Question 1

Which portions of the code of professional conduct are enforceable?

Accepted Answer

A)  principles and rules 
B)  the rules of conduct 
C)  interpretations 
D)  rules and interpretations 
A)  principles and rules 
B)  the rules of conduct 
C)  interpretations 
D)  rules and interpretations B

Question 2

Generally, all of the rules of professional conduct for CPAs apply to

Accepted Answer

A)  students in public practice. 
B)  students and members. 
C)  all members. 
D)  members in public practice. 
A)  students in public practice. 
B)  students and members. 
C)  all members. 
D)  members in public practice. D

Question 3

The disadvantage of general statements in codes of professional conduct is

Accepted Answer

A)  the emphasis on positive activities. 
B)  that they identify ideal conduct. 
C)  the difficulty of enforcing general ideals without minimum standards of behaviour. 
D)  that there are too many to remember. 
A)  the emphasis on positive activities. 
B)  that they identify ideal conduct. 
C)  the difficulty of enforcing general ideals without minimum standards of behaviour. 
D)  that there are too many to remember. C

Question 4

Frank has discovered that his employer is part of a group of banks that is manipulating interest rates. He would like to stop this practice at his employer but is not sure how best to talk to his boss. He has heard of the GVV (Giving Voice to Values) approach and thinks he may be able to use it successfully because his company has recently implemented new initiatives to empower employees to speak of improvements to business practices. Frank has crafted a useful, powerful response that he could use, taking into account multiple options. He has conducted research to make him more informed on the issue, and has consulted a friend who is expert in this area. What is the next thing he should do before talking to his boss?

Accepted Answer

A)  review the values underpinning the different positions in the value conflict 
B)  further develop and practice his response (scripting) and get help (coaching) 
C)  review the different possibilities for action to make sure that he has considered enough 
D)  check his stakeholder analysis to make sure that it is thorough and complete 
A)  review the values underpinning the different positions in the value conflict 
B)  further develop and practice his response (scripting) and get help (coaching) 
C)  review the different possibilities for action to make sure that he has considered enough 
D)  check his stakeholder analysis to make sure that it is thorough and complete

Question 5

As a member of a professional accounting association, when considering the applicability of the rules of professional conduct, a PA would be responsible for compliance by

Accepted Answer

A)  themselves only. 
B)  their partners in the practice and themselves. 
C)  their employees. 
D)  themselves, their employees, and partners. 
A)  themselves only. 
B)  their partners in the practice and themselves. 
C)  their employees. 
D)  themselves, their employees, and partners.

Question 6

Each of the following situations involves a possible violation of the provincial institutes Rules of Professional Conduct. For each situation, (1) decide whether or not the Rules have been violated, and (2) briefly explain how the situation violates (or does not violate) the Rules.
A) Johnny Line has a successful dentistry practice in Calgary. Johnny has recommended one of his patients to Leslie King, public accountant. To show gratitude for the referral, Leslie has agreed to pay Johnny 5% of the fee for audit services rendered by Leslie to Johnny's patient. Leslie discloses the payment agreement to her new client. Violation? Yes No

Accepted Answer

A)Violation. A public accountant may not

Question 7

The provincial institutes Rules of Professional Conduct state, in part, that a public accountant should maintain integrity and due care. Integrity in the Rules refers to a public accountant's

Accepted Answer

A)  ability to maintain an impartial attitude on all matters that come under the public accountant's review. 
B)  ability to distinguish independently between accounting practices that are acceptable and those that are not. 
C)  ability to be unyielding in all matters dealing with auditing procedures. 
D)  reputation for honesty and fair dealing. 
A)  ability to maintain an impartial attitude on all matters that come under the public accountant's review. 
B)  ability to distinguish independently between accounting practices that are acceptable and those that are not. 
C)  ability to be unyielding in all matters dealing with auditing procedures. 
D)  reputation for honesty and fair dealing.

Question 8

Each of the following situations involves a possible violation of the independence requirements of the provincial institutes Rules of Professional Conduct. For each situation, (1) decide whether the Rules have been violated, and (2) briefly explain how the situation violates (or does not violate) the Rules.
A) Mike Lednicky, public accountant, is a partner in the Oshawa office of Arthur & Thompson, public accountants. Mike's brother is employed as an inventory warehouse supervisor (an audit-sensitive position) by Sweeny Appliances, a publicly-held company in Manitoba. Sweeny Appliances is one of Arthur & Thompson's audit clients. Neither Mike nor the Oshawa office of Arthur & Thompson is involved in the audit of Sweeny Appliances. Violation? Yes No

Accepted Answer

A)No violation. Although partners in a p

Question 9

Ethical dilemmas occur when

Accepted Answer

A)  you know what you want to do but the rules say otherwise. 
B)  businesses disregard the laws and engage in illegal behaviour. 
C)  a person chooses to act in his/her own interest. 
D)  a choice must be taken about appropriate behaviour. 
A)  you know what you want to do but the rules say otherwise. 
B)  businesses disregard the laws and engage in illegal behaviour. 
C)  a person chooses to act in his/her own interest. 
D)  a choice must be taken about appropriate behaviour.

Question 10

Kimora is a senior manager at a public accounting firm. Kimora was assigned to the audit of Toble Corp. Upon arriving at the client, Kimora met with the controller, Brad, who was a classmate in college, 20 years ago. She had not been in contact with Brad since college, but they realized that they still had many friends in common. Brad invited Kimora to go to the company box to watch a hockey game and catch up.
Discuss the issue of independence between Kimora and Toble Corp.

Accepted Answer

Kimora might not be independent in appea

Question 11

According to the profession's ethical standards, an auditor would be considered independent in which of the following instances? The

Accepted Answer

A)  auditor's chequing account, which is fully insured by CDIC, is held at a client financial institution. 
B)  client comprises 75% of the auditor's fees. 
C)  auditor does not have enough employees to meet the client's reporting deadline. 
D)  client owes the auditor fees for two consecutive annual audits. 
A)  auditor's chequing account, which is fully insured by CDIC, is held at a client financial institution. 
B)  client comprises 75% of the auditor's fees. 
C)  auditor does not have enough employees to meet the client's reporting deadline. 
D)  client owes the auditor fees for two consecutive annual audits.

Question 12

What is the difference between auditors and lawyers with respect to privileged information?

Accepted Answer

Public accountants do not have the right

Question 13

Which of the following situations best describes an advocacy threat? PA has been hired to

Accepted Answer

A)  consult with the corporate controller and the bank manager about the conditions for financing a loan. 
B)  manage the accounting department for three weeks while the corporate controller is on vacation. 
C)  complete the personal tax returns of all executive management. 
D)  prepare the year end journal entries for a subsidiary company. 
A)  consult with the corporate controller and the bank manager about the conditions for financing a loan. 
B)  manage the accounting department for three weeks while the corporate controller is on vacation. 
C)  complete the personal tax returns of all executive management. 
D)  prepare the year end journal entries for a subsidiary company.

Question 14

Raul, PA, received a call from his friend Cristobal Franco. He needed an audit urgently, because the bank might call his loan for his computer store CF Ltd. Since Cristobal had been his high school friend and they still played soccer together every two weeks, Raul agreed. Raul and Cristobal had a quick meeting, where Raul fixed the audit fee at $10 000. Cristobal stressed the importance of an unqualified opinion for the bank.
Raul sent two available junior staff to CF's offices. The junior staff were experienced in review engagements, and had been working for Raul for about six months. The two staff had a quick look around the store, noting the documents strewn everywhere. The accounting staff came in and chatted briefly after their smoke break. They were about a month behind on recording transactions, because Cristobal had laid off one sales person. The accounting staff also helped out with providing sales quotes and Cristobal did all of the technical work.
At the end of the day, the junior staff were each given a $250 gift certificate to be used in the computer store. This was great, because CF also sold MP3 players and supplies such as CDs and DVDs.
At dinner that night, the junior staff told their family that it would probably be a great idea to hold off on any computer supplies or equipment purchases that they needed, since CF would likely hold a sale in the next month or two to improve cash flow.
Required:
Identify and discuss the violations in the rules of conduct with respect to CF.

Accepted Answer

Raul is too familiar (familiarity threat

Question 15

At a small practice where the bulk of the work is accounting, bookkeeping, and review engagements, what is an important procedure that should be followed by the PA to help ensure independence?

Accepted Answer

A)  Management should be trained in accounting principles so that they can adequately assess the PAs work. 
B)  All transactions should be prepared and processed by client personnel. 
C)  Transactions and journal entries should be discussed with and approved by the client. 
D)  The accountant should avoid doing bookkeeping for review engagements, and restrict this to compilation engagements only. 
A)  Management should be trained in accounting principles so that they can adequately assess the PAs work. 
B)  All transactions should be prepared and processed by client personnel. 
C)  Transactions and journal entries should be discussed with and approved by the client. 
D)  The accountant should avoid doing bookkeeping for review engagements, and restrict this to compilation engagements only.

Question 16

The confidential relationship will be violated if, without the client's permission, the public accountant provides working papers about a client to

Accepted Answer

A)  a court of law which subpoenas them. 
B)  the relevant provincial institute as part of a practice inspection. 
C)  another public accounting firm which has just purchased the public accountant's entire practice. 
D)  an investigative or disciplinary body of the relevant provincial institute which is conducting a review of the public accountant's practice. 
A)  a court of law which subpoenas them. 
B)  the relevant provincial institute as part of a practice inspection. 
C)  another public accounting firm which has just purchased the public accountant's entire practice. 
D)  an investigative or disciplinary body of the relevant provincial institute which is conducting a review of the public accountant's practice.

Question 17

Identify and describe each of the three parts to the Code of Professional Conduct. Also discuss which parts are officially enforceable and which are not.

Accepted Answer

The three parts to the Code are:
•Princi

Question 18

An intimidation threat occurs when

Accepted Answer

A)  it is difficult to believe the actions of management because there is a suspicion of irregular activity with respect to the recording of transaction activity. 
B)  the auditor suspects that fraud has occurred at the middle management level of the organization. 
C)  the auditor has been working on a client engagement for many years and has trouble believing that management would deceive the auditors. 
D)  a client threatens the firm or its staff with respect to the content of the financial statements or with respect to the conduct of the audit. 
A)  it is difficult to believe the actions of management because there is a suspicion of irregular activity with respect to the recording of transaction activity. 
B)  the auditor suspects that fraud has occurred at the middle management level of the organization. 
C)  the auditor has been working on a client engagement for many years and has trouble believing that management would deceive the auditors. 
D)  a client threatens the firm or its staff with respect to the content of the financial statements or with respect to the conduct of the audit.

Question 19

Which of the following is the best example of an intimidation threat? Management

Accepted Answer

A)  has decided to sue you because the audit fee was twice as high as they expected. 
B)  has changed auditors of all of its subsidiary companies as they can get the audit done for a lower cost. 
C)  threatens to change auditors if you do not let them overstate accounts receivable by $100 000 (the bad debt allowance is too low). 
D)  threatens to resign from the company if the board of directors does not give them a 15% raise. 
A)  has decided to sue you because the audit fee was twice as high as they expected. 
B)  has changed auditors of all of its subsidiary companies as they can get the audit done for a lower cost. 
C)  threatens to change auditors if you do not let them overstate accounts receivable by $100 000 (the bad debt allowance is too low). 
D)  threatens to resign from the company if the board of directors does not give them a 15% raise.

Question 20

Some independence rules apply to all assurance engagements, while others apply only to a listed entity. For the purposes of assessing the independence rules, a listed entity is defined as

Accepted Answer

A)  an organization with share capital exceeding $10 million that has public accountability. 
B)  an entity whose debt or shares is listed on a stock exchange, with market capitalization and total assets greater than $10 million. 
C)  any organization that has shares or debt listed on a stock exchange. 
D)  an organization that has shares or debt listed on a stock exchange, and that has redeemed shares. 
A)  an organization with share capital exceeding $10 million that has public accountability. 
B)  an entity whose debt or shares is listed on a stock exchange, with market capitalization and total assets greater than $10 million. 
C)  any organization that has shares or debt listed on a stock exchange. 
D)  an organization that has shares or debt listed on a stock exchange, and that has redeemed shares.

Which portions of the code of professional conduct are enforceable?

Generally, all of the rules of professional conduct for CPAs apply to

The disadvantage of general statements in codes of professional conduct is

As a member of a professional accounting association, when considering the applicability of the rules of professional conduct, a PA would be responsible for compliance by

The provincial institutes Rules of Professional Conduct state, in part, that a public accountant should maintain integrity and due care. Integrity in the Rules refers to a public accountant's

Ethical dilemmas occur when

According to the profession's ethical standards, an auditor would be considered independent in which of the following instances? The

What is the difference between auditors and lawyers with respect to privileged information?

Which of the following situations best describes an advocacy threat? PA has been hired to

At a small practice where the bulk of the work is accounting, bookkeeping, and review engagements, what is an important procedure that should be followed by the PA to help ensure independence?

The confidential relationship will be violated if, without the client's permission, the public accountant provides working papers about a client to

Identify and describe each of the three parts to the Code of Professional Conduct. Also discuss which parts are officially enforceable and which are not.

An intimidation threat occurs when

Which of the following is the best example of an intimidation threat? Management

Some independence rules apply to all assurance engagements, while others apply only to a listed entity. For the purposes of assessing the independence rules, a listed entity is defined as

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Legal Liability

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Evidence

Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters

Exam 4: Professional Judgment and Ethics

Which portions of the code of professional conduct are enforceable?

Generally, all of the rules of professional conduct for CPAs apply to

The disadvantage of general statements in codes of professional conduct is

As a member of a professional accounting association, when considering the applicability of the rules of professional conduct, a PA would be responsible for compliance by

The provincial institutes Rules of Professional Conduct state, in part, that a public accountant should maintain integrity and due care. Integrity in the Rules refers to a public accountant's

Ethical dilemmas occur when

According to the profession's ethical standards, an auditor would be considered independent in which of the following instances? The

What is the difference between auditors and lawyers with respect to privileged information?

Which of the following situations best describes an advocacy threat? PA has been hired to

At a small practice where the bulk of the work is accounting, bookkeeping, and review engagements, what is an important procedure that should be followed by the PA to help ensure independence?

The confidential relationship will be violated if, without the client's permission, the public accountant provides working papers about a client to

Identify and describe each of the three parts to the Code of Professional Conduct. Also discuss which parts are officially enforceable and which are not.

An intimidation threat occurs when

Which of the following is the best example of an intimidation threat? Management

Some independence rules apply to all assurance engagements, while others apply only to a listed entity. For the purposes of assessing the independence rules, a listed entity is defined as

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Legal Liability

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Evidence

Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters