Question 1

An alternative practice structure can best be described as:

Accepted Answer

A) A form of ownership where a CPA firm owns a public company and audits that company 
B) A form of structure where a public company provides nonattest services for a client that is also provided with attest services by an affiliate of the public company 
C) A form of structure where a CPA firm provides nonattest services for a client that is also provided with attest services by a public company 
D) A form of structure other than LLP and LLC 
A) A form of ownership where a CPA firm owns a public company and audits that company 
B) A form of structure where a public company provides nonattest services for a client that is also provided with attest services by an affiliate of the public company 
C) A form of structure where a CPA firm provides nonattest services for a client that is also provided with attest services by a public company 
D) A form of structure other than LLP and LLC

Question 2

A common requirement/effect of the commissions and contingent fees rule is:

Accepted Answer

A) A CPA who accepts such a payment always violates independence 
B) The CPA must disclose the acceptance of such a payment to the client 
C) A CPA is prohibited from accepting such a form of payment when engaged in attest services for a client 
D) All of the above 
A) A CPA who accepts such a payment always violates independence 
B) The CPA must disclose the acceptance of such a payment to the client 
C) A CPA is prohibited from accepting such a form of payment when engaged in attest services for a client 
D) All of the above

Question 3

Which rule of professional conduct in the AICPA code does not apply both to internal and external accountants who are CPAs and members of the Institute?

Accepted Answer

A) Independence 
B) Integrity 
C) Objectivity 
D) Due care 
A) Independence 
B) Integrity 
C) Objectivity 
D) Due care

Question 4

The AOL case described in the text focused mainly on:

Accepted Answer

A) Proper accounting for line costs 
B) Proper accounting for advertising costs 
C) Proper accounting for special purpose entities 
D) All of the above 
A) Proper accounting for line costs 
B) Proper accounting for advertising costs 
C) Proper accounting for special purpose entities 
D) All of the above

Question 5

Objectivity may be impaired when a CPA prepares a tax return for a client because:

Accepted Answer

A) The CPA violates the independence rule 
B) The CPA violates the integrity rule 
C) The CPA serves in a tax advocacy position for the client 
D) The CPA must prepare the tax return solely based on the information provided by the client 
A) The CPA violates the independence rule 
B) The CPA violates the integrity rule 
C) The CPA serves in a tax advocacy position for the client 
D) The CPA must prepare the tax return solely based on the information provided by the client

Question 6

To avoid violating independence when engaged in nonattest services for an audit client, a CPA must:

Accepted Answer

A) Make all management decisions and perform all management decisions 
B) Evaluate the adequacy and results of the services performed 
C) Avoid being biased when providing nonattest services for the audit client 
D) Avoid being pressured by the client when providing nonattest services for the audit client 
A) Make all management decisions and perform all management decisions 
B) Evaluate the adequacy and results of the services performed 
C) Avoid being biased when providing nonattest services for the audit client 
D) Avoid being pressured by the client when providing nonattest services for the audit client

Question 7

Each of the following is an outright restriction on providing nonattest services for an attest client except for:

Accepted Answer

A) Tax services 
B) Financial information systems design and implementation 
C) Appraisal or valuation services 
D) Internal audit outsourcing services 
A) Tax services 
B) Financial information systems design and implementation 
C) Appraisal or valuation services 
D) Internal audit outsourcing services

Question 8

The Bubba and Rufus case deals primarily with:

Accepted Answer

A) Audit independence 
B) Tax avoidance 
C) Contingent fees in tax services 
D) Engaging in Nonattest services for an audit client 
A) Audit independence 
B) Tax avoidance 
C) Contingent fees in tax services 
D) Engaging in Nonattest services for an audit client

Question 9

The conceptual framework for the AICPA Independence standards can best be characterized as:

Accepted Answer

A) A model to prevent fraud from occurring 
B) An approach to identify threats to independence 
C) An approach to identify fraud risks 
D) A model to assist controllers in dealing with differences of opinion with top management on accounting issues 
A) A model to prevent fraud from occurring 
B) An approach to identify threats to independence 
C) An approach to identify fraud risks 
D) A model to assist controllers in dealing with differences of opinion with top management on accounting issues

Question 10

Which of the following would be an example of due care?

Accepted Answer

A) Audit documentation all supplied by the client. 
B) Audit documentation is a copy of last year's work papers. 
C) Audit documentation with reviews by senior, manager, and partner. 
D) Audit documentation with misapplication of GAAP. 
A) Audit documentation all supplied by the client. 
B) Audit documentation is a copy of last year's work papers. 
C) Audit documentation with reviews by senior, manager, and partner. 
D) Audit documentation with misapplication of GAAP.

Question 11

Assume the external auditor of a client entity also served on the client's board of directors.What aspect of independence would be violated?

Accepted Answer

A) The auditor may be exposed to an intimidation threat by the client 
B) The auditor is involved in a business relationship with the client 
C) The auditor serves in a management decision making position with the client 
D) All of the above 
A) The auditor may be exposed to an intimidation threat by the client 
B) The auditor is involved in a business relationship with the client 
C) The auditor serves in a management decision making position with the client 
D) All of the above

Question 12

In which of the following is a CPA independent in fact and appearance?

Accepted Answer

A) The CPA's brother is the controller of the company being audited. 
B) The CPA serves on the board of a non-profit with the CFO of the company being audited. 
C) The CPA borrowed money for a new car from the CEO of the company being audited. 
D) The CPA owes an office building that he leases to the client. 
A) The CPA's brother is the controller of the company being audited. 
B) The CPA serves on the board of a non-profit with the CFO of the company being audited. 
C) The CPA borrowed money for a new car from the CEO of the company being audited. 
D) The CPA owes an office building that he leases to the client.

Question 13

Which was the ethical concern in the PeopleSoft case?

Accepted Answer

A) Family relationships between PeopleSoft and EY 
B) Nonattest services for PeopleSoft by EY 
C) Independence in appearance and fact 
D) Managerial services for PeopleSoft by EY 
A) Family relationships between PeopleSoft and EY 
B) Nonattest services for PeopleSoft by EY 
C) Independence in appearance and fact 
D) Managerial services for PeopleSoft by EY

Question 14

The revenue recognition issue in the Family Games case is:

Accepted Answer

A) Whether a company can record revenue before it is signed-off by the lawyers 
B) Whether a company can record revenue before it is shipped to the customer 
C) Whether a company can record revenue before the revenue recognition rules are met 
D) All of the above 
A) Whether a company can record revenue before it is signed-off by the lawyers 
B) Whether a company can record revenue before it is shipped to the customer 
C) Whether a company can record revenue before the revenue recognition rules are met 
D) All of the above

Question 15

What is the primary fiduciary responsibility of professional accountants?

Accepted Answer

A) Stockholders 
B) Public interest 
C) Client 
D) Stakeholders 
A) Stockholders 
B) Public interest 
C) Client 
D) Stakeholders

Question 16

The committee that first recommended that the profession institute a voluntary program for peer review was:

Accepted Answer

A) Metcalf committee 
B) Cohen committee 
C) The House Subcommittee on Oversight and Investigations 
D) Mintz and Morris committee 
A) Metcalf committee 
B) Cohen committee 
C) The House Subcommittee on Oversight and Investigations 
D) Mintz and Morris committee

Question 17

Which example illustrates the danger of a CPA accepting loans from an audit client?

Accepted Answer

A) Tyco International 
B) Enron 
C) Alphadelphia 
D) ESM Government Securities 
A) Tyco International 
B) Enron 
C) Alphadelphia 
D) ESM Government Securities

Question 18

In the PeopleSoft case, the auditors violated what aspect of independence?

Accepted Answer

A) The auditor was exposed to an intimidation threat by the client 
B) The auditor was involved in a business relationship with the client 
C) The auditor served in a management decision making position with the client 
D) All of the above 
A) The auditor was exposed to an intimidation threat by the client 
B) The auditor was involved in a business relationship with the client 
C) The auditor served in a management decision making position with the client 
D) All of the above

Question 19

Which of the following is a permitted loan to a CPA from an audit client financial institution?

Accepted Answer

A) Car loan collateralized by the car 
B) Credit cards with a limit greater than $25,000 
C) Home mortgage 
D) Personal loan of less than $10,000 
A) Car loan collateralized by the car 
B) Credit cards with a limit greater than $25,000 
C) Home mortgage 
D) Personal loan of less than $10,000

Question 20

The House Subcommittee on Oversight and Investigations made its recommendations after looking into failures at:

Accepted Answer

A) ESM Government Securities 
B) Continental Illinois National Bank and Trust 
C) Penn Square Bank 
D) All of the above 
A) ESM Government Securities 
B) Continental Illinois National Bank and Trust 
C) Penn Square Bank 
D) All of the above

An alternative practice structure can best be described as:

A common requirement/effect of the commissions and contingent fees rule is:

Which rule of professional conduct in the AICPA code does not apply both to internal and external accountants who are CPAs and members of the Institute?

The AOL case described in the text focused mainly on:

Objectivity may be impaired when a CPA prepares a tax return for a client because:

To avoid violating independence when engaged in nonattest services for an audit client, a CPA must:

Each of the following is an outright restriction on providing nonattest services for an attest client except for:

The Bubba and Rufus case deals primarily with:

The conceptual framework for the AICPA Independence standards can best be characterized as:

Which of the following would be an example of due care?

Assume the external auditor of a client entity also served on the client's board of directors.What aspect of independence would be violated?

In which of the following is a CPA independent in fact and appearance?

Which was the ethical concern in the PeopleSoft case?

The revenue recognition issue in the Family Games case is:

What is the primary fiduciary responsibility of professional accountants?

The committee that first recommended that the profession institute a voluntary program for peer review was:

Which example illustrates the danger of a CPA accepting loans from an audit client?

In the PeopleSoft case, the auditors violated what aspect of independence?

Which of the following is a permitted loan to a CPA from an audit client financial institution?

The House Subcommittee on Oversight and Investigations made its recommendations after looking into failures at:

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

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Exam 4: Aicpa Code of Professional Conduct

An alternative practice structure can best be described as:

A common requirement/effect of the commissions and contingent fees rule is:

Which rule of professional conduct in the AICPA code does not apply both to internal and external accountants who are CPAs and members of the Institute?

The AOL case described in the text focused mainly on:

Objectivity may be impaired when a CPA prepares a tax return for a client because:

To avoid violating independence when engaged in nonattest services for an audit client, a CPA must:

Each of the following is an outright restriction on providing nonattest services for an attest client except for:

The Bubba and Rufus case deals primarily with:

The conceptual framework for the AICPA Independence standards can best be characterized as:

Which of the following would be an example of due care?

Assume the external auditor of a client entity also served on the client's board of directors.What aspect of independence would be violated?

In which of the following is a CPA independent in fact and appearance?

Which was the ethical concern in the PeopleSoft case?

The revenue recognition issue in the Family Games case is:

What is the primary fiduciary responsibility of professional accountants?

The committee that first recommended that the profession institute a voluntary program for peer review was:

Which example illustrates the danger of a CPA accepting loans from an audit client?

In the PeopleSoft case, the auditors violated what aspect of independence?

Which of the following is a permitted loan to a CPA from an audit client financial institution?

The House Subcommittee on Oversight and Investigations made its recommendations after looking into failures at:

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