Question 1

Which of the following would probably not be considered an "act discreditable to the profession"?

Accepted Answer

A)  Numerous moving traffic violations. 
B)  Failing to file the CPA's own tax return. 
C)  Filing a fraudulent tax return for a client in a severe financial difficulty. 
D)  Refusing to hire Asian Americans in an accounting practice. 
A)  Numerous moving traffic violations. 
B)  Failing to file the CPA's own tax return. 
C)  Filing a fraudulent tax return for a client in a severe financial difficulty. 
D)  Refusing to hire Asian Americans in an accounting practice.

Question 2

When a client's financial statements contain a material departure from an FASB Statement on Accounting Standards and the public accounting firm believes the departure is necessary to ensure that the statements are not misleading,

Accepted Answer

A)  The public accounting firm must qualify the auditors' report for a departure from GAAP. 
B)  The public accounting firm can explain why the departure is necessary and then give an unqualified opinion paragraph in the auditors' report. 
C)  The public accounting firm must give an adverse auditors' report. 
D)  The public accounting firm can give the standard unqualified auditors' report with an unqualified opinion paragraph. 
A)  The public accounting firm must qualify the auditors' report for a departure from GAAP. 
B)  The public accounting firm can explain why the departure is necessary and then give an unqualified opinion paragraph in the auditors' report. 
C)  The public accounting firm must give an adverse auditors' report. 
D)  The public accounting firm can give the standard unqualified auditors' report with an unqualified opinion paragraph.

Question 3

An auditor recommends a local computer company to a client that is trying to upgrade its computerized sales records.The client purchases $25,000 worth of equipment and sends a check to the auditor for 5 percent of the total sales.This is an example of a

Accepted Answer

A)  Commission. 
B)  Contingent fee. 
C)  Referral fee. 
D)  Nonaudit fee. 
A)  Commission. 
B)  Contingent fee. 
C)  Referral fee. 
D)  Nonaudit fee.

Question 4

To which group can a CPA provide audit documentation without being subpoenaed and without the client's consent?

Accepted Answer

A)  The IRS. 
B)  The FASB. 
C)  Another CPA firm performing a peer review. 
D)  Another CPA firm considering the purchase of the auditing firm. 
A)  The IRS. 
B)  The FASB. 
C)  Another CPA firm performing a peer review. 
D)  Another CPA firm considering the purchase of the auditing firm.

Question 5

The AICPA Council has designated the following bodies to pronounce accounting principles under Rule 203 except the

Accepted Answer

A)  Financial Accounting Standards Board. 
B)  Auditing Procedures Board. 
C)  Accounting Principles Board. 
D)  Governmental Accounting Standards Board. 
A)  Financial Accounting Standards Board. 
B)  Auditing Procedures Board. 
C)  Accounting Principles Board. 
D)  Governmental Accounting Standards Board.

Question 6

General standards Rule 201 prohibits the acceptance of any engagement that the CPA knowingly cannot handle.

Accepted Answer

A) True 
 B)False

Question 7

Audit independence in fact is most clearly lost when

Accepted Answer

A)  A public accounting firm audits competitor companies in the same industry (e.g., Coca-Cola and Pepsi). 
B)  An auditor agrees to the argument of the client's financial vice president that deferring losses on debt refinancing is in accordance with generally accepted accounting principles. 
C)  An audit team fails to discover the client's misleading omission of disclosure about permanent impairment of asset values. 
D)  A public accounting firm issues a standard unqualified report, but the reviewing partner fails to notice that the assistant's observation of inventory was woefully incomplete. 
A)  A public accounting firm audits competitor companies in the same industry (e.g., Coca-Cola and Pepsi). 
B)  An auditor agrees to the argument of the client's financial vice president that deferring losses on debt refinancing is in accordance with generally accepted accounting principles. 
C)  An audit team fails to discover the client's misleading omission of disclosure about permanent impairment of asset values. 
D)  A public accounting firm issues a standard unqualified report, but the reviewing partner fails to notice that the assistant's observation of inventory was woefully incomplete.

Question 8

Which of the following is not one of the AICPA Principles of Professional Conduct?

Accepted Answer

A)  Responsibility. 
B)  Reliability. 
C)  Objectivity. 
D)  Due care. 
A)  Responsibility. 
B)  Reliability. 
C)  Objectivity. 
D)  Due care.

Question 9

Auditors are interested in having independence in appearance because

Accepted Answer

A)  They want to impress the public with their independence in fact. 
B)  They want the public at large to have confidence in the profession. 
C)  They need to comply with the Performance Principle of GAAS. 
D)  Audits should be planned and properly supervised. 
A)  They want to impress the public with their independence in fact. 
B)  They want the public at large to have confidence in the profession. 
C)  They need to comply with the Performance Principle of GAAS. 
D)  Audits should be planned and properly supervised.

Question 10

Rule 503 permits commission type fees for all types of services.

Accepted Answer

A) True 
 B)False

Question 11

Based on Sarbanes-Oxley,who is ultimately responsible for the independence of the external auditor?

Accepted Answer

A)  The CPA firm's engagement partner. 
B)  The CPA firm's quality control partner. 
C)  The client's senior management. 
D)  The audit committee. 
A)  The CPA firm's engagement partner. 
B)  The CPA firm's quality control partner. 
C)  The client's senior management. 
D)  The audit committee.

Question 12

CPA Krogstad is the executive in charge of the Omaha office of the audit firm.He is responsible for the practice in all areas of audit,tax,and consulting,but he does not serve as a field audit partner or a reviewer.CPA Ward is the partner in charge of the Dodger,Inc.audit (an SEC filing).The audit firm's independence is impaired if:

Accepted Answer

A)  Krogstad owns Dodger common stock. 
B)  Krogstad's brother owns 10 shares of Dodger common stock. 
C)  Ward's sister-in-law is a sales representative with a territory in California. 
D)  Ward's fellow partner CPA Felix in the Omaha office has a wife who owns Dodger stock through a mutual fund held in her own employer's employee benefit plan. 
A)  Krogstad owns Dodger common stock. 
B)  Krogstad's brother owns 10 shares of Dodger common stock. 
C)  Ward's sister-in-law is a sales representative with a territory in California. 
D)  Ward's fellow partner CPA Felix in the Omaha office has a wife who owns Dodger stock through a mutual fund held in her own employer's employee benefit plan.

Question 13

Discipline of the members of a professional association is carried out by peers.

Accepted Answer

A) True 
 B)False

Question 14

The interpretation of Rule 501,Acts Discreditable to the Profession,would not include

Accepted Answer

A)  Membership in an activist political party. 
B)  Withholding of a client's books until a professional fee is paid. 
C)  Failure to follow government audit standards in government audits. 
D)  Authorization for others to make misleading entries in records. 
A)  Membership in an activist political party. 
B)  Withholding of a client's books until a professional fee is paid. 
C)  Failure to follow government audit standards in government audits. 
D)  Authorization for others to make misleading entries in records.

Question 15

________________________________ is information that should not be disclosed to outside parties unless demanded by a court._____________________________ cannot be demanded,even by a court.

Accepted Answer

Confidenti

Question 16

Ethics in the imperative sense is a function of moral rules and principles,not a situation specific calculation of the consequences.

Accepted Answer

A) True 
 B)False

Question 17

The Sarbanes-Oxley Act of 2002 limits the engagement of and concurring audit partners on an engagement to four-year terms.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is true?

Accepted Answer

A)  Members of an audit engagement team cannot speak with audit client officers about matters outside the scope of the audit while the audit engagement is in progress. 
B)  Audit team members who leave the public accounting firm for employment with audit clients can provide audit efficiencies (next year) because they are very familiar with the firm's audit plans. 
C)  Audit team partners who leave the public accounting firm for employment with audit clients can retain variable annuity retirement accounts established in the person's former firm retirement plan. 
D)  The public accounting firm must discuss with the audit client's board or its audit committee the independence implications of the client's having hired the audit engagement team manager as its financial vice president. 
A)  Members of an audit engagement team cannot speak with audit client officers about matters outside the scope of the audit while the audit engagement is in progress. 
B)  Audit team members who leave the public accounting firm for employment with audit clients can provide audit efficiencies (next year) because they are very familiar with the firm's audit plans. 
C)  Audit team partners who leave the public accounting firm for employment with audit clients can retain variable annuity retirement accounts established in the person's former firm retirement plan. 
D)  The public accounting firm must discuss with the audit client's board or its audit committee the independence implications of the client's having hired the audit engagement team manager as its financial vice president.

Question 19

Which of the following defines the imperative principle of ethics?

Accepted Answer

A)  Ethic decisions cannot be resolved without evaluating all possible outcomes of all choices. 
B)  Ethics are a function of moral rules and principles. 
C)  All ethical decisions will have positive and negative consequences. 
D)  It is essential that ethical decisions be made for the greater good of society. 
A)  Ethic decisions cannot be resolved without evaluating all possible outcomes of all choices. 
B)  Ethics are a function of moral rules and principles. 
C)  All ethical decisions will have positive and negative consequences. 
D)  It is essential that ethical decisions be made for the greater good of society.

Question 20

The AICPA Code of Professional Conduct contains two basic sections: _______________________ and ________________________.

Accepted Answer

Principles of Profes

Which of the following would probably not be considered an "act discreditable to the profession"?

When a client's financial statements contain a material departure from an FASB Statement on Accounting Standards and the public accounting firm believes the departure is necessary to ensure that the statements are not misleading,

An auditor recommends a local computer company to a client that is trying to upgrade its computerized sales records.The client purchases $25,000 worth of equipment and sends a check to the auditor for 5 percent of the total sales.This is an example of a

To which group can a CPA provide audit documentation without being subpoenaed and without the client's consent?

The AICPA Council has designated the following bodies to pronounce accounting principles under Rule 203 except the

General standards Rule 201 prohibits the acceptance of any engagement that the CPA knowingly cannot handle.

Audit independence in fact is most clearly lost when

Which of the following is not one of the AICPA Principles of Professional Conduct?

Auditors are interested in having independence in appearance because

Rule 503 permits commission type fees for all types of services.

Based on Sarbanes-Oxley,who is ultimately responsible for the independence of the external auditor?

Discipline of the members of a professional association is carried out by peers.

The interpretation of Rule 501,Acts Discreditable to the Profession,would not include

____ is information that should not be disclosed to outside parties unless demanded by a court._ cannot be demanded,even by a court.

Ethics in the imperative sense is a function of moral rules and principles,not a situation specific calculation of the consequences.

The Sarbanes-Oxley Act of 2002 limits the engagement of and concurring audit partners on an engagement to four-year terms.

Which of the following is true?

Which of the following defines the imperative principle of ethics?

The AICPA Code of Professional Conduct contains two basic sections: _ and __.

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

Which of the following would probably not be considered an "act discreditable to the profession"?

When a client's financial statements contain a material departure from an FASB Statement on Accounting Standards and the public accounting firm believes the departure is necessary to ensure that the statements are not misleading,

An auditor recommends a local computer company to a client that is trying to upgrade its computerized sales records.The client purchases $25,000 worth of equipment and sends a check to the auditor for 5 percent of the total sales.This is an example of a

To which group can a CPA provide audit documentation without being subpoenaed and without the client's consent?

The AICPA Council has designated the following bodies to pronounce accounting principles under Rule 203 except the

General standards Rule 201 prohibits the acceptance of any engagement that the CPA knowingly cannot handle.

Audit independence in fact is most clearly lost when

Which of the following is not one of the AICPA Principles of Professional Conduct?

Auditors are interested in having independence in appearance because

Rule 503 permits commission type fees for all types of services.

Based on Sarbanes-Oxley,who is ultimately responsible for the independence of the external auditor?

Discipline of the members of a professional association is carried out by peers.

The interpretation of Rule 501,Acts Discreditable to the Profession,would not include

________________________________ is information that should not be disclosed to outside parties unless demanded by a court._____________________________ cannot be demanded,even by a court.

Ethics in the imperative sense is a function of moral rules and principles,not a situation specific calculation of the consequences.

The Sarbanes-Oxley Act of 2002 limits the engagement of and concurring audit partners on an engagement to four-year terms.

Which of the following is true?

Which of the following defines the imperative principle of ethics?

The AICPA Code of Professional Conduct contains two basic sections: _______________________ and ________________________.

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

____ is information that should not be disclosed to outside parties unless demanded by a court._ cannot be demanded,even by a court.

The AICPA Code of Professional Conduct contains two basic sections: _ and __.