Question 1

The following elements are essential features of a profession:

Accepted Answer

A) Extensive training, license or certification, and provision of important services to society 
B) Extensive training, primarily intellectual skills, and representation by professional organizations 
C) Extensive training, provision of important services to society, and primarily intellectual skills 
D) License or certification, representation by professional organizations, and autonomy 
E) License or certification, autonomy, and provision of important services to society 
A) Extensive training, license or certification, and provision of important services to society 
B) Extensive training, primarily intellectual skills, and representation by professional organizations 
C) Extensive training, provision of important services to society, and primarily intellectual skills 
D) License or certification, representation by professional organizations, and autonomy 
E) License or certification, autonomy, and provision of important services to society C

Question 2

A professional accounting firm has several audit and tax clients; however, a single client represents 40% of the firm's revenue.This situation could result in the following threat to professional independence:

Accepted Answer

A) Self-review 
B) Intimidation 
C) Advocacy 
D) Familiarity 
E) Over-dependence 
A) Self-review 
B) Intimidation 
C) Advocacy 
D) Familiarity 
E) Over-dependence E

Question 3

This organization is developing an international code of conduct for professional accountants:

Accepted Answer

A) International Accounting Standards Board 
B) European Federation of Accountants 
C) Financial Accounting Standards Board 
D) Public Accounting Oversight Board 
E) International Federation of Accountants 
A) International Accounting Standards Board 
B) European Federation of Accountants 
C) Financial Accounting Standards Board 
D) Public Accounting Oversight Board 
E) International Federation of Accountants E

Question 4

According to Kohlberg, at this stage of moral reasoning, fear of punishment and authorities are a motive for doing right:

Accepted Answer

A) Pre-conventional 
B) Conventional 
C) Post-conventional 
D) Autonomous 
E) Principled 
A) Pre-conventional 
B) Conventional 
C) Post-conventional 
D) Autonomous 
E) Principled

Question 5

A professional accountant has been the partner in charge of a particular audit client for the past eight years.This situation could result in the following threat to professional independence:

Accepted Answer

A) Self-review 
B) Intimidation 
C) Advocacy 
D) Familiarity 
E) None of the above 
A) Self-review 
B) Intimidation 
C) Advocacy 
D) Familiarity 
E) None of the above

Question 6

Professional Accountants, in their fiduciary role, owe primary loyalty to:

Accepted Answer

A) The accounting profession 
B) The client 
C) The general public 
D) Government regulations 
E) All of the above 
A) The accounting profession 
B) The client 
C) The general public 
D) Government regulations 
E) All of the above

Question 7

This organization can issue auditing standards in the U.S.:

Accepted Answer

A) AICPA 
B) FASB 
C) SEC 
D) PCAOB 
E) All of the above 
A) AICPA 
B) FASB 
C) SEC 
D) PCAOB 
E) All of the above

Question 8

If a professional accountant is billing an audit client for more hours than those actually worked, he will be violating the following fundamental principle:

Accepted Answer

A) Objectivity 
B) Professional due care 
C) Integrity 
D) Confidentiality 
E) All of the above 
A) Objectivity 
B) Professional due care 
C) Integrity 
D) Confidentiality 
E) All of the above

Question 9

The following duties are essential to maintaining a fiduciary relationship in the accounting profession:

Accepted Answer

A) Development and maintenance of required knowledge and skills 
B) Maintenance of trust 
C) Maintenance of an acceptable personal reputation 
D) All of the above 
E) aand bonly 
A) Development and maintenance of required knowledge and skills 
B) Maintenance of trust 
C) Maintenance of an acceptable personal reputation 
D) All of the above 
E) aand bonly

Question 10

The external review of an audit firm's quality control system is an example of:

Accepted Answer

A) Safeguards reducing the risk of conflict of interest within the audit profession 
B) Safeguards reducing the risk of conflict of interest within a client 
C) Safeguards reducing the risk of conflict of interest within a professional accounting firm 
D) All of the above 
E) aand conly 
A) Safeguards reducing the risk of conflict of interest within the audit profession 
B) Safeguards reducing the risk of conflict of interest within a client 
C) Safeguards reducing the risk of conflict of interest within a professional accounting firm 
D) All of the above 
E) aand conly

Question 11

Using partners who do not report to audit partners for the provision of non-assurance services to an assurance client would be an example of:

Accepted Answer

A) Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation 
B) Safeguards reducing the risk of conflict of interest within a client 
C) Safeguards reducing the risk of conflict of interest within a professional accounting firm 
D) All of the above 
E) aand conly 
A) Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation 
B) Safeguards reducing the risk of conflict of interest within a client 
C) Safeguards reducing the risk of conflict of interest within a professional accounting firm 
D) All of the above 
E) aand conly

Question 12

If a professional accountant is auditing a public company and she receives company shares as payment for her audit services, she will be violating the following fundamental principle:

Accepted Answer

A) Integrity 
B) Objectivity 
C) Professional due care 
D) Confidentiality 
E) All of the above 
A) Integrity 
B) Objectivity 
C) Professional due care 
D) Confidentiality 
E) All of the above

Question 13

The adoption of the following measures would reduce the expectation gap and lessen public misunderstanding of the auditor's role

Accepted Answer

A) Publish a statement of management responsibility 
B) Auditor to report annually to audit committee 
C) Expand audit report to clarify auditor's role and the level of assurance 
D) aand b 
E) aand c 
A) Publish a statement of management responsibility 
B) Auditor to report annually to audit committee 
C) Expand audit report to clarify auditor's role and the level of assurance 
D) aand b 
E) aand c

Question 14

Which of the following is not a fundamental principle in codes of conduct for professional accountants?

Accepted Answer

A) Act in the client's best interest 
B) Objectivity and independence 
C) Maintain the good reputation of the profession 
D) Maintain confidentiality 
E) Not to be associated with misleading information 
A) Act in the client's best interest 
B) Objectivity and independence 
C) Maintain the good reputation of the profession 
D) Maintain confidentiality 
E) Not to be associated with misleading information

Question 15

According to Kohlberg, at this stage of moral reasoning, adherence to moral codes or to codes of law and order are a motive for doing right:

Accepted Answer

A) Pre-conventional 
B) Conventional 
C) Post-conventional 
D) Autonomous 
E) Principled 
A) Pre-conventional 
B) Conventional 
C) Post-conventional 
D) Autonomous 
E) Principled

Question 16

This organization issues auditing standards, carries out inspections of public accounting firms auditing U.S.public clients, and imposes sanctions when applicable:

Accepted Answer

A) CPAB 
B) PCAOB 
C) SEC 
D) FASB 
E) AICPA 
A) CPAB 
B) PCAOB 
C) SEC 
D) FASB 
E) AICPA

Question 17

The following value is not necessary for an accounting professional:

Accepted Answer

A) Honesty 
B) Integrity 
C) Objectivity 
D) A primary commitment to self-interest 
E) All but one of the above 
A) Honesty 
B) Integrity 
C) Objectivity 
D) A primary commitment to self-interest 
E) All but one of the above

Question 18

A professional accountant is auditing client A and providing consulting services to client B.Both clients are in the same industry.If the professional accountant uses specific information from client A's audit to prepare a business plan for client B, he will be violating the following fundamental principle:

Accepted Answer

A) Integrity 
B) Objectivity 
C) Professional due care 
D) Confidentiality 
E) All of the above 
A) Integrity 
B) Objectivity 
C) Professional due care 
D) Confidentiality 
E) All of the above

Question 19

A new audit client was taken on by a professional accountant's firm.The fee for this client's audit engagement is significantly lower than that charged by the prior accountants.This situation could result in the following threat to professional independence:

Accepted Answer

A) Self-review 
B) Intimidation 
C) Advocacy 
D) Familiarity 
E) None of the above 
A) Self-review 
B) Intimidation 
C) Advocacy 
D) Familiarity 
E) None of the above

Question 20

The recommendation of appointment and review of the external auditors by the audit committee is an example of:

Accepted Answer

A) Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation 
B) Safeguards reducing the risk of conflict of interest between an auditor and management 
C) Safeguards reducing the risk of conflict of interest within a professional accounting firm's own systems and procedures 
D) All of the above 
E) aand conly 
A) Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation 
B) Safeguards reducing the risk of conflict of interest between an auditor and management 
C) Safeguards reducing the risk of conflict of interest within a professional accounting firm's own systems and procedures 
D) All of the above 
E) aand conly

The following elements are essential features of a profession:

A professional accounting firm has several audit and tax clients; however, a single client represents 40% of the firm's revenue.This situation could result in the following threat to professional independence:

This organization is developing an international code of conduct for professional accountants:

According to Kohlberg, at this stage of moral reasoning, fear of punishment and authorities are a motive for doing right:

A professional accountant has been the partner in charge of a particular audit client for the past eight years.This situation could result in the following threat to professional independence:

Professional Accountants, in their fiduciary role, owe primary loyalty to:

This organization can issue auditing standards in the U.S.:

If a professional accountant is billing an audit client for more hours than those actually worked, he will be violating the following fundamental principle:

The following duties are essential to maintaining a fiduciary relationship in the accounting profession:

The external review of an audit firm's quality control system is an example of:

Using partners who do not report to audit partners for the provision of non-assurance services to an assurance client would be an example of:

If a professional accountant is auditing a public company and she receives company shares as payment for her audit services, she will be violating the following fundamental principle:

The adoption of the following measures would reduce the expectation gap and lessen public misunderstanding of the auditor's role

Which of the following is not a fundamental principle in codes of conduct for professional accountants?

According to Kohlberg, at this stage of moral reasoning, adherence to moral codes or to codes of law and order are a motive for doing right:

This organization issues auditing standards, carries out inspections of public accounting firms auditing U.S.public clients, and imposes sanctions when applicable:

The following value is not necessary for an accounting professional:

A new audit client was taken on by a professional accountant's firm.The fee for this client's audit engagement is significantly lower than that charged by the prior accountants.This situation could result in the following threat to professional independence:

The recommendation of appointment and review of the external auditors by the audit committee is an example of:

The Ethics Environment

Ethics & Governance Scandals

Ethical Behavior Philosophers’ Contributions

Practical Ethical Decision Making

Corporate Ethical Governance & Accountability

Managing Ethics Risks & Opportunities

Subprime Lending Fiasco Ethics Issues

Enron Events Motivate Governance & Ethics Reform

Filters

Exam 6: Professional Accounting in the Public Interest, Post Enron

The following elements are essential features of a profession:

A professional accounting firm has several audit and tax clients; however, a single client represents 40% of the firm's revenue.This situation could result in the following threat to professional independence:

This organization is developing an international code of conduct for professional accountants:

According to Kohlberg, at this stage of moral reasoning, fear of punishment and authorities are a motive for doing right:

A professional accountant has been the partner in charge of a particular audit client for the past eight years.This situation could result in the following threat to professional independence:

Professional Accountants, in their fiduciary role, owe primary loyalty to:

This organization can issue auditing standards in the U.S.:

If a professional accountant is billing an audit client for more hours than those actually worked, he will be violating the following fundamental principle:

The following duties are essential to maintaining a fiduciary relationship in the accounting profession:

The external review of an audit firm's quality control system is an example of:

Using partners who do not report to audit partners for the provision of non-assurance services to an assurance client would be an example of:

If a professional accountant is auditing a public company and she receives company shares as payment for her audit services, she will be violating the following fundamental principle:

The adoption of the following measures would reduce the expectation gap and lessen public misunderstanding of the auditor's role

Which of the following is not a fundamental principle in codes of conduct for professional accountants?

According to Kohlberg, at this stage of moral reasoning, adherence to moral codes or to codes of law and order are a motive for doing right:

This organization issues auditing standards, carries out inspections of public accounting firms auditing U.S.public clients, and imposes sanctions when applicable:

The following value is not necessary for an accounting professional:

A new audit client was taken on by a professional accountant's firm.The fee for this client's audit engagement is significantly lower than that charged by the prior accountants.This situation could result in the following threat to professional independence:

The recommendation of appointment and review of the external auditors by the audit committee is an example of:

The Ethics Environment

Ethics & Governance Scandals

Ethical Behavior Philosophers’ Contributions

Practical Ethical Decision Making

Corporate Ethical Governance & Accountability

Managing Ethics Risks & Opportunities

Subprime Lending Fiasco Ethics Issues

Enron Events Motivate Governance & Ethics Reform

Filters