Question 1

According to the ethical standards of the profession,which of the following acts is generally prohibited?

Accepted Answer

A)  Purchasing a product from a third party and reselling it to a client. 
B)  Writing a financial management newsletter promoted and sold by a publishing company. 
C)  Accepting a commission for recommending a product to an audit client. 
D)  Accepting engagements obtained through the efforts of third parties. 
A)  Purchasing a product from a third party and reselling it to a client. 
B)  Writing a financial management newsletter promoted and sold by a publishing company. 
C)  Accepting a commission for recommending a product to an audit client. 
D)  Accepting engagements obtained through the efforts of third parties.

Question 2

Rule 201,General Standards,requires a member to comply with standards and interpretations.Which of the following is not a standard covered by Rule 201?

Accepted Answer

A)  Independence. 
B)  Due professional care. 
C)  Planning and supervision. 
D)  Sufficient relevant data. 
A)  Independence. 
B)  Due professional care. 
C)  Planning and supervision. 
D)  Sufficient relevant data.

Question 3

Which of the following "bodies designated by Council" have been authorized to promulgate general standards enforceable under Rule 201 of the AICPA Code of Professional Conduct?

Accepted Answer

A)  AICPA Division of Professional Ethics. 
B)  Financial Accounting Standards Board. 
C)  Government Accounting Standards Board. 
D)  Accounting and Review Services Committee. 
A)  AICPA Division of Professional Ethics. 
B)  Financial Accounting Standards Board. 
C)  Government Accounting Standards Board. 
D)  Accounting and Review Services Committee.

Question 4

For each of the following cases,indicate where the action or situation is a violation of the AICPA Code of Professional Conduct and cite the relevant rule or interpretation that would apply to it.

Accepted Answer

1.Rule 101.No violation if it is an hono

Question 5

Licenses to practice accounting are issued by the AICPA.

Accepted Answer

A) True 
 B)False

Question 6

An audit client hires a member of the audit engagement team to be its new controller.Sarbanes-Oxley rules require that:

Accepted Answer

A)  The new controller sever all relations with the CPA firm, including any retirement funds. 
B)  The new controller not take part in any discussions regarding the retention of the audit form. 
C)  The client find a new audit firm. 
D)  The client disclose the controller's relationship in the notes to the financial statements. 
A)  The new controller sever all relations with the CPA firm, including any retirement funds. 
B)  The new controller not take part in any discussions regarding the retention of the audit form. 
C)  The client find a new audit firm. 
D)  The client disclose the controller's relationship in the notes to the financial statements.

Question 7

A client has omitted a significant disclosure from the financial statements.The auditor has asked the client to include the information,but the client refuses and claims the information is confidential.The position of the CPA should be that the information

Accepted Answer

A)  Cannot be considered confidential if it is necessary to the completeness of the financial statements. 
B)  Cannot be considered confidential unless it can be covered by the attorney-client privilege. 
C)  Is confidential and will be disclosed only under subpoena or for a regulatory investigation. 
D)  Should be discussed with the audit committee to determine whether the information should be disclosed. 
A)  Cannot be considered confidential if it is necessary to the completeness of the financial statements. 
B)  Cannot be considered confidential unless it can be covered by the attorney-client privilege. 
C)  Is confidential and will be disclosed only under subpoena or for a regulatory investigation. 
D)  Should be discussed with the audit committee to determine whether the information should be disclosed.

Question 8

Members of the AICPA are held responsible for compliance with the Rules of Conduct by all persons associated with them in public practice,including employees and partners.

Accepted Answer

A) True 
 B)False

Question 9

The Code of Professional Conduct is very important for the auditing profession.The AICPA,state CPA boards,and other professional organizations spend a great deal of time and effort implementing and reinforcing the ethical standards as well as penalizing those who violate the ethical standards.
Required:
A. If the profession is to maintain the public trust and confidence, it must have standards that are visible to the public, and the profession must demonstrate an adherence to those standards. Without a set of minimum ethical standards, the profession might lose creditability in its opinions provided to financial statement users.
A. Why is the Code of Professional Conduct important to the profession?
B. In today's business environment, it may be more difficult to adhere to ethical standards than ever before. Many more investment options including pensions exist. It may not always be clear what some of the funds are investing in and the extent of these investments. In addition, as businesses become more complex, integrate more technology, and engage in more global business practices, it becomes more difficult for accountants to acquire the knowledge and skills required to meet the standard of competence. As the number of standards and the complexity increase, the adherence to standards becomes more difficult. Also, as business moves more quickly and corporations attempt to meet market expectations, the pressures placed on auditors to perform audits faster and achieve results in line with management expectations become greater.
B. Many professionals believe that in today's business environment it is more difficult to adhere to the Code of Professional Conduct than ever before. Why might this be true?

Accepted Answer

A.If the profession is to maintain the p

Question 10

A public accounting firm's independence is impaired when members of the audit engagement team does which of the following for a public company audit client?

Accepted Answer

A)  Prepares special purchase orders for active plutonium in secure national defense installations. 
B)  Completes operational internal audit assignments under the directions of the client's director of internal auditing. 
C)  Prepares outsourced internal audit work on the client's financial accounting control monitoring. 
D)  Prepares actuarial assumptions used by the client's actuaries for life insurance actuarial liability determination. 
E)  All of the above would impair the public accounting firm's independence. 
A)  Prepares special purchase orders for active plutonium in secure national defense installations. 
B)  Completes operational internal audit assignments under the directions of the client's director of internal auditing. 
C)  Prepares outsourced internal audit work on the client's financial accounting control monitoring. 
D)  Prepares actuarial assumptions used by the client's actuaries for life insurance actuarial liability determination. 
E)  All of the above would impair the public accounting firm's independence.

Question 11

For each of the following cases,indicate whether the action by a member CPA is a violation of the AICPA Code of Professional Conduct and cite the relevant rule.
A. Was a trustee of client's profit-sharing trust.
B. Accepted referral fees from local attorneys for nonattest clients with the clients' knowledge.
C. Performed an audit in accordance with GASB standards.
D. Advises a client to have an insurance review from a local insurance company in which the CPA has a material financial interest.
E. Promoted the CPA's tax service on local TV station.

Accepted Answer

The answer of For each of the following cases,indicate whether...

Question 12

In which of the following circumstances would a CPA who audits XZ Corporation lack independence?

Accepted Answer

A)  The CPA and XZ's president are both on the board of directors of COD Corporation. 
B)  Both the CPA and XZ's president own 25 percent of FOB Corporation, a closely held company. 
C)  The CPA has an automobile loan from XZ, a financial institution. The loan is collateralized by the automobile. 
D)  The CPA reduced XZ's usual audit fee by 40 percent prior to the audit because XZ's financial condition was unfavorable. 
A)  The CPA and XZ's president are both on the board of directors of COD Corporation. 
B)  Both the CPA and XZ's president own 25 percent of FOB Corporation, a closely held company. 
C)  The CPA has an automobile loan from XZ, a financial institution. The loan is collateralized by the automobile. 
D)  The CPA reduced XZ's usual audit fee by 40 percent prior to the audit because XZ's financial condition was unfavorable.

Question 13

The spirit of Rule 102 is that integrity and objectivity are required in connection with ____________________ professional services.

Accepted Answer

The answer of The spirit of Rule 102 is that...

Question 14

Confidential information is information that should not be disclosed to outside parties,even if demanded by a court.

Accepted Answer

A) True 
 B)False

Question 15

All CPAs are subject to the rules of conduct of the AICPA and state CPA societies.

Accepted Answer

A) True 
 B)False

Question 16

___________________,___________________,or ____________________ advertising is not in the public interest and is prohibited.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not included in Rule of Conduct 102,Integrity and Objectivity?

Accepted Answer

A)  Be prudent in assessment of facts. 
B)  Be free from conflict of interests. 
C)  Do not knowingly misrepresent facts. 
D)  Do not subordinate judgment to others. 
A)  Be prudent in assessment of facts. 
B)  Be free from conflict of interests. 
C)  Do not knowingly misrepresent facts. 
D)  Do not subordinate judgment to others.

Question 18

Which of the following agencies issues independence rules for the auditors of public companies?

Accepted Answer

A)  Financial Accounting Standards Board (FAS
B) . 
B)  Government Accountability Office (GAO). 
C)  Public Company Accounting Oversight Board (PCAO
B) . 
D)  AICPA Accounting and Review Services Committee (ARS
C) . 
A)  Financial Accounting Standards Board (FAS
B) . 
B)  Government Accountability Office (GAO). 
C)  Public Company Accounting Oversight Board (PCAO
B) . 
D)  AICPA Accounting and Review Services Committee (ARS
C) .

Question 19

Which of the following is not a key element of the definition of ethics?

