Question 1

A CPA who informs management of a material misstatement in the financial statements can go to the SEC with his/her concerns if:

Accepted Answer

A) The CPA informed client of this matter and the client did not inform the SEC within one business day of being informed of the CPA 
B) The CPA informed the client of this matter and the client refuses to correct the financial statements 
C) The CPA informs the client of this matter and the client fires the CPA 
D) All of the above 
A) The CPA informed client of this matter and the client did not inform the SEC within one business day of being informed of the CPA 
B) The CPA informed the client of this matter and the client refuses to correct the financial statements 
C) The CPA informs the client of this matter and the client fires the CPA 
D) All of the above

Question 2

Which of the following relationships does a CPA not impair independence?

Accepted Answer

A) Financial relationships 
B) Business relationships 
C) Family relationships 
D) Civic relationships 
A) Financial relationships 
B) Business relationships 
C) Family relationships 
D) Civic relationships

Question 3

Each of the following were themes of the investigations of the accounting profession during the 1970s and 1980s except for:

Accepted Answer

A) Whether low-balling to obtain audits impairs independence 
B) Whether nonaudit services impair auditor independence 
C) The need for a report on internal controls 
D) The importance of developing techniques to prevent and detect fraud 
A) Whether low-balling to obtain audits impairs independence 
B) Whether nonaudit services impair auditor independence 
C) The need for a report on internal controls 
D) The importance of developing techniques to prevent and detect fraud

Question 4

In the New CEO case, the CEO directed the chief accounting officer to:

Accepted Answer

A) Inflate revenues for the year to meet financial analysts' earnings estimates 
B) Ignore inventory write-down's required by GAAP 
C) Inflate inventory write-down's beyond what had already been recorded 
D) Ignore accrued expenses incurred at year end 
A) Inflate revenues for the year to meet financial analysts' earnings estimates 
B) Ignore inventory write-down's required by GAAP 
C) Inflate inventory write-down's beyond what had already been recorded 
D) Ignore accrued expenses incurred at year end

Question 5

The requirement that there should be reasonable support for a tax return position before a CPA recommends it to a client:

Accepted Answer

A) Might violate basic ethical standards discussed in chapters 1 and 2 
B) Might violate the objectivity standard in the AICPA code 
C) Might violate the integrity standard in the AICPA code 
D) All of the above 
A) Might violate basic ethical standards discussed in chapters 1 and 2 
B) Might violate the objectivity standard in the AICPA code 
C) Might violate the integrity standard in the AICPA code 
D) All of the above

Question 6

The SEC's position on independence can best be characterized as:

Accepted Answer

A) Proscribing certain financial interests with the client 
B) Proscribing certain business relationships with the client 
C) Restricting the provision of certain nonaudit services to audit clients 
D) All of the above 
A) Proscribing certain financial interests with the client 
B) Proscribing certain business relationships with the client 
C) Restricting the provision of certain nonaudit services to audit clients 
D) All of the above

Question 7

In the Lincoln Savings & Loan failure during the period of failures at savings and loan institutions, Lincoln was charged with:

Accepted Answer

A) Stealing $300 million from shareholders 
B) Causing retirees to lose their life savings 
C) Causing employees to lose their jobs 
D) Engaging in a Ponzi scheme 
A) Stealing $300 million from shareholders 
B) Causing retirees to lose their life savings 
C) Causing employees to lose their jobs 
D) Engaging in a Ponzi scheme

Question 8

Statement on Standards for Tax Services No.1 establishes as a basic principle of providing tax services that the CPA:

Accepted Answer

A) Must have a good faith belief that the tax return position can be justified if challenged 
B) Must have a good faith belief that the information provided by the client is accurate 
C) Can never recommend a tax position to the client when it is frivolous 
D) All of the above 
A) Must have a good faith belief that the tax return position can be justified if challenged 
B) Must have a good faith belief that the information provided by the client is accurate 
C) Can never recommend a tax position to the client when it is frivolous 
D) All of the above

Question 9

Describe each of the investigations of the accounting profession during the 1970s and 1980s.

Accepted Answer

During the 1970s and 1980s, the accounti

Question 10

The concept of not holding an auditor legally responsible for knowing misrepresentations in the financial statements by management is called:

Accepted Answer

A) Disgorgement 
B) Tax avoidance 
C) Indemnification 
D) Restricted liability 
A) Disgorgement 
B) Tax avoidance 
C) Indemnification 
D) Restricted liability

Question 11

The Federal Trade Commission has been responsible for loosening which of the following rules of conduct in the accounting profession?

