Exam 5: Ethics and the Audit Profession

Under Rule 101,Independence,independence is considered to be impaired if fees remain unpaid for professional services provided more than six months before the date of the current year's report.

The AICPA's Code of Professional Conduct states that a CPA should maintain integrity and objectivity.The term "objectivity" in the Code refers to a CPA's ability to:

The AICPA's Code of Professional Conduct requires independence for all:

Information obtained by a CPA from a client is legally privileged in federal court.

The Sarbanes-Oxley Act requires which employees of an accounting firm to rotate off the engagement every five years?

The financial interests of a CPA's family members can affect the CPA's independence.Which of the following parties would not be included as a "direct financial interest" of the CPA?

Interpretations of the rules regarding independence allow an auditor to serve as:

Rule 101,Independence,prohibits a CPA from performing both audit services and bookkeeping services for the same public company in the same year.

Don Crosby,a partner in a national CPA firm,has just learned that his self sufficient daughter has accepted a position as the CFO of Sunglasses,Inc.,a current client within the office with which he is employed.Explain the independence ramifications on 1)Don's independence,2)his office,and 3)the firm's independence.

Briefly describe the advantages and disadvantages of a code of conduct based on general statements of ideal conduct as opposed to specific rules that define unacceptable behavior.

In the AICPA Code of Professional Conduct,the second principle of professional conduct,entitled "The Public Interest," applies only to members of the AICPA in public practice and not to members who work as accountants in business,government,or education.

Discuss Rule 301-Confidential Client Information,including the four exceptions to the rule.

A CPA firm may charge a contingent fee for:

Of the four parts of the AICPA's Code of Professional Conduct,which part is enforceable?

An auditor's independence is considered impaired if the auditor has:

Several months after an unqualified audit report was issued,the auditor discovers the financial statements were materially misstated.The client's CEO agrees that there are misstatements,but refuses to correct them.She claims that "confidentiality" prevents the CPA from informing anyone.Which of the following statements is correct?