Question 1

On an audit,only CPAs are required to comply with the AICPA's independence rules.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following is not an aspect of Rule 201 of the General Standards of the Code of Professional Conduct?

Accepted Answer

A) A member must not take on an engagement that is beyond the member's professional competence. 
B) A member must exercise duties prudently and professionally. 
C) A member must adequately plan and supervise the performance of professional services. 
D) A member firm must not advertise services to competing clients. 
A) A member must not take on an engagement that is beyond the member's professional competence. 
B) A member must exercise duties prudently and professionally. 
C) A member must adequately plan and supervise the performance of professional services. 
D) A member firm must not advertise services to competing clients. D

Question 3

An audit firm is considered independent even if it performs which of the following services for a publicly traded audit client?

Accepted Answer

A) Serving as a member of the client's board of directors. 
B) Determining which accounting policies will be adopted by the client. 
C) Accounting information system design and implementation. 
D) Tax return preparation as approved by the board of directors. 
A) Serving as a member of the client's board of directors. 
B) Determining which accounting policies will be adopted by the client. 
C) Accounting information system design and implementation. 
D) Tax return preparation as approved by the board of directors. D

Question 4

The auditor is normally not permitted to divulge confidential information obtained from a client.Which of the following situations would be a violation of this standard?

Accepted Answer

A) To respond to the information request of a shareholder. 
B) To respond to a quality review request of the state board of accountancy. 
C) To initiate a complaint with the AICPA's ethics division. 
D) To ensure adequate disclosure in accordance with GAAP. 
A) To respond to the information request of a shareholder. 
B) To respond to a quality review request of the state board of accountancy. 
C) To initiate a complaint with the AICPA's ethics division. 
D) To ensure adequate disclosure in accordance with GAAP.

Question 5

Julie Webb,CPA takes out an automobile loan with First national Bank of Wellville (FNBW)while attending the University of Wellville.Julie graduates one year later and is hired as an auditor by Best and Driftwood,LLP.Her first assigned audit engagement is with First national Bank of Wellville,a client of Best and Driftwood.As a new audit assistant,Julie continues to pay her automobile loan payments each month.According to the AICPA,why is Julie is considered a covered member for FNBW independence purposes?

Accepted Answer

A) She will be working on the engagement. 
B) She has a direct financial interest in FNBW. 
C) She graduated in the same area as the client is operating. 
D) She has an immaterial direct financial interest in FNBW. 
A) She will be working on the engagement. 
B) She has a direct financial interest in FNBW. 
C) She graduated in the same area as the client is operating. 
D) She has an immaterial direct financial interest in FNBW.

Question 6

Professional Skepticism Explain why professional skepticism is important in making professional judgments.What are the types of actions that a professionally skeptical auditor will take?

Accepted Answer

Professional skepticism is important bec

Question 7

An auditor of a public client may perform internal audit outsourcing services for a client because such services coincide with external audit functions.

Accepted Answer

A) True 
 B)False

Question 8

Utilitarian theory is an approach for addressing ethical problems by identifying a hierarchy of rights that should be considered in solving ethical dilemmas.

Accepted Answer

A) True 
 B)False

Question 9

The importance of independence Why is "independence" referred to as the cornerstone of auditing?

Accepted Answer

Independence is referred to as the corne

Question 10

Keeping client information confidential The rule on confidentiality is intended to protect the client's information.The rule,however,does not apply in certain circumstances.
A.
Explain the rule on confidentiality.
B.
Identify the circumstances in which the rule of confidentiality does not apply.

Accepted Answer

A) The rule on confidentiality exists to

Question 11

What concepts does the AICPA Principles of Professional Conduct include?

Accepted Answer

A) Public interest,objectivity and independence. 
B) Due professional care and supervision. 
C) Scope and nature of services and adequate training. 
D) Integrity and confidentiality. 
A) Public interest,objectivity and independence. 
B) Due professional care and supervision. 
C) Scope and nature of services and adequate training. 
D) Integrity and confidentiality.

Question 12

What is a situation in which an individual is morally or ethically required to do something that conflicts with his or her immediate self-interest called?

Accepted Answer

A) An ethical dilemma. 
B) An ethical problem. 
C) An ethical theory. 
D) None of the above. 
A) An ethical dilemma. 
B) An ethical problem. 
C) An ethical theory. 
D) None of the above.

Question 13

According to the framework for ethical decision making,which of the following should the decision maker consider?

Accepted Answer

A) All possible alternative courses of action. 
B) The consequences associated with possible actions. 
C) Whether the rights framework would cause any course of action to be added. 
D) All of the above. 
A) All possible alternative courses of action. 
B) The consequences associated with possible actions. 
C) Whether the rights framework would cause any course of action to be added. 
D) All of the above.

Question 14

Under the AICPA definition,who among the following would not be considered a covered member?

Accepted Answer

A) An individual on the attest engagement team. 
B) An individual in a position to influence the attest engagement. 
C) A partner in the office of the lead engagement partner. 
D) All would be considered covered members. 
A) An individual on the attest engagement team. 
B) An individual in a position to influence the attest engagement. 
C) A partner in the office of the lead engagement partner. 
D) All would be considered covered members.

Question 15

For which of the following engagements are members of the AICPA required to act with integrity and objectivity?

Accepted Answer

A) Tax preparation. 
B) Financial statement review services. 
C) Financial statement audits. 
D) All engagements. 
A) Tax preparation. 
B) Financial statement review services. 
C) Financial statement audits. 
D) All engagements.

Question 16

Independence is required for which of the following types of services?

Accepted Answer

A) Audit work. 
B) Tax work. 
C) Consulting. 
D) Independence is always required of the CPA. 
A) Audit work. 
B) Tax work. 
C) Consulting. 
D) Independence is always required of the CPA.

