Question 1

The AICPA Code of Professional Conduct guidance starts at a conceptual level with the principles and progressively moves to general rules and then to detailed interpretation.

Accepted Answer

A) True 
 B)False  True

Question 2

When auditing a public company, a CPA must follow the auditing standards and Code of Professional Conduct of the PCAOB.

Accepted Answer

A) True 
 B)False  True

Question 3

Principles are stated at a conceptual level, not a detailed level.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is required for a firm to designate itself as a "Member of the American Institute of Certified Public Accountants" on its letterhead?

Accepted Answer

A)  At least one of the partners must be a member.
B)  The partners whose names appear in the firm name must be members.
C)  All CPA owners must be members of the institute.
D)  The firm must be a dues-paying member.E) C) and D)
F) None of the above

Question 5

Distinguish between the following theories of ethical behavior: a utilitarian approach, a rights-based approach, and a justice-based approach.

Accepted Answer

A utilitarian approach focuses on the co...

Question 6

If an auditor is not independent of the client, it is unlikely that a user of financial statements will place much reliance on the CPA's work.

Accepted Answer

A) True 
 B)False

Question 7

A CPA's failure to file a tax return is:

Accepted Answer

A)  considered acceptable by the AICPA Code of Professional Conduct.
B)  ill-advised because it would impair the CPA's independence with respect to attest clients.
C)  considered discreditable to the profession.
D)  a violation of generally accepted auditing standards.E) All of the above
F) A) and D)

Question 8

Which of the following statements best describes why the profession of certified public accountants has deemed it essential to promulgate a code of conduct and to establish a mechanism for enforcing observance of the code?

Accepted Answer

A)  Ethical standards are established so that users of accounting services know what to expect, the professionals know what behaviors are acceptable, and overseers can take disciplinary action when appropriate.
B)  A prerequisite to success is the establishment of an ethical code that stresses primarily the professional's responsibility to clients and colleagues.
C)  A requirement of most state laws calls for the profession to establish a code of conduct.
D)  An essential means of self-protection for the profession is the establishment of flexible ethical standards by the profession.E) B) and C)
F) A) and B) A

Question 9

In which of the following circumstances would a CPA be bound by ethics to refrain from disclosing any confidential information obtained during the course of a professional engagement?

Accepted Answer

A)  The CPA is issued a summons enforceable by a court order that orders the CPA to present confidential information.
B)  A major stockholder of a client company seeks accounting information from the CPA after management declined to disclose the requested information.
C)  Confidential client information is requested as part of a quality review of the CPA's practice by a review team authorized by the AICPA.
D)  An inquiry by a disciplinary body of a state CPA society requests confidential client information.E) B) and C)
F) C) and D)

Question 10

Following the issuance of a PCAOB draft report, how many days does the CPA firm have to respond to accusations?

Accepted Answer

A)  10 days.
B)  30 days.
C)  50 days.
D)  90 days.E) A) and B)
F) None of the above

Question 11

A financial interest is "beneficially owned" when an individual or entity is NOT the recorded owner of the interest but has a right to some or all of the underlying benefits of ownership.

Accepted Answer

A) True 
 B)False

Question 12

PCAOB rules require tax services provided by a public company auditor to be considered and approved by the company's audit committee.

Accepted Answer

A) True 
 B)False

Question 13

A violation of the profession's ethical standards would least likely have occurred when a CPA in public practice:

Accepted Answer

A)  used a records-retention agency to store the CPA's working papers and client records.
B)  served as an expert witness in a damage suit and received compensation based on the amount awarded to the plaintiff.
C)  referred life insurance assignments to the CPA's spouse, who is a life insurance agent.
D)  failed to file his personal tax return.E) B) and C)
F) All of the above

Question 14

In auditing a publicly held company, an auditor must follow the professional standards established by all of the following except:

Accepted Answer

A)  the AICPA's Auditing Standards Board.
B)  the SEC Independence Rules.
C)  the PCAOB Code of Professional Conduct.
D)  the PCAOB Auditing Standards.E) C) and D)
F) All of the above

Question 15

A CPA's membership in the AICPA will ordinarily be suspended or revoked automatically for:

Accepted Answer

A)  controlling the bookkeeping for a compilation client.
B)  conviction of willful failure to file personal income tax return.
C)  refusing to respond to an inquiry by the AICPA practice review committee.
D)  accepting compensation while honoring a subpoena to appear as an expert witness.E) B) and D)
F) B) and C)

Question 16

Rules of Conduct are enforceable.

Accepted Answer

A) True 
 B)False

Question 17

Why do professions establish codes of conduct that define ethical behaviors for members of the profession?

Accepted Answer

These rules are established so that user...

Question 18

Ms. Lembke is a partner for DTS, a CPA firm. She is the lead partner for the firm's largest client, The Grey Elephant. Ms. Zadina, who works in the same office as Ms. Lembke, has a sister who is the controller for The Grey Elephant. Because of potential independence issues, Ms. Zadina does no work for The Grey Elephant. Ms. Zadina is being considered for promotion to partner. What independence issues should Ms. Lembke consider before promoting Ms. Zadina?

Accepted Answer

Interpretation of the Independence Rule ...

Question 19

Identify the primary purposes of the General Standards Rule, the Compliance with Standards Rule, and the Accounting Principles Rule of the Rules of Conduct.

Accepted Answer

The General Standards Rule outlines that...

Question 20

An auditor is about to commence a recurring annual audit engagement. The continuing auditor's independence would ordinarily be considered to be impaired if the prior year's audit fee:

Accepted Answer

A)  was unusually large.
B)  has not been paid and will not be paid for at least twelve months.
C)  has not been paid and the client has filed a voluntary petition for bankruptcy.
D)  was renegotiated during the prior year audit based on the need for expanded testing.E) A) and B)
F) A) and C)

Exam 19: Professional Conduct, Independence, and Quality Control

The AICPA Code of Professional Conduct guidance starts at a conceptual level with the principles and progressively moves to general rules and then to detailed interpretation.

Correct Answer
verified
True

When auditing a public company, a CPA must follow the auditing standards and Code of Professional Conduct of the PCAOB.

Correct Answer
verified
True

Principles are stated at a conceptual level, not a detailed level.

Correct Answer
verified

Which of the following is required for a firm to designate itself as a "Member of the American Institute of Certified Public Accountants" on its letterhead?

Correct Answer
verified

Distinguish between the following theories of ethical behavior: a utilitarian approach, a rights-based approach, and a justice-based approach.

Correct Answer
verified
A utilitarian approach focuses on the co...
View Answer

If an auditor is not independent of the client, it is unlikely that a user of financial statements will place much reliance on the CPA's work.

Correct Answer
verified

A CPA's failure to file a tax return is:

Correct Answer
verified

Which of the following statements best describes why the profession of certified public accountants has deemed it essential to promulgate a code of conduct and to establish a mechanism for enforcing observance of the code?

Correct Answer
verified
A

In which of the following circumstances would a CPA be bound by ethics to refrain from disclosing any confidential information obtained during the course of a professional engagement?

Correct Answer
verified

Following the issuance of a PCAOB draft report, how many days does the CPA firm have to respond to accusations?

Correct Answer
verified

A financial interest is "beneficially owned" when an individual or entity is NOT the recorded owner of the interest but has a right to some or all of the underlying benefits of ownership.

Correct Answer
verified

PCAOB rules require tax services provided by a public company auditor to be considered and approved by the company's audit committee.

Correct Answer
verified

A violation of the profession's ethical standards would least likely have occurred when a CPA in public practice:

Correct Answer
verified

In auditing a publicly held company, an auditor must follow the professional standards established by all of the following except:

Correct Answer
verified

A CPA's membership in the AICPA will ordinarily be suspended or revoked automatically for:

Correct Answer
verified

Rules of Conduct are enforceable.

