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CHAPTER 1

PROFESSIONAL PRACTICE OF ACCOUNTANCY


Questions
1.

Generally, to be a CPA one must meet certain education requirements, and pass
the CPA exam.
The CPA examination is prepared and graded twice each year. It is generally
recognized as an academic examination. It includes multiple-choice questions
in the following subjects namely, Theory of Accounts, Practical Accounting I,
Practical Accounting II, Auditing Theory, Auditing Problems, Management
Services, Business Law and Taxation.

2.

Refer to page 11 of the textbook.

3.

Refer to page 110 (Section 28 of the Philippine Accountancy Act of 2004) of the
textbook.

4.

Competencies include both what individual auditors know and what individual
auditors and audit teams do. Competencies are evidenced by auditors applying
their skills in the delivery of services to clients or supporting the delivery of
those services. These competencies categorized as High Opportunity
Competencies and Low Opportunity Competencies are as follows:
High Opportunity Competencies have a high likelihood of being building
blocks for selling or delivering new assurance services.

Analytical Skills

Business Advisory Skills

Business Knowledge

Capacity for Work

Comprehension of Clients Business Processes

Communication Skills

Efficiency

Intellectual Capability

Learning and Rejuvenation

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Solutions Manual Public Accountancy Profession

Marketing and Selling

Model Building

People Development

Relationship Management

Responsiveness and Timeliness

Technology

Verification

Low Opportunity Competencies, while important to the delivery of current


assurance services, are less likely to be exploited in the development of future
services.

Accounting and Auditing Standards

Administrative Capability

Managing Audit Risk

5.

Refer to page 4 of the textbook.

6.

The Philippine Accountancy Act of 2004 (R.A. 9298) Article I, Section 4,


paragraphs (a) to (d) spell out the scope of the practice of accountancy as
follows:

Practice of Public Accountancy

Practice in Commerce and Industry

Practice in Education/Academe

Practice in the Government

7.

Refer to pages 8 to 10 of the textbook.

8.

Refer to page 11 of the textbook.

9.

Refer to pages 13 to 14 of the textbook.

10. Refer to pages 14 to 15 of the textbook.


11. Refer to pages 16 to 17 of the textbook.

Professional Practice of Accountancy

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12. This is brought about by the nature of accounting standards and the demand for
accounting-related information which have changed in several significant ways.
These changes include:

Global Harmonization of Accounting Standards

Expanded Accountability

More Detailed Reporting

Increased Risk Reporting

Global Audit Standards

13. (a) While university-level training is important, it is also necessary that


professionals continue their education throughout their careers, as
accounting and auditing standards will change. In this particular case, the
staff member would need to stay abreast of current developments in order to
meet the competence and capabilities element of the responsibilities
principle.
(b) Auditors need to be both independent in fact and independent in
appearance. While a small financial investment might not impair the
auditors actual state of mind (independence in fact), it is unlikely that
financial statement users will perceive the auditor to be independent
(independence in appearance). Professional standards would not consider
the auditor independent in this case, as no direct financial interests in clients
are permitted.
Multiple Choice Questions
1.
2.
3.
4.

D
C
B
B