Question 17

In determining auditor independence,the SEC considers which of the following as an independence impairment?

Accepted Answer

A) An auditor performs the accounting work and then audits it. 
B) An auditor has no conflicting interest with the client. 
C) An auditor does not act as an advocate for the audit client. 
D) An auditor does not act as an employee of the audit client. 
A) An auditor performs the accounting work and then audits it. 
B) An auditor has no conflicting interest with the client. 
C) An auditor does not act as an advocate for the audit client. 
D) An auditor does not act as an employee of the audit client.

Question 18

The confidentiality between auditor and client is legally equivalent as the confidentiality shared between attorney and client.

Accepted Answer

A) True 
 B)False

Question 19

In determining the types of activities,engagements and interactions an auditor should have with a client,what must the CPA and the audit firm do?

Accepted Answer

A) Follow the rules exactly as they are written. 
B) Assess all of their relationships with every client to ensure that independence is intact. 
C) Focus on client satisfaction above all other considerations. 
D) Realize that ethics are only guidelines and a matter of personal judgment. 
A) Follow the rules exactly as they are written. 
B) Assess all of their relationships with every client to ensure that independence is intact. 
C) Focus on client satisfaction above all other considerations. 
D) Realize that ethics are only guidelines and a matter of personal judgment.

Question 20

One issue that may threaten independence is that of the fee pressures placed on the auditor when an audit is under bid.

Accepted Answer

A) True 
 B)False

On an audit,only CPAs are required to comply with the AICPA's independence rules.

Which of the following is not an aspect of Rule 201 of the General Standards of the Code of Professional Conduct?

An audit firm is considered independent even if it performs which of the following services for a publicly traded audit client?

The auditor is normally not permitted to divulge confidential information obtained from a client.Which of the following situations would be a violation of this standard?

Professional Skepticism Explain why professional skepticism is important in making professional judgments.What are the types of actions that a professionally skeptical auditor will take?

An auditor of a public client may perform internal audit outsourcing services for a client because such services coincide with external audit functions.

Utilitarian theory is an approach for addressing ethical problems by identifying a hierarchy of rights that should be considered in solving ethical dilemmas.

The importance of independence Why is "independence" referred to as the cornerstone of auditing?

Keeping client information confidential The rule on confidentiality is intended to protect the client's information.The rule,however,does not apply in certain circumstances. A. Explain the rule on confidentiality. B. Identify the circumstances in which the rule of confidentiality does not apply.

What concepts does the AICPA Principles of Professional Conduct include?

What is a situation in which an individual is morally or ethically required to do something that conflicts with his or her immediate self-interest called?

According to the framework for ethical decision making,which of the following should the decision maker consider?

Under the AICPA definition,who among the following would not be considered a covered member?

For which of the following engagements are members of the AICPA required to act with integrity and objectivity?

Independence is required for which of the following types of services?

In determining auditor independence,the SEC considers which of the following as an independence impairment?

The confidentiality between auditor and client is legally equivalent as the confidentiality shared between attorney and client.

In determining the types of activities,engagements and interactions an auditor should have with a client,what must the CPA and the audit firm do?

One issue that may threaten independence is that of the fee pressures placed on the auditor when an audit is under bid.

Auditing: Integral to the Economy

The Risk of Fraud and Mechanisms to Address Fraud: Regulation,corporate Governance,and Audit Quality

Internal Control Over Financial Reporting: Managements Responsibilities and Importance to the External Auditors

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, use, impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

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Exam 4: Professional Liability and the Need for Quality Auditor Judgments and Ethical Decisions

On an audit,only CPAs are required to comply with the AICPA's independence rules.

Which of the following is not an aspect of Rule 201 of the General Standards of the Code of Professional Conduct?

An audit firm is considered independent even if it performs which of the following services for a publicly traded audit client?

The auditor is normally not permitted to divulge confidential information obtained from a client.Which of the following situations would be a violation of this standard?

Professional Skepticism Explain why professional skepticism is important in making professional judgments.What are the types of actions that a professionally skeptical auditor will take?

An auditor of a public client may perform internal audit outsourcing services for a client because such services coincide with external audit functions.

Utilitarian theory is an approach for addressing ethical problems by identifying a hierarchy of rights that should be considered in solving ethical dilemmas.

The importance of independence Why is "independence" referred to as the cornerstone of auditing?

Keeping client information confidential The rule on confidentiality is intended to protect the client's information.The rule,however,does not apply in certain circumstances. A. Explain the rule on confidentiality. B. Identify the circumstances in which the rule of confidentiality does not apply.

What concepts does the AICPA Principles of Professional Conduct include?

What is a situation in which an individual is morally or ethically required to do something that conflicts with his or her immediate self-interest called?

According to the framework for ethical decision making,which of the following should the decision maker consider?

Under the AICPA definition,who among the following would not be considered a covered member?

For which of the following engagements are members of the AICPA required to act with integrity and objectivity?

Independence is required for which of the following types of services?

In determining auditor independence,the SEC considers which of the following as an independence impairment?

The confidentiality between auditor and client is legally equivalent as the confidentiality shared between attorney and client.

In determining the types of activities,engagements and interactions an auditor should have with a client,what must the CPA and the audit firm do?

One issue that may threaten independence is that of the fee pressures placed on the auditor when an audit is under bid.

Auditing: Integral to the Economy

The Risk of Fraud and Mechanisms to Address Fraud: Regulation,corporate Governance,and Audit Quality

Internal Control Over Financial Reporting: Managements Responsibilities and Importance to the External Auditors

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, use, impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters