjects) 12. Ubud Antoniette Cruz, a CPA Licensure Examination
• Retake subjects below 75% candidate, received the following grades in the six CPA
within 2 years from preceding subjects:
examination. • Management Services (MS): 76%
3. FAILED • Did not meet any or both • Auditing (AUD): 68%
criteria to pass, AND • Financial Accounting and Reporting (FAR): 72%
• Did not obtain at least 75% in • Advanced Financial Accounting and Reporting
majority of the subjects taken. (AFAR): 79%
• Regulatory Framework for Business Transactions
(RFBT): 74%
Refresher Course • Taxation (TAX): 80% total average:74.83%

A candidate who fails in 2 complete LECPA is disqualified Based on the criteria above, what is Ubud's examination
from taking another set of examinations unless the status?
candidate submits evidence to the satisfaction of the Board a. Passed
that the candidate enrolled in and completed a refresher b. Conditioned
course composed of at least 24 units of subjects in LECPA c. Failed
from a BOA-accredited educational institution. The d. Need more information
Certificate of Completion as evidenced by the Transcript of
Records (TOR) issued by qualified schools shall be valid for 13. Seminyak Santos, a CPA Licensure Examination
two (2) years from the date of completion to ensure candidate, received the following grades in the six CPA
relevance of the subjects taken in the refresher course. subjects:
• Management Services (MS): 81%
*** • Auditing (AUD): 64%
• Financial Accounting and Reporting (FAR): 74%
Answer question nos. 9 to 15: • Advanced Financial Accounting and Reporting
(AFAR): 79%
9. Which of the following is not a requisite in applying for • Regulatory Framework for Business Transactions
the licensure examination for CPAs? (RFBT): 75%
a. Natural-born citizen of the Philippines. filipino citizen • Taxation (TAX): 80% total average: 75.5
b. Good moral character.
c. Holder of the degree of Bachelor of Science in Which of the following statements is correct?
Accountancy. a. Seminyak passed the CPA examination since his
d. Has not been convicted of any criminal offense overall average is 75.5%.
involving moral turpitude. b. Seminyak failed the CPA examination since he has
a disqualifying grade in auditing subject of 64%.
10. The following statements relate to CPA examination c. Seminyak obtained a conditional status because he
ratings. Which statement is incorrect? got at least 75% in majority of the subjects and is
a. To pass the examination, candidates should obtain required to re-examine auditing only.
a general weighted average of 75% and above, with d. Seminyak obtained a conditional status because he
no rating in any subject less than 65%. got at least 75% in majority of the subjects and is
b. Candidates who obtain a rating of 75% and above required to re-examine auditing and financial
in at least four subjects shall receive a conditional accounting and reporting subjects only.
credit for the subjects passed.
c. Conditioned candidates shall take an examination in 14. Any candidate who fails in two (2) complete Certified
the remaining subject(s) within three years from Public Accountant Board Examinations shall be
the preceding examination. two disqualified from taking another set of examinations
d. Candidates who fail in two (2) complete CPA unless he/she submits evidence to the satisfaction of
examinations may be allowed to take examinations the Board that he/she enrolled in and completed at least
a third time provided he or she will comply with Sec. ____
24 of subject given in the licensure examination.
18 of RA 9298. Refresher Program a. 12 units c. 24 units
b. 21 units d. 60 units
11. Aloha Delos Reyes, a CPA Licensure Examination
candidate, received the following grades in the six CPA 15. According to PRBOA Resolution 2020-46, how long is
subjects: the Transcript of Records (TOR) issued by a school upon
• Management Services (MS): 76% completion of a refresher course valid?
• Auditing (AUD): 68% a. Three years c. Five years
• Financial Accounting and Reporting (FAR): 72% b. Two years d. Indefinitely
• Advanced Financial Accounting and Reporting 14. *BOA Reso. 2020-46 CPA Refresher Requirement
(AFAR): 79% *Schools must be accredited by the ***BOA to offer the Refresher Course
*Failed in 2 complete licensure examination
*Enroll and pass atleast 24 units of the subjects given in the licensure
examination
* Valid for 2 years from date of completion
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EXCEL PROFESSIONAL SERVICES, INC.

Registration for the Practice of Accountancy The minimum credit units under the required competence
area is 40 units and the remaining 80 credit units can be
All successful candidates shall take an oath of profession1 earned under flexible CPD units.
and shall receive the following credentials:
Minimum required credit units (40) under the 3 competence
Certificate of Professional areas:
Registration (CPA Identification Card • Competence Area A (Technical Competence) – 30 CPD
Certificate) (PRC ID) units
• Indicates that the • Bears the registration • Competence Area B (Professional Skills) – 5 CPD units
person named therein number, date of • Competence Area C (Professional Values, Ethics,
is entitled to the issuance, and expiry Attitudes) – 5 CPD units
practice of the date.
profession with all the • Bears the signature of All other CPAs renewing their Professional ID Card are
privileges appurtenant the chairperson of the required to earn fifteen (15) CPD units under any of the
thereto. PRC. competence areas. Overseas Filipino Workers (OFWs) are
• Bears the signature of • Must be renewed every not covered by the CPD requirement. Newly licensed CPAS
the chairperson of PRC 3 years. are not covered by the CPD requirement for their first
and the chairman and renewal cycle.
members of the BOA.
• Valid unless withdrawn, Per PRBOA Resolution No. 254-2017, revised common
suspended or revoked. sources of CPD credit units (CU):

Seminars/Workshops:
Refusal to Issue CPA Certificate and PRC ID Participant Approved CU for program
Resource Speaker 3 CU per hour
1. Convicted of criminal offense involving moral turpitude Panelist/Reactor 2 CU per hour
2. Guilty of immoral and dishonorable conduct Facilitator/Moderator 1 CU per hour
3. Has an unsound mind CPD Monitor Twice approved CU for program
4. Misrepresented in the LECPA application In-service training or Maximum of 20 CU for a 12-
OJT month period or a fraction thereof
Academic track (valid within 5 years after completion):
Grounds for Suspension/Revocation of License Master’s 60 CU upon completion
Doctorate 60CU + 30CU upon completion
1. Same as for the grounds for refusal to issue above.
Bachelor of Laws 30CU upon completion +30CU
2. Malpractice of profession.
after passing the Bar exams
3. Violation of RA 9298 and its IRR, Code of Ethics and the
Professional 10CU per certification
technical and professional standards.
Certifications (CMA,
CFA, etc.)
CPA Seal
Foreign language 10CU per foreign language
All licensed CPAs shall obtain and use a seal of a design certifications
prescribed by the BOA, bearing the registrant’s name, Professional chair 15 CU per year
registration number and title. The CPA shall provide the Self-directed and/or lifelong learning
following information in the documents he/she signs or uses Other activities recommended by CPD Council, BOA, PRC
in connection with the practice of profession:

• Certificate of Registration and Professional Identification Penalties and Sanctions

Card
• Date of issuance and duration of validity. Penalties and sanctions are imposed where the CPAs has
• Professional Tax Receipt (PTR) Number issued by violated the rules prescribed by law, regulation, or the Code
City/Municipal Treasurer. of Ethics such as:
a. Suspension of CPA Certificate,
Affixing the CPA’s seal and signature is an indication of b. Revocation of CPA Certificate or Cancellation of
compliance by the CPA of the requisite accounting and temporary/special permit,
auditing standards and rules. c. Payment of fines (not less than P50,000) or
imprisonment (not exceeding 2 years) or both.
Continuing Professional Development Note: Only the court of law can sentence CPA to
imprisonment.
Continuing Professional Development (CPD) refers to the
inculcation of advanced knowledge, skills, and ethical values ***
in a post-licensure specialization or in an interdisciplinary or
multidisciplinary field of study, for assimilation into Answer question nos. 16 to 22:
professional practice, self-directed research and/or lifelong
learning. 16. The Certificate of Registration issued to successful
examinees
a. Is renewable every three years
CPD Credit Units b. Is renewable every five years
c. Shall bear the signature of the PRC Chairperson
CPAs applying for accreditation to practice accountancy d. Shall remain in full force and effect until withdrawn,
shall be required to comply with one-hundred twenty (120) suspended or revoked.
CPD credit units in a compliance period of three (3) years.

