Question 1

The CPA must not subordinate his or her professional judgment to that of others in any

Accepted Answer

A)  engagement.
B)  audit engagement.
C)  engagement excluding tax services.
D)  engagement where the opinion of a specialist is used.E) B) and C)
F) C) and D)

Question 2

What are the six Ethical Principles stated in the Code of Professional Conduct?
 Briefly discuss each principle.Are these principles enforceable?

Accepted Answer

The six Ethical Principles of the Code o...

Question 3

Under Sarbanes-Oxley,the audit committee of a public company

Accepted Answer

A)  must meet on a monthly basis.
B)  must be comprised entirely of financial experts.
C)  is responsible for the oversight of the work of the independent auditor.
D)  should have at least one independent member.E) C) and D)
F) B) and C)

Question 4

The Conceptual Framework for AICPA Independence Standards can be used when making decisions on ethical matters not explicitly addressed in the Code.

Accepted Answer

A) True 
 B)False

Question 5

The AICPA's Code of Professional Conduct requires CPAs to maintain the confidentiality of client information.This rule would be violated if a CPA disclosed information without a client's consent as a result of a

Accepted Answer

A)  subpoena or summons.
B)  peer review.
C)  complaint filed with the trial board of the Institute.
D)  request by a client's largest stockholder.E) A) and B)
F) None of the above

Question 6

Ethical frameworks help identify the ethical issues and will always lead to the appropriate course of action.

Accepted Answer

A) True 
 B)False

Question 7

In the AICPA Code of Professional Conduct,the sixth principle of professional conduct,entitled "Scope and Nature of Services," applies to members of the AICPA who work in public practice,business,government,or education.

Accepted Answer

A) True 
 B)False

Question 8

CPA firms are required to be independent when performing any professional service.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is True when the CPA has been engaged to perform an audit of financial statements?

Accepted Answer

A)  The CPA firm is engaged and paid by the client;therefore,the firm has primary responsibility to be an advocate for the client.
B)  The CPA firm is engaged and paid by the client,but the primary beneficiaries of the audit are those who rely on the financial statements.
C)  Should a situation arise where there is no convincing authoritative standard available,and there is a choice of actions which could impact a client's financial statements,the CPA is free to endorse the choice which is in the investors' interests.
D)  The CPA firm has primary responsibility to the FASB.E) B) and C)
F) C) and D)

Question 10

A CPA performs bookkeeping services for a client and then performs an audit of those financial statements.This is an example of a ________ threat.

Accepted Answer

A)  familiarity
B)  self-interest
C)  self-review
D)  management participationE) A) and B)
F) A) and C)

Question 11

Interpretations of the AICPA Code of Professional Conduct are dominated by the concept of

Accepted Answer

A)  independence.
B)  compliance with standards.
C)  accounting.
D)  acts discreditable to the profession.E) A) and D)
F) A) and B)

Question 12

The members of a client's "audit committee" should be

Accepted Answer

A)  members of management.
B)  directors who are not a part of company management.
C)  non-directors and non-managers.
D)  directors and managers.E) All of the above
F) A) and C)

Question 13

One of the main reasons people act unethically is that they choose to act selfishly.

Accepted Answer

A) True 
 B)False

Question 14

Companies are required to disclose in their proxy statement or annual filings with the SEC the total amount of audit and non-audit fees paid to the audit firm for the two most recent years.Which of the following is not one of the categories of fees that must be disclosed?

Accepted Answer

A)  tax fees
B)  consulting fees
C)  audit-related fees
D)  all other feesE) C) and D)
F) B) and D)

Question 15

CPAs are prohibited from which of the following forms of advertising?

Accepted Answer

A)  self-laudatory advertising
B)  celebrity endorsement advertising
C)  use of trade names,such as "Awesome Auditors"
D)  use of phrases,such as "Guaranteed largest tax refunds in town!"E) B) and D)
F) A) and D)

Question 16

If an action is considered legal,it must also be considered ethical.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is a True statement regarding the enforcement mechanism for CPA conduct?

Accepted Answer

A)  The PCAOB has the authority to investigate and discipline registered public accounting firms.
B)  All disciplinary action by the AICPA must go through the Joint Trial Board.
C)  Disciplinary actions taken by the AICPA are not disclosed to the public.
D)  Only a few states have adopted the AICPA rules of conduct.E) A) and B)
F) C) and D)

Question 18

The provisions of the Sarbanes-Oxley Act are most likely to allow which of the following non-audit services for audit clients?

Accepted Answer

A)  appraisal or valuation services (e.g.,pension,post-employment benefit liabilities) 
B)  financial information systems design and implementation
C)  internal audit outsourcing
D)  tax consultingE) A) and B)
F) A) and C)

Question 19

A rationalization method that can easily result in unethical behavior is the argument that "everybody does it."

Accepted Answer

A) True 
 B)False

Question 20

Under the interpretations to the AICPA Code,independence is considered to be impaired if fees remain unpaid for professional services provided more than six months before the date of the current year's report.

Accepted Answer

A) True 
 B)False

Exam 4: Professional Ethics

The Conceptual Framework for AICPA Independence Standards can be used when making decisions on ethical matters not explicitly addressed in the Code.

Correct AnswerverifiedShow Answer

The CPA must not subordinate his or her professional judgment to that of others in any

Correct AnswerverifiedShow Answer

In the AICPA Code of Professional Conduct,the sixth principle of professional conduct,entitled "Scope and Nature of Services," applies to members of the AICPA who work in public practice,business,government,or education.

Correct AnswerverifiedShow Answer

Under Sarbanes-Oxley,the audit committee of a public company

Correct AnswerverifiedShow Answer

Which of the following statements is True when the CPA has been engaged to perform an audit of financial statements?

Correct AnswerverifiedShow Answer

A rationalization method that can easily result in unethical behavior is the argument that "everybody does it."

Correct AnswerverifiedShow Answer

A CPA performs bookkeeping services for a client and then performs an audit of those financial statements.This is an example of a ________ threat.

Correct AnswerverifiedShow Answer

Companies are required to disclose in their proxy statement or annual filings with the SEC the total amount of audit and non-audit fees paid to the audit firm for the two most recent years.Which of the following is not one of the categories of fees that must be disclosed?

Correct AnswerverifiedShow Answer

If an action is considered legal,it must also be considered ethical.

Correct AnswerverifiedShow Answer

The AICPA's Code of Professional Conduct requires CPAs to maintain the confidentiality of client information.This rule would be violated if a CPA disclosed information without a client's consent as a result of a

Correct AnswerverifiedShow Answer

One of the main reasons people act unethically is that they choose to act selfishly.

Correct AnswerverifiedShow Answer

What are the six Ethical Principles stated in the Code of Professional Conduct? Briefly discuss each principle.Are these principles enforceable?

Correct AnswerverifiedThe six Ethical Principles of the Code o...View AnswerShow Answer

The members of a client's "audit committee" should be

Correct AnswerverifiedShow Answer

Under the interpretations to the AICPA Code,independence is considered to be impaired if fees remain unpaid for professional services provided more than six months before the date of the current year's report.

Correct AnswerverifiedShow Answer

Ethical frameworks help identify the ethical issues and will always lead to the appropriate course of action.

Correct AnswerverifiedShow Answer

CPAs are prohibited from which of the following forms of advertising?

Correct AnswerverifiedShow Answer

CPA firms are required to be independent when performing any professional service.

Correct AnswerverifiedShow Answer

The provisions of the Sarbanes-Oxley Act are most likely to allow which of the following non-audit services for audit clients?

Correct AnswerverifiedShow Answer

Which of the following is a True statement regarding the enforcement mechanism for CPA conduct?

Correct AnswerverifiedShow Answer

Interpretations of the AICPA Code of Professional Conduct are dominated by the concept of

Correct AnswerverifiedShow Answer

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The six Ethical Principles of the Code o...
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