CHAPTER 1

PROFESSIONAL PRACTICE OF ACCOUNTANCY

Questions and Answers:

1. Role of the professional accountant in the economy?

Answer:

The credibility added to the information by an independent

auditor actually reduces the decision maker’s risk.

2. How does one become a CPA?

Answer:
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. Before the
effectivity of PRC-BOA Resolution No. 262, series of 2015 on May
2016, 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. So starting
May 2016, it covers, but are not limited to, the following six (6)
subjects: Financial Accounting and Reporting, Advanced
Financial Accounting and Reporting; Management Advisory
Services, Auditing, Taxation and, Regulatory Framework for
Business Transaction.

3.What are the qualification requirements that a prospective examinee

must satisfy before taking the CPA Licensure Examination? Refer to
page 11 of the textbook.

Answer:

The “Philippine Accountancy Act of 2004” (RA 9298) Article II,

Section 13 to 18 provides for the requirements for the Examination,
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(Registration and Licensure) for the Practice of Accountancy as
follows:
Any person applying for examination shall establish the following
pre-requisites to the satisfaction of the Board that he/she:
a) Is a Filipino citizen;
b) Is of good moral character;
c) Is a holder of the degree of BSA conferred by a school,
college, academy or institute duly recognized and/or
accredited by the CHED or other authorized government
offices; and
d) Has not been convicted of any criminal offense involving moral
turpitude.

4. What are the requirements that a CPA in public practice must

comply with before he is issued a certificate of accreditation by the
Board of Accountancy?

Answer: Refer to page 110 (Section 28 of the Philippine Accountancy

Act of 2004) of the textbook.

5. Name the core competencies required in the public accounting

practice?

Answer:

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.
Refer to page 24 of text.

1. Communication Skills
2. Leadership Skills
3. Critical-/Thinking and Problem-Solving Skill
4. Anticipating and Serving Evolving Needs
5. Synthesizing Intelligence to Insight
6. Integration and Collaboration
 Professional Practice of Accountancy 1-3
These competencies categorized as “High Opportunity
Competencies” and “Low Opportunity Competencies” are as
follows:

a) 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 Client’s Business Processes
 Communication Skills
 Efficiency
 Intellectual Capability
 Learning and Rejuvenation
 Marketing and Selling
 Model Building
 People Development
 Relationship Management
 Responsiveness and Timeliness
 Technology
 Verification

b) 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

6. Why is the practice of accountancy considered practice of

profession?
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Answer: Refer to page 4 of the textbook.

7. Describe briefly the scope of practice of a professional

accountant?

Answer:

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

8. What are the major components of the BSA Curriculum?

Answer: Refer to pages 8 to 10 of the textbook.

9. What are the qualification requirements that an individual must

meet to be able to take the CPA Licensure examination?

Answer: Refer to page 11 of the textbook.

10. How may a professional accountant develop and sustain the

required capabilities and competence after admission to the
profession?

Answer: Refer to pages 13 to 14 of the textbook.

11. Explain briefly the competency requirements for professional

accountants in public practice?

Answer: Refer to pages 14 to 15 of the textbook.

12.Explain briefly the competency requirements for professional

accountants in business?

Answer: Refer to pages 16 to 17 of the textbook.

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13.Explain why the practice of accountancy is currently considered
more globalized?

Answer:

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

14.Comment upon each of the following statements you heard in a

conversation between two newly hired staff auditors?

Answer:

(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.

Additional Questions:
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15. What are the 5 different areas that a professional accountant’s
mindset needs to embrace? Page 17 of the Text.

Answer:

1. Professional and Ethical Behavior

2. Professional Judgment
3. Organizational and Environmental Awareness
4. An Investor and Wider Stakeholder Focus
5. Change, Uncertainty and Complexity

16. What should Professional Ethics include, as a minimum program?

Answer: Page 10 of the text.

17. What should professional skills for professional accountants in

general include?

Answer: Page 16 of the text.

18. What are the 10 Insights and Directions that the research
project conducted by AICPA in 2011 entitled “CPA Horizons
2025”, cited?

Answer: Pages 20-23.

Multiple Choice Questions

Answer
1. D
2. C
3. B
4. B