Correct Answer
verified

Why do professions establish codes of conduct that define ethical behaviors for members of the profession?

Correct Answer
verified
These rules are established so that user...
View Answer

Correct Answer
verified
Interpretation of the Independence Rule ...
View Answer

Identify the primary purposes of the General Standards Rule, the Compliance with Standards Rule, and the Accounting Principles Rule of the Rules of Conduct.

Correct Answer
verified
The General Standards Rule outlines that...
View Answer

An auditor is about to commence a recurring annual audit engagement. The continuing auditor's independence would ordinarily be considered to be impaired if the prior year's audit fee:

Correct Answer
verified

Exam 19: Professional Conduct, Independence, and Quality Control

The AICPA Code of Professional Conduct guidance starts at a conceptual level with the principles and progressively moves to general rules and then to detailed interpretation.

Correct AnswerverifiedTrue

When auditing a public company, a CPA must follow the auditing standards and Code of Professional Conduct of the PCAOB.

Correct AnswerverifiedTrue

Principles are stated at a conceptual level, not a detailed level.

Correct AnswerverifiedShow Answer

Which of the following is required for a firm to designate itself as a "Member of the American Institute of Certified Public Accountants" on its letterhead?

Correct AnswerverifiedShow Answer

Distinguish between the following theories of ethical behavior: a utilitarian approach, a rights-based approach, and a justice-based approach.

Correct AnswerverifiedA utilitarian approach focuses on the co...View AnswerShow Answer

If an auditor is not independent of the client, it is unlikely that a user of financial statements will place much reliance on the CPA's work.

Correct AnswerverifiedShow Answer

A CPA's failure to file a tax return is:

Correct AnswerverifiedShow Answer

Which of the following statements best describes why the profession of certified public accountants has deemed it essential to promulgate a code of conduct and to establish a mechanism for enforcing observance of the code?

Correct AnswerverifiedA

In which of the following circumstances would a CPA be bound by ethics to refrain from disclosing any confidential information obtained during the course of a professional engagement?

Correct AnswerverifiedShow Answer

Following the issuance of a PCAOB draft report, how many days does the CPA firm have to respond to accusations?

Correct AnswerverifiedShow Answer

A financial interest is "beneficially owned" when an individual or entity is NOT the recorded owner of the interest but has a right to some or all of the underlying benefits of ownership.

Correct AnswerverifiedShow Answer

PCAOB rules require tax services provided by a public company auditor to be considered and approved by the company's audit committee.

Correct AnswerverifiedShow Answer

A violation of the profession's ethical standards would least likely have occurred when a CPA in public practice:

Correct AnswerverifiedShow Answer

In auditing a publicly held company, an auditor must follow the professional standards established by all of the following except:

Correct AnswerverifiedShow Answer

A CPA's membership in the AICPA will ordinarily be suspended or revoked automatically for:

Correct AnswerverifiedShow Answer

Rules of Conduct are enforceable.

Correct AnswerverifiedShow Answer

Why do professions establish codes of conduct that define ethical behaviors for members of the profession?

Correct AnswerverifiedThese rules are established so that user...View AnswerShow Answer

Correct AnswerverifiedInterpretation of the Independence Rule ...View AnswerShow Answer

Identify the primary purposes of the General Standards Rule, the Compliance with Standards Rule, and the Accounting Principles Rule of the Rules of Conduct.

Correct AnswerverifiedThe General Standards Rule outlines that...View AnswerShow Answer

An auditor is about to commence a recurring annual audit engagement. The continuing auditor's independence would ordinarily be considered to be impaired if the prior year's audit fee:

Correct AnswerverifiedShow Answer

Correct Answer
verified
True

Correct Answer
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True

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Correct Answer
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Correct Answer
verified
A utilitarian approach focuses on the co...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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A

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
These rules are established so that user...
View Answer

Correct Answer
verified
Interpretation of the Independence Rule ...
View Answer

Correct Answer
verified
The General Standards Rule outlines that...
View Answer

Correct Answer
verified