1
Secure a copy of oath of profession from PRC website.

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17. According to Section 20 of RA 9298, a Professional d. Only a court of law can impose imprisonment on
Identification Card bearing the registration number, erring CPAs.
date of issuance, expiry date, duly signed by the
chairperson of the PRC, shall likewise be issued to every ***
registrant renewable every
a. One (1) year c. Three (3) years Accredited National Professional Organizations of
b. Two (2) years d. Five (5) years CPAs

18. The BOA shall refuse the registration of any person who The Philippine Institute of Certified Public Accountants
successfully passed the CPA examinations if, except (PICPA) is the national professional organization of Certified
a. Convicted by a court of competent jurisdiction of a Public Accountants (CPAs) in the Philippines. Established in
criminal offense involving moral turpitude 1929, it is one of the oldest and largest professional bodies
b. Having an unsound mind in the country.
c. Guilty of immoral and dishonorable conduct
d. Conviction for a political offense or for an offense • PICPA is dedicated to the development and professional
which shall not disqualify a person from practicing enhancement of CPAs, promoting ethical standards, and
accountancy. encouraging member engagement in issues of public
interest.
19. Which of the following is true regarding the use of a seal • PICPA membership comprises CPAs from all sectors,
and signature by licensed CPAs in the Philippines? including public practice, commerce and industry, the
a. Affixing the CPA's seal and signature indicates academe, and government.
compliance with accounting and auditing standards • The organization is divided into regions and chapters,
and rules. which cover major areas in the Philippines to effectively
b. The use of a seal and signature is optional for cater to the needs of its members.
licensed CPAs. • PICPA provides a range of services to its members,
c. CPAs are not required to include their registration including continuing professional education, technical
number and title in the seal and signature. updates, advocacy services, and opportunities for
d. The CPA's seal and signature are only necessary for networking and professional development. It also
documents related to taxation. represents the profession in legislative matters and
public policy discourse.
20. The Continuing Professional Development (CPD) • PICPA is accredited as the Accredited Professional
program mentioned in the IRR shall have the following Organization (APO) of CPAs by the Professional
objectives, except: Regulation Commission of the Philippines. This
a. To promote the general welfare of the public accreditation is based on certain conditions and must be
b. To provide and ensure the continuous education of renewed periodically.
CPAs accountancy students with the latest trends in the • PICPA has a Board of Directors who implement policies
profession brought about by modernization and and oversee the organization's operations. It also
scientific and technological advancement employs a full-time Executive Director for supervising
c. To raise and maintain the professionals capability the PICPA Secretariat.
for delivering professional services
d. To attain and maintain the highest standards and ***
quality in the practice of the profession Answer question nos. 23 to 24:

21. Which of the following is incorrect regarding CPD 23. Which of the following best describes the primary
requirements for CPAs? mission of the Philippine Institute of Certified Public
a. OFWs are not covered by the CPD requirements. Accountants (PICPA)?
b. Newly licensed CPAs are not covered by the CPD a. To provide financial consulting services to
requirements for their first renewal cycle. corporations.
c. CPAs getting BOA accreditation will need 120 units b. To develop and enhance the professional skills of
of CPD training. Certified Public Accountants (CPAs), promote
ethical standards, and encourage member
d. All other CPAs renewing their Professional ID Card engagement in public interest issues.
will need 15 CPD units of training under the
c. To earn profit by providing paid training programs
any technical competence area.
for CPAs.
d. To provide legal services to individuals CPAs, firm
22. Which of the following statements about penalties and
and partnership of CPAs in the Philippines.
sanctions imposed on CPAs who violate the rules and
regulations prescribed by law, regulations, or the Code
24. Which of the following conditions must PICPA meet to
of Ethics is incorrect?
maintain its accreditation as the Accredited Professional
a. The term "suspension" refers to a temporary
Organization (APO) of CPAs in the Philippines?
sanction that is imposed on a certified public
a. PICPA must maintain a certain membership size and
accountant (CPA) as a disciplinary action for
represent CPAs in all sectors, including public
violating certain rules or regulations.
practice, commerce and industry, the academe, and
b. Revocation is a permanent sanction that entails the
government.
removal of a certified public accountant's (CPA)
b. PICPA must be registered with the Securities and
certification due to severe violations of rules or
Exchange Commission (SEC) and pay the
regulations.
prescribed accreditation fee.
c. Reinstatement of a revoked certificate is possible
c. PICPA must have a full-time Executive Director who
under the discretion of the board if the certified
supervises the PICPA Secretariat.
public accountant (CPA) demonstrates remorse for
d. All of the above.
their actions and act exemplary for a period of not
less than two years.
***

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Accreditation to Practice Public Accountancy the firm or engagement partners are appropriate in the
circumstances.
Individual CPAs, including staff members thereof, Firms,
including the sole proprietors and staff members thereof The QAR Inspection Program is mandatory for all CPAs
and Partnerships of CPAs including the partners and staff engaged in the public accounting sector whether as an
members shall register with the Board and the Commission, individual practitioner or a partnership.
and shall not commence the practice of public accountancy
until a valid Certificate of Registration has been issued.
Death or Disability of an individual CPA and Dissolution or
Accreditation Requirements Liquidation of a Firm or Partnership of CPAs

a. Documentary requirements In case an individual CPA passes away or becomes disabled,

b. Three (3) years minimum meaningful experience in any or if a CPA firm or partnership dissolves or liquidates, the
sector of accountancy practice event must be reported to the Board of Accountancy not
c. Undergo quality review program less than 30 days from the occurrence.
d. Continuing professional development
Accredited Accounting Teachers

Name of the Individual CPA, Firm or Partnership. PRC BOA Resolution No. 88 Series of 2008 prescribes the
rules and regulations for the accreditation of accounting
a. In the case of an Individual CPA, he/she shall do teachers.
business under his registered name with the Board and
the Commission and as printed in his/her CPA certificate Requirements for Accreditation
( i.e. "Juan de la Cruz, CPA.")
b. In the case of Firms, they shall do business under their a. Possession of relevant Master’s Degree.
respective duly registered and authorized Firm name b. Completion of 12 units of relevant education subjects.
appearing in the registration documents issued by the c. A total of three years meaningful experience in actual
Department of Trade and Industry (DTI) or any other accounting work either in the public practice, commerce
proper government office(s) and such Firm name shall or industry or government sector.
include the real name of the sole proprietor as printed d. Compliance with continuing professional development
in his CPA certificate (i.e."Juan de la Cruz and requirements.
Associates") or other similar Firm names.
c. In the case of registered Partnerships, they shall do The requirements in (b) and (c) shall not apply to those
business under their respective Partnership names as CPAs already engaged in teaching as of the effective date of
indicated in their current Articles of Partnership and the rules.
certificates of registration issued by the Securities and
Exchange Commission (SEC or under the Partnership The Certificate of Accreditation is valid for three (3) years
names as indicated in their current Articles of and renewable every three (3) years.
Partnership in case of unregistered partnerships ( i.e.
"Cruz, Isidro, Martin, and Company,") or other similar ***
Partnership names. Answer question nos. 25 to 33:

A CPA shall practice only under an individual, firm or 25. Which of the following is not permitted by law to practice
partnership name allowed in accordance with Philippine laws public accountancy?
(corporate form of practice is not allowed) and shall not a. A corporation whose stockholders are all CPAs
include any fictitious name, indicates specialization or is b. A partnership of CPAs
misleading as to the type of organization (proprietorship or c. A solo practitioner
partnership). d. A partnership of CPAs, with some non-CPA staff

A partner surviving the death or withdrawal of all the other 26. A meaningful experience shall be considered as
partners in a Partnership may continue to practice under the satisfactory compliance with the requirements of
Partnership name for a period of not more than two (2) Section 28 if it is earned in academe/education and shall
years after becoming a sole proprietor. include teaching for at least three (3) trimesters or two
(2) semesters subjects in either financial accounting,
business law and tax, auditing problems, auditing
Quality Assurance Review (QAR) theory, financial management and management
services. Provided the accumulated teaching
The Board shall require as a condition to registration or any experience on these subjects shall not be less than
renewal thereof for the Individual CPAs, Firms or three (3) school years.
Partnerships of CPAs to undergo quality review in such
A meaningful experience shall be considered as
manner as the Board may specify.
satisfactory compliance with the requirements of
Section 28 if it is earned in Public Practice and shall
The QAR Inspection Program is a comprehensive appraisal
include at least one year as audit assistant and at least
or review conducted by the BOA, or its duly authorized
two years as auditor in charge of the audit engagement
representative, on the system of quality management of a
covering full audit functions of significant clients.
public accounting practitioner. A system of quality
a. True, False c. False, False
management is a system designed, implemented and
b. False, True d. True, True
operated by a firm to provide the firm with reasonable
assurance that: (i) The firm and its personnel fulfill their
27. All registered CPAs whose names appear in the roster
responsibilities in accordance with professional standards
of CPAs shall be united and integrated through their
and applicable legal and regulatory requirements, and
membership in a one and only registered and accredited
conduct engagements in accordance with such standards
national professional organization of registered and
and requirements; and (ii) Engagement reports issued by

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EXCEL PROFESSIONAL SERVICES, INC.

licensed CPAs, which shall be registered with the SEC as b. Cruz and Reyes, CPAs (The name of V. Valdes, CPA,
a nonprofit corporation and recognized by the Board a third partner, is omitted from the firm name).
subject to the approval of the commission. c. Gomez and Castro, CPAs (Gomez died about three
years ago; Castro is continuing the firm as a sole
CPAs, firms and partnerships of CPAs engaged in the
proprietorship). carry the partnership not less than 2 years
practice of public accountancy, including partners and
d. P. Reyes and Co., CPAs (The firm has ten other
staff members thereof, shall register with the
partners who are all CPAs).
Commission and the Board.
a. True, False c. False, True
32. The death or disability of an individual CPA and/or the
b. False, False d. True, True
dissolution and liquidation of a firm or partnership of
CPAs shall be reported to the BOA not later than _____
30
28. Which of the following statements concerning the use of
days from the date of such death, dissolution or
firm or partnership name is incorrect?
liquidation.
a. In the case of an individual CPA, he/she shall do
a. 15 c. 60
business under his/her registered name with the
b. 30 d. 90
BOA and the PRC and as printed in his/her CPA
certificate.
33. Which of the following statements about the
b. In the case of a firm, it shall do business under its
accreditation for accounting teachers is incorrect?
duly registered and authorized firm name appearing
a. The accreditation policy applies to all CPAs involved
in the registration documents issued by the
in the teaching of accounting, auditing,
Department of Trade and Industry (DTI) and other
management services, finance, business law, tax
government offices and such firm name shall
and other technically related subjects.
include the real name of the sole proprietor as
b. The 12 units in education may be earned either from
printed in his/her CPA certificate.
undergraduate education programs or from a
c. In the case of a registered partnership, it shall do
graduate degree program or from in-service or in-
business under its name as indicated in its current
house training.
Articles of Partnership and Certificate of
c. LET passers are exempted from the education units
Registration issued by the Securities and Exchange
requirement.
Commission (SEC).
d. The three years meaningful experience should be
d. A CPA shall practice only under an individual, firm,
earned in a continuous period of three years.
or partnership name in accordance with Philippine
laws and shall not include any fictitious name or is
***
misleading as to the type of the organization but
may indicate specialization.
not include The Audit Standard Setting Process in the Philippines
29. Which of the following statements about BOA’s Quality
The standard setting body for auditing and engagement
Assurance Review (QAR) Inspection Program is
standards in the Philippines is the Auditing and Assurance
incorrect?
Standards Council (AASC), which is under the supervision
a. The QAR Program covers all CPAs in the public
of the Board of Accountancy (BOA) and the Professional
accounting sectors, whether as an individual
Regulation Commission (PRC).
practitioner or a partnership.
b. Failure to comply with the prescribed registration
AASC in the Philippines generally adopts the International
and to submit the QAR process shall be a ground for
Standards on Auditing (ISAs) issued by the International
the non-renewal of the CPA practitioner’s
Auditing and Assurance Standards Board (IAASB), with
registration with BOA.
minimal modifications to fit the local context..
c. The registration of CPA Practitioner with the QAR
program is valid for one year, and shall be renewed
The standard-setting process involves identifying the need
annually for a long as the CPA issues audit report
for a standard, conducting research and drafting, releasing
on the financial statements of its clients within the
an exposure draft for public comment, reviewing comments
first two months of each calendar year.
and finalizing the draft, obtaining approval from relevant
d. All CPAs shall be registered in accordance with the
bodies, issuing the standard, and monitoring its
following risk categories: (a) CPAs issuing
implementation and periodic review
assurance reports and (b) CPAs issuing non-
assurance reports.
Exposure draft of proposed Philippine Standard or Practice
Statements are widely distributed to interested
30. Under the IRR of RA 9298, if a partner in a two-member
organizations and persons for comment, the period of which
partnership dies, the surviving partner may continue to
is generally not shorter than 90 days.
practice as an individual under the existing firm title
which includes the deceased partner’s name
Issuance of exposure drafts requires approval by a majority
a. For a period of time not to exceed five years.
of the members of the Council; issuance of final Philippine
b. For a period of time not to exceed two years.
Standards and Practice Statements, as well as
c. Indefinitely.
interpretations, requires approval of at least ten (10)
d. Until the partnership payout to the deceased
members.
partner’s estate is terminated.
Standards become effective from the date indicated in the
31. Below are names of four CPA firms and pertinent facts
document.
relating to them. Unless otherwise indicated, the
individuals named are CPAs and partners, and there are
no other partners. Which firm name and related facts
The International Auditing and Assurance Standards Board
indicate a violation of RA 9298 and its IRR?
a. Dee, Lim and Sy, CPAs (Dee died about five years
The International Auditing and Assurance Standards Board
ago; Lim and Sy are continuing the firm).
(IAASB) is an independent standard-setting body that
serves the public interest by setting high-quality

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EXCEL PROFESSIONAL SERVICES, INC.

international standards for auditing, assurance, and other 3. Philippine Standards on • Assurance
related areas. It also facilitates the convergence of national Assurance engagements dealing
and international standards, thereby enhancing the quality Engagements (PSAEs) with subject matters
and uniformity of practice throughout the world. other than historical
financial information.
4. Philippine Standards on • Compilation
The Auditing and Assurance Standards Council Related Services engagements
(PSRSs) • Engagements to apply
The Auditing and Assurance Standards Council’s (AASC’s) agreed-upon
mission is “the promulgation of auditing standards, procedures to
practices and procedures which shall be generally accepted information
by the accounting profession in the Philippines.” The AASC • Other related services
replaced the Auditing Standards and Practices Council engagements
(ASPC), which was established by the PICPA and ACPAPP.
It has 15 regular members coming from the following in Notes:
accordance with the IRR to RA 9298 or the Philippine
Accountancy Act of 2004: • PSAs, PSREs, PSAEs, and PSREs are collectively referred
to as the AASC’s Engagement Standards.
No. of Members
• Philippine Standards on Quality Management (PSQM)
Chairman 1
introduces a new framework with two standards, PSQM
Board of Accountancy 1
1 (previously PSQC 1) and PSQM 2. PSQM 1 focuses on
Securities and Exchange 1
the firm's overall system of quality management, while
Commission PSQM 2 specifically addresses the engagement quality
Bangko Sentral ng Pilipinas 1 reviews.
Commission on Audit 1 • Philippine Standards are applicable to engagements in
Association of CPAs in Public Practice 1 the Public Sector.
PICPA
Public Practice 6 Practice Statements or Practice Notes
Commerce and Industry 1
Academe/Education 1 a. Philippine Practice Statements (now called Philippine
Government 1 Auditing Practice Notes)
15 • Provide interpretive guidance and practical
assistance to professional accountants in
However, per PRC BOA Resolution No. 22 Series of 2020, implementing Philippine Standards and
the BOA unanimously agreed that the membership in the • Promote good practice.
AASC be increased from fifteen (15) to eighteen (18) to
include two (2) representatives from the small and medium b. Professional accountants should be aware of and
sized practitioners, a representative from the Insurance consider Practice Notes applicable to the engagement.
Commission, and remove the representative from
government. The PRC BOA Resolution was dated July 1, c. A professional accountant who does not consider and
2020 and was published in official gazette on July 9, 2020. apply the guidance included in a relevant Practice Notes
Hence, the updated structure of the AASC is as follows: should be prepared to explain how the basic principles
and essential procedures in the AASC’s Engagement
No. of Members Standards addressed by the Practice Notes have been
Chairman 1 complied with.
Board of Accountancy 1
Securities and Exchange 1 ***
Commission Answer question nos. 34 to 40:
Bangko Sentral ng Pilipinas 1
Insurance Commission 1 34. The International Auditing and Assurance Standards
Commission on Audit 1 Board (IAASB) is an independent standard-setting body
Association of CPAs in Public Practice 1 that serves the public interest by setting high-quality
PICPA international standards for auditing, quality control,
Public Practice 9 review, other assurance, and related services, and by
Commerce and Industry 1 facilitating the convergence of international and
Academe/Education 1 national standards.
18
The IAASB develops and issues, in the public interest
and under its own authority, high-quality auditing and
Engagement Standards assurance standards and other pronouncements for use
around the world.
The AASC’s Standards contain basic principles and essential a. True, False
procedures together with related guidance in the form of b. False, True
explanatory and other material, including appendices. c. True, True
d. False, False
Standards Application
1. Philippine Standards on • Audit of historical 35. The Auditing and Assurance Standards Council (AASC)
Auditing (PSAs) financial information is the body authorized to establish and promulgate
generally accepted auditing standards (GAAS) in the
2. Philippine Standards on • Review of historical
Philippines.
Review Engagements financial information
(PSREs)

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At present, AASC pronouncements are mainly adopted

from the standards and practice statements issued by 40. Which of the following is true of Practice Notes?
the International Auditing and Assurance Standards a. These statements are intended to replace standards
Board (IAASB). b. These statements are intended to have the
a. True, False authority of the standards
b. False, True c. These statements are issued to provide practical
c. True, True assistance to auditors in implementing the
d. False, False standards
d. These are form of interpretation issued by the AASC
36. Which of the following statements about AASC and its
working procedures is incorrect? ***End***
a. The AASC’s Standards contain basic principles and
essential procedures together with related guidance
in the form of explanatory and other material,
including appendices.
b. Exposure draft of proposed Philippine Standard or
Practice Statements are widely distributed to
interested organizations and persons for comment,
the period of which is generally not shorter than 90
days.
c. Issuance of exposure drafts requires approval by a
majority of the members of the Council; issuance of
final Philippine Standards and Practice Statements,
as well as interpretations, requires approval of at
least ten members.
d. Each final Philippine Standard and Practice
Statement, as well as interpretations, if deemed
appropriate, shall be submitted to the PRC through
the BOA for approval after which the
pronouncements shall be published in the Official
Gazette. After publication, the AASC
pronouncement becomes operative 15 days from
publication in the Official Gazette. on the date indicated in the document.

37. Which statement is incorrect regarding AASC?

a. The AASC shall be composed of 18 members
including a chairman
b. The chairman and members of the AASC shall be
appointed by PRC upon the recommendation of BOA
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

38. Which statement is correct regarding the

pronouncements of AASC?
a. The exposure period allowed for each exposure
draft of auditing and other pronouncements to be
considered by the organizations and persons to
whom it is sent for comment is generally 60 days.
b. Each final standard and statement shall be
submitted to the PRC through the BOA for approval
after which the pronouncements become operative
6 months from publication in the official gazette.
c. Practice Statements will have the same authority as
the Engagement Standards.
d. PSAs issued by AASC are not the only authoritative
source of engagement standards for members of the
accountancy profession in the Philippines.

39. Which statement is(are) incorrect regarding the

pronouncements of AASC?
a. Engagement Standards contain basic principles and
essential procedures together with related guidance
in the form of explanatory and other material.
b. Engagement Standards need only be applied to
material matters.
c. In exceptional circumstances, an auditor may judge
it necessary to depart from a standard in order to
more effectively achieve the objective of an audit.
When such situation arises, the auditor is not
required to justify the departure.
d. All of the above

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