Quiz 1 Consul
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Instruction: Identify the letter that best completes the statement or answers the question. Shade the box letter of your choice. ERASURES NOT ALLOWED.
1. The following characterize managemnet advisory services except: a. Involve decision for the future b. Broader in scope and varied in nature c. Utilize more junior staff than senior members of the firm d. Relate to specific problems where expert help is requied (rpcpa) 2. Management services of certified public accountants cover all of the following except: a. Project feasibilty studies b. Systems design, development and implementation c. Organizational development and planning d. Audit, tax and legal services (rpcpa) 3. Which of the following does not relate to management services by CPAs? a. Design and/or installation of accounting system b. Financial analysis for project feasibilty studies c. Cost analysis of major incestment decision d. None of the above (rpcpa) 4. Which of the following statement is true? a. Adequate training and experience in both the analytical approach and process in the particular undertaking are requisites for the CPA to be involved in a management service engagement b. A CPA with MBA and Ph.D degree is automatically qualified to render management services c. Competence as a standard in the rendition of management services by a CPA may be equated to having excellent scholarly preparation to include the usual baccalaureate degree, an MBA and other post-graduates studies d. A certified public accountant by virtue of having the necessary academic preparation and by having the licensure examination reqired to have a CPA license can readily render management services to the public (rpcpa) 5. As a consultant, the CPA practioner should a. Exercise administrative control over the client’s staff to avoid unnecessary delays in implementation b. Encourage dependence of client on the consultant’s staff so as to pin point clear responsibilty in implementing systems c. Not take responsibilty for making decisions and policy judgements in MAS engagements d. Conduct his engagement as if he is a member of the client’s organization (rpcpa) 6. Which of the following statements is false? a. CPA’s provide management services to go around the ethical constraints as mandated by the Accountancy Act b. Business hire management consultants to help define specific problems and develop solutions c. Included in the practice of consulting is the provision of confidential service in which the identity of the client is concealed d. CPA’s performing managemnt services may be considered to be in the practice of management consulting (rpcpa) 7. Indicate whether the following statements are true or false. Statement 1 – All of the provisions of the Code of Professional Ethics for CPAs in public accounting without exception, must be observed by those in MAS Statement 2 – Management services are confirmed only to such areas as financial accounting, auditing, and tax services a. b. c. d.
False True True False
Statement 1 False True False True
8. The Accountancy Act of 2004 (or RA 9298) incorporates the Code of Professional Ethics for CPAs. The provision of management advisory services is among the areas of public accounting. It is, however, not exclusive to CPAs. Considering these premises, which of the following statements is applicable? a. Management advisory services as a field of professional practice is considered as an integral part of public accounting thus, Code of Professional Ethics for CPAs covers management advisory services b. CPAs in the practice of audit and management consulting services may advertise and charge contingent fees c. The practice of management advisory services should not be extended to existing audit clients since this will adversely affect the CPA’s independence d. CPAs in the practice of management advisory services are not bound by the Board of Accountancy Law but are bound by the said law in the practice of audit (rpcpa) 9. A certified public accountant’s scope of management services is broad and covers all the following except: a. Change in managemnt engagements b. Computerization engagements c. Audit engagements d. Re-engineering engagements (rpcpa) 10. Indicate whether the following statements are true or false Statement 1 – A CPA firm’s primary purpose for performing MAS services is to enable the staff mambers to acquire the necessary continuing education in all areas of business Statement 2 – MAS consultation, unlike MAS engagement, generally involves advise or information by a CPA in which an anlytical process is applied a. b. c. d.
Statement 1 True False False True
Statement 2 False True False True (rpcpa)
11.Which of the following is not a characteristic of Management Advisory Services? a. MAS is broad in concept b. MAS involves problem-solving affecting the future of the client c. Beneficiary of service is management d. MAS is representative as far as the same client is concerned (rpcpa)
I. II. III. IV. V. VI. VII.
12.A management advisory services engagement generally involves the following activities in what order? Post engagement follow-up Implementing the recommendation Conducting the engagement Negotiating the engagement Preparing for and starting the engagement Evaluating the engagement Preparing and representing the report and recommendations a. b.