Accepted Answer

A)  Reflective choice. 
B)  Moral principles. 
C)  Definitive conclusions. 
D)  Consequences of decisions. 
A)  Reflective choice. 
B)  Moral principles. 
C)  Definitive conclusions. 
D)  Consequences of decisions.

Question 20

Violet,CPA,audits Big Bank,a local financial institution.Which of the following would most likely impair Violet's independence with regard to Big Bank?

Accepted Answer

A)  A home loan with the value of the house exceeding the mortgage balance. 
B)  A car loan collateralized by the car. 
C)  A personal loan collateralized by cash deposits at Big Bank. 
D)  A Visa credit card issued by Big Bank with a balance of $2,500. 
A)  A home loan with the value of the house exceeding the mortgage balance. 
B)  A car loan collateralized by the car. 
C)  A personal loan collateralized by cash deposits at Big Bank. 
D)  A Visa credit card issued by Big Bank with a balance of $2,500.

According to the ethical standards of the profession,which of the following acts is generally prohibited?

Rule 201,General Standards,requires a member to comply with standards and interpretations.Which of the following is not a standard covered by Rule 201?

Which of the following "bodies designated by Council" have been authorized to promulgate general standards enforceable under Rule 201 of the AICPA Code of Professional Conduct?

For each of the following cases,indicate where the action or situation is a violation of the AICPA Code of Professional Conduct and cite the relevant rule or interpretation that would apply to it.

Licenses to practice accounting are issued by the AICPA.

An audit client hires a member of the audit engagement team to be its new controller.Sarbanes-Oxley rules require that:

A client has omitted a significant disclosure from the financial statements.The auditor has asked the client to include the information,but the client refuses and claims the information is confidential.The position of the CPA should be that the information

Members of the AICPA are held responsible for compliance with the Rules of Conduct by all persons associated with them in public practice,including employees and partners.

A public accounting firm's independence is impaired when members of the audit engagement team does which of the following for a public company audit client?

In which of the following circumstances would a CPA who audits XZ Corporation lack independence?

The spirit of Rule 102 is that integrity and objectivity are required in connection with ____________________ professional services.

Confidential information is information that should not be disclosed to outside parties,even if demanded by a court.

All CPAs are subject to the rules of conduct of the AICPA and state CPA societies.

_________,_,or ____________ advertising is not in the public interest and is prohibited.

Which of the following is not included in Rule of Conduct 102,Integrity and Objectivity?

Which of the following agencies issues independence rules for the auditors of public companies?

Which of the following is not a key element of the definition of ethics?

Violet,CPA,audits Big Bank,a local financial institution.Which of the following would most likely impair Violet's independence with regard to Big Bank?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Exam 14: Professional Ethics

According to the ethical standards of the profession,which of the following acts is generally prohibited?

Rule 201,General Standards,requires a member to comply with standards and interpretations.Which of the following is not a standard covered by Rule 201?

Which of the following "bodies designated by Council" have been authorized to promulgate general standards enforceable under Rule 201 of the AICPA Code of Professional Conduct?

For each of the following cases,indicate where the action or situation is a violation of the AICPA Code of Professional Conduct and cite the relevant rule or interpretation that would apply to it.

Licenses to practice accounting are issued by the AICPA.

An audit client hires a member of the audit engagement team to be its new controller.Sarbanes-Oxley rules require that:

A client has omitted a significant disclosure from the financial statements.The auditor has asked the client to include the information,but the client refuses and claims the information is confidential.The position of the CPA should be that the information

Members of the AICPA are held responsible for compliance with the Rules of Conduct by all persons associated with them in public practice,including employees and partners.

A public accounting firm's independence is impaired when members of the audit engagement team does which of the following for a public company audit client?

In which of the following circumstances would a CPA who audits XZ Corporation lack independence?

The spirit of Rule 102 is that integrity and objectivity are required in connection with ____________________ professional services.

Confidential information is information that should not be disclosed to outside parties,even if demanded by a court.

All CPAs are subject to the rules of conduct of the AICPA and state CPA societies.

___________________,___________________,or ____________________ advertising is not in the public interest and is prohibited.

Which of the following is not included in Rule of Conduct 102,Integrity and Objectivity?

Which of the following agencies issues independence rules for the auditors of public companies?

Which of the following is not a key element of the definition of ethics?

Violet,CPA,audits Big Bank,a local financial institution.Which of the following would most likely impair Violet's independence with regard to Big Bank?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

_________,_,or ____________ advertising is not in the public interest and is prohibited.