Exam 5: Ethics and the Audit Profession

Describe an ethical dilemma that an auditor or an accountant might face in his or her business career,then illustrate how the auditor or accountant might use the six-step approach presented in the text to resolve that dilemma.Be specific.

One of the main reasons people act unethically is that they choose to act selfishly.

In determining independence with respect to any audit engagement,the ultimate decision as to whether or not the auditor is independent must be made by the:

The provisions of the Sarbanes-Oxley Act of 2002 are most likely to allow which of the following non-audit services for audit clients?

In some situations,the interpretations of the Rules of Conduct permit former partners to have relationships with a client of the firm without affecting the firm's independence.Which of the following situations would cause a loss of independence?

Which of the following statements best describes the enforceability of the Interpretations of the Rules of Conduct?

Oehlers,CPA,is a staff auditor participating in the engagement of Capital Trust,Inc.Which of the following circumstances impairs Oehlers independence?

In which of the following circumstances would a CPA be ethically bound to refrain from disclosing any confidential client information?

An advantage of specific rules in the Code of Professional Conduct is the enforceability of minimum behavior and performance standards.

One of the AICPA's Ethical Principles deals with the public interest.It states that members should accept the obligation to act in a way that will:

The Code of Conduct rule on independence indicates that materiality must be considered when:

Which of the following is least likely to impair a CPA firm's independence with respect to an audit client in the Oklahoma City office of a national CPA firm?

Under the AICPA independence rules,independence can be considered impaired when:

Ethics are:

Freedom from ________ means the absence of relationships that might interfere with objectivity or integrity.

Ethical Rulings are: I.explanations relating to broad hypothetical circumstances. II.not enforceable,but one must justify departure. III.explanations relating to specific factual circumstances.

Which of the following would be a violation of the rule requiring "objectivity" by the CPA? I.The auditor accepts management's opinion regarding the collection of accounts receivable without an independent evaluation. II.In preparing a client's tax return,the CPA encourages a client to take a deduction for which there is no support.

Each state also has rules of conduct that are required for licensing by the state.

Each of the following situations involves a possible violation of the rule on independence.For each situation,(1)decide whether the Code of Professional Conduct has been violated,and (2)briefly explain how the situation violates (or does not violate)the Code of Professional Conduct. a.Harry Brown is a partner in the Topeka office of Hedley & Co.,CPAs.Harry's brother is employed in an audit-sensitive position by Jensen Appliances,a publicly held company in Kansas.Jensen Appliances is one of Hedley & Co.'s audit clients.Neither Harry nor personnel from the Topeka office is involved in the audit of Jensen. Violation? Yes No

Which of the following activities is allowed for a CPA firm's attestation clients?