Accepted Answer

A) Commissions 
B) Contingent Fees 
C) Advertising and solicitation 
D) All of the above 
A) Commissions 
B) Contingent Fees 
C) Advertising and solicitation 
D) All of the above

Question 12

Steve Morris, CPA, performs audits for nonpublic clients.Describe the independence obligations of Steve that apply to the performance of professional services for audit clients.

Accepted Answer

As a Certified Public Accountant (CPA) p

Question 13

The question that arises in the First Community Church case is whether:

Accepted Answer

A) The financial statements have been materially misstated 
B) There has been a misappropriation of assets 
C) The auditors lacked independence 
D) All of the above 
A) The financial statements have been materially misstated 
B) There has been a misappropriation of assets 
C) The auditors lacked independence 
D) All of the above

Question 14

What is the difference on contingent fees under the PCAOB rules versus the AICPA rules?

Accepted Answer

A) Both rules allow contingent fees for an audit client if the contingency is based upon findings of government agencies. 
B) The AICPA prohibits contingent fees to an audit client. 
C) The PCAOB allows contingent fees for non public companies engagements. 
D) The PCAOB prohibits contingent fees in tax engagements performed for an audit client. 
A) Both rules allow contingent fees for an audit client if the contingency is based upon findings of government agencies. 
B) The AICPA prohibits contingent fees to an audit client. 
C) The PCAOB allows contingent fees for non public companies engagements. 
D) The PCAOB prohibits contingent fees in tax engagements performed for an audit client.

Question 15

The cost to the public to clean up 1,043 failed savings and loan institutions during the period of 1986-1995 was :

Accepted Answer

A) $152.9 billion including $123.8 billion of U.S.taxpayer losses 
B) $300 million including $123.8 million of U.S.taxpayer losses 
C) $400 billion including $152.9 billion of U.S.taxpayer losses 
D) $400 million including $152.9 billion of U.S.taxpayer losses 
A) $152.9 billion including $123.8 billion of U.S.taxpayer losses 
B) $300 million including $123.8 million of U.S.taxpayer losses 
C) $400 billion including $152.9 billion of U.S.taxpayer losses 
D) $400 million including $152.9 billion of U.S.taxpayer losses

Question 16

Under the Sarbanes-Oxley Act, the auditor's responsibility with respect to internal controls can best be stated as:

Accepted Answer

A) Develop a system of internal controls that helps to prevent and detect fraud 
B) Assess whether the internal controls helps to prevent and detect fraud 
C) Assess management's report on internal controls 
D) All of the above 
A) Develop a system of internal controls that helps to prevent and detect fraud 
B) Assess whether the internal controls helps to prevent and detect fraud 
C) Assess management's report on internal controls 
D) All of the above

Question 17

The PCAOB rules prohibit auditors from:

Accepted Answer

A) Providing certain aggressive tax shelters to their public company audit clients 
B) Providing tax services to members of the audit client's management who serve in financial reporting oversight roles 
C) Providing tax preparation and planning services for public company executives 
D) All of the above 
A) Providing certain aggressive tax shelters to their public company audit clients 
B) Providing tax services to members of the audit client's management who serve in financial reporting oversight roles 
C) Providing tax preparation and planning services for public company executives 
D) All of the above

Question 18

The accounting issues at failed savings and loan institutions included:

Accepted Answer

A) The failure to provide adequate allowances for loan losses 
B) The failure to disclose dubious deals between the S&Ls and some of its major customers 
C) The existence of inadequate controls to prevent inadequate allowances and control for dubious deals 
D) All of the above 
A) The failure to provide adequate allowances for loan losses 
B) The failure to disclose dubious deals between the S&Ls and some of its major customers 
C) The existence of inadequate controls to prevent inadequate allowances and control for dubious deals 
D) All of the above

Question 19

Why don't auditors prepare financial statements, as well as audit them?

Accepted Answer

A) It would take away a job from the controller of the company. 
B) It would not eliminate errors in the financial statements. 
C) It would be a conflict of interest and violates ethical standards. 
D) It would streamline the process and be effective. 
A) It would take away a job from the controller of the company. 
B) It would not eliminate errors in the financial statements. 
C) It would be a conflict of interest and violates ethical standards. 
D) It would streamline the process and be effective.

Question 20

Circular 230 applies to CPAs who:

Accepted Answer

A) Audit the financial statements of a tax client 
B) Practice before the IRS 
C) Practice before the SEC 
D) All of the above 
A) Audit the financial statements of a tax client 
B) Practice before the IRS 
C) Practice before the SEC 
D) All of the above

A CPA who informs management of a material misstatement in the financial statements can go to the SEC with his/her concerns if:

Which of the following relationships does a CPA not impair independence?

Each of the following were themes of the investigations of the accounting profession during the 1970s and 1980s except for:

In the New CEO case, the CEO directed the chief accounting officer to:

The requirement that there should be reasonable support for a tax return position before a CPA recommends it to a client:

The SEC's position on independence can best be characterized as:

In the Lincoln Savings & Loan failure during the period of failures at savings and loan institutions, Lincoln was charged with:

Statement on Standards for Tax Services No.1 establishes as a basic principle of providing tax services that the CPA:

Describe each of the investigations of the accounting profession during the 1970s and 1980s.

The concept of not holding an auditor legally responsible for knowing misrepresentations in the financial statements by management is called:

The Federal Trade Commission has been responsible for loosening which of the following rules of conduct in the accounting profession?

Steve Morris, CPA, performs audits for nonpublic clients.Describe the independence obligations of Steve that apply to the performance of professional services for audit clients.

The question that arises in the First Community Church case is whether:

What is the difference on contingent fees under the PCAOB rules versus the AICPA rules?

The cost to the public to clean up 1,043 failed savings and loan institutions during the period of 1986-1995 was :

Under the Sarbanes-Oxley Act, the auditor's responsibility with respect to internal controls can best be stated as:

The PCAOB rules prohibit auditors from:

The accounting issues at failed savings and loan institutions included:

Why don't auditors prepare financial statements, as well as audit them?

Circular 230 applies to CPAs who:

Ethical Reasoning Implications for Accounting

Accountants Ethical Decision Process and Professional Judgment

Corporate Governance and Ethical Management

Audit Responsibilities and Accounting Fraud

Legal and Regulatory Obligations in an Ethical Framework

Earnings Management and the Quality of Financial Reporting

International Financial Reporting: Ethics and Corporate Governance Considerations

Filters

Exam 4: Aicpa Code of Professional Conduct

A CPA who informs management of a material misstatement in the financial statements can go to the SEC with his/her concerns if:

Which of the following relationships does a CPA not impair independence?

Each of the following were themes of the investigations of the accounting profession during the 1970s and 1980s except for:

In the New CEO case, the CEO directed the chief accounting officer to:

The requirement that there should be reasonable support for a tax return position before a CPA recommends it to a client:

The SEC's position on independence can best be characterized as:

In the Lincoln Savings & Loan failure during the period of failures at savings and loan institutions, Lincoln was charged with:

Statement on Standards for Tax Services No.1 establishes as a basic principle of providing tax services that the CPA:

Describe each of the investigations of the accounting profession during the 1970s and 1980s.

The concept of not holding an auditor legally responsible for knowing misrepresentations in the financial statements by management is called:

The Federal Trade Commission has been responsible for loosening which of the following rules of conduct in the accounting profession?

Steve Morris, CPA, performs audits for nonpublic clients.Describe the independence obligations of Steve that apply to the performance of professional services for audit clients.

The question that arises in the First Community Church case is whether:

What is the difference on contingent fees under the PCAOB rules versus the AICPA rules?

The cost to the public to clean up 1,043 failed savings and loan institutions during the period of 1986-1995 was :

Under the Sarbanes-Oxley Act, the auditor's responsibility with respect to internal controls can best be stated as:

The PCAOB rules prohibit auditors from:

The accounting issues at failed savings and loan institutions included:

Why don't auditors prepare financial statements, as well as audit them?

Circular 230 applies to CPAs who:

Ethical Reasoning Implications for Accounting

Accountants Ethical Decision Process and Professional Judgment

Corporate Governance and Ethical Management

Audit Responsibilities and Accounting Fraud

Legal and Regulatory Obligations in an Ethical Framework

Earnings Management and the Quality of Financial Reporting

International Financial Reporting: Ethics and Corporate Governance Considerations

Filters