VII, VI, V, IV, III, II and I III, IV, V, VI, VII, I and II
IV, III, V, VI, II, VII and I IV, V, III, VII, II, VI, and I (cma)
13. A CPA should reject management advisory services engagement if a. It would require him to make management decisions for an audit client b. The proposed engagement is not acconting related c. His recommendations are to be subjected to a review by the client d. He audits the financial statements of a subsidiary of the proposed client (cma) 14. Which of the following is not a characteristic of management services? a. A wider variety os assignment are encountered in MAS that in audit b. MAS engagements are recurring c. MAS pinpoint actions to be taken, the benefits of which will be received in the future d. In MAS engagement, the nature of work involved requires lesser need for junior assisstance (rpcpa)
15. Which of the following is not an area related to the performance of management services by independent accounting firms? a. In troducing new ideas, concepts and methods to management b. Improving existing policies, methods and procedures c. Performing special studies, preparing recommendations, and formulating plans and programs d. Performing management functions and making decisions (rpcpa) 16. The following statements refer to competence of CPA’s in management advisroy services except: a. In concept, it refers to the tecjnical qualification of the practitioner and his ability to supervise and evaluate the quality of work of his staff as assigned to the engagement so as to be resposible for the successful completion of project b. It is acquired by education, self study, attendance to professional developemnt courses, actual experience in MS work, and research c. It is the ability to identify client’s needs, use analytical approach and process, apply technical knowledge, communiacte recommendations and assist in implementation d. It must be retained in the rendition of MAS work and it can be impaired if the CPA performs decision-making for the client or acts as employee of the client (rpcpa) 17. Competence in management advisory services is acquired by a. Education b. Auditing and other experience c. Actual performance of management advisory services d. All of these (rpcpa) 18. Which of the following in not a qualification of a CPA in MAS practice? a. Familiarity with the client’s financial accounting and internal control systems b. Analytical experience in problem-solving c. Professional independence, objectivity, and integrity d. Auditor of the client (rpcpa) 19. These statements relate to MAS practice standards 1. A practioner is to notify the client of any reservation ha has regarding anticipated benefits 2. Throughout the engagement, there ought to be a systematic critical review of accomplishment and work ahould be done within the framework of the code of ethics and other professional standards 3. During the engagement, should there be significant changes between cost and anticipated benefits, the client should be informed 4. Before the engagement, the practioner must make arrengements with, and inform the client on significant matters related to engagement, in writing Of these statements, which pertains to the practice standard on the client benefit? a. Statements 1 and 3 only b. All statements c. Statement 1 noly d. Statements 1, 3, and 4 only (rpcpa) 20. Which of the following statements is not acceptable? a. A CPA represents 3 major players in the industry in rationalizing the industry’s incentive before the gocernment public hearings b. A CPA shares with new and substantial client information regarding another client belonging to the same industry c. A CPA provides consulting services to an existing audit client d. A CPA offers and provides consulting serviecs to two major competing client (rpcpa)
21.A CPA should reject management advisory services engagement if: a. It would require him to make management decisions for an audit client b. The proposed engagement is not accounitng related c. His recommendations are to be subjected to a review by the client He audits the financial statements of a subsidiary of the prospective client (rpcpa)
22.Which of the following does not impair independence of a CPA in the rendition of management serviecs? a. The CPA performs decidion-making serviecs for his client b. The CPA performs services wherein he is in effect acting as an employee of the client c. The CPA eases its objectivity and acts in a manner as if he is advocating for the interest of his client d. The CPA does not extend his service beyond the presentation of recommendations or giving of advice (rpcpa)
23. Indicate whether the following statements are true or false: Statement 1 – Management consultancy is an exclusive field of practice for CPAs and is regulated by law Statement 2 – An area of MAS which is directly related to the accounting and finance functions is project feasibilty study a. b. c. d.
Statement 1 False True True False
Statement 2 False True False True (rpcpa)
24. Mr. Rey Carlos, a CPA firm’s patner-in-charge of quality assurance and review is arguing with Mr. Ruben Fortuna, the consulting partner regarding the question on independence as Mr. Fortuna is presently rendering consulting services to Tam Co., an audit client of the firm. Related to this issue of independence, all of the following statements are not valid except a. Independence is never sacrificed for as long as the auditor/consulatant is correct in his decision for the client b. A CPA who renders both audit and consulting services to a client by virtue of his competence/expertise and extebsive knowledge of the client’s business is in the best position to render decisions for the client and do so c. The clien is the ulitmate decision maker and the auditor/ and or consultant should not make decisions for the client d. It is up to the professional judgement and discretion of the auditor/consultant to renser decision for the client for as long as his professional fees are commensurate to the benefit that the client will derive from the engagement (rpcpa) 25. After preliminary audit engeagement have been made, an engagement confrimation letter should be sent to the client. The letter usually would not include: a. An estimate of the time to be spent on the audit work by audit staff and management b. A refernce to the auditor’s responsibility for the detection of errors or irregularities c. A statement that management advisory services would be made available upon request d. A statement that management letter will be issued outlining comments and suggestions as to any procedures requiring the client’s attention (cma)