Exam 3: Judgmental and Ethical Decision-Making Frameworks and Associated Professional Standards

Audit committees should consider all factors that might affect the independence of which of the following:

(Multiple Choice)

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Question 21

Which of the following represents a situation in which an auditor is independent of the client?

(Multiple Choice)

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Question 22

Direct ownership in a client's business must be material to the CPA's investment portfolio in order to violate the independence rule.

(True/False)

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Question 23

Commissions and referral fees are allowed to audit firms as long as the fees are disclosed to the client's board and audit committee.

(True/False)

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Question 24

Rule 201 of the General Standards of the Code of Professional Conduct defines professional competence in which of the following ways?

(Multiple Choice)

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Question 25

A member of the AICPA must safeguard the confidentiality of client information.Auditors,however,must disclose information to non-clients for the following reasons except to:

(Multiple Choice)

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Question 26

Contingent fees are prohibited for any client for which the auditor performs attestation services.

(True/False)

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Question 27

Independence Discuss what audit independence is and why it is important to the audit firm and the profession.What are some major threats to audit firm independence and what are some of the steps that audit firms and the profession have taken in addressing those threats?

(Essay)

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Question 28

AICPA Code of Professional Conduct,Rule 101 Livingston and Associates is a CPA firm in Las Vegas,Nevada and it performs the financial statement audit for Smith Plastics,Inc.For each non-related situation below,determine if each individual represented is independent of Smith Plastics and if Livingston and Associates (the Firm)is independent of Smith Plastics: A.Sam Livingston, an audit paitner, meets Jill $W$ amer, $C F O$ of Sminth Plastics after the engagement begins and they fall in love. Sam and Jill mary in Lake T ahoe, California a short time later. Sam Livingston will not be on the auclit engagement team of Smith Plastics. B.The Firm hires Billy Messer as a staff auditor. Billy is aware that hisfather has a material investment in Smith Plastics. Billy will no work on the Smith Plastics audit. C.Lucy Brown is an audit manager at the Firm. Bob, her high school aged son, owns $1 \%$ of the equity of Smith Plastics. The investment is not material to Bob or Lucy's net worth. Lucy is assigned as the aucht manager for the Smith Plastics engagement. D. Sinith Plastics has paid all but $\$ 5,000$ of the previous ye ars audit fees. E.Julie Simpson, tax partner at the Firm has a 401k plan with multiple securities maling up the balance. One of the securities in the plan is that of Smith Plastic swhich comprises .05\% of the total balance of Julie's $401 \mathrm{k}$ . Julie does not have a significant portion of her retirement or savings in this particular plan

(Essay)

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Question 29

Professional judgment involves applying relevant professional knowledge and experience to unique and potentially uncertain facts and circumstances in order to reach a conclusion or make a decision.

(True/False)

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Question 30

The auditor is permitted to violate the confidentiality rule in providing relevant information to an inquiry by a major shareholder of the client.

(True/False)

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Question 31

An auditor that has an attitude that includes a questioning mind and a critical assessment of audit evidence is considered which of the following?

(Multiple Choice)

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Question 32

Which of the following is included in the AICPA Code of Professional Conduct?

(Multiple Choice)

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Question 33

Which of the following describes a situation in which moral duties or obligations conflict and one action is not necessarily the correct action?

(Multiple Choice)

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Question 34

Under the AICPA definition,who among the following would not be considered a covered member?

(Multiple Choice)

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Question 35

A CPA may only practice public accounting in which of the following forms?

(Multiple Choice)

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Question 36

A contingency fee is where no fee will be charged unless a specified finding or result is attained.

(True/False)

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Question 37

The SEC is concerned with situations between an auditor and a public company that allow the auditor to act as management of the client.

(True/False)

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Question 38

A CPA firm is not considered independent when it performs which of the following services for a publicly traded audit client?

(Multiple Choice)

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Question 39

Individual state boards of accountancy and state societies of CPAs have mostly adopted Rules of Conduct established by the AICPA.

(True/False)

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Question 40

Showing 21 - 40 of 90

Audit committees should consider all factors that might affect the independence of which of the following:

Which of the following represents a situation in which an auditor is independent of the client?

Direct ownership in a client's business must be material to the CPA's investment portfolio in order to violate the independence rule.

Commissions and referral fees are allowed to audit firms as long as the fees are disclosed to the client's board and audit committee.

Rule 201 of the General Standards of the Code of Professional Conduct defines professional competence in which of the following ways?

A member of the AICPA must safeguard the confidentiality of client information.Auditors,however,must disclose information to non-clients for the following reasons except to:

Contingent fees are prohibited for any client for which the auditor performs attestation services.

Independence Discuss what audit independence is and why it is important to the audit firm and the profession.What are some major threats to audit firm independence and what are some of the steps that audit firms and the profession have taken in addressing those threats?

Professional judgment involves applying relevant professional knowledge and experience to unique and potentially uncertain facts and circumstances in order to reach a conclusion or make a decision.

The auditor is permitted to violate the confidentiality rule in providing relevant information to an inquiry by a major shareholder of the client.

An auditor that has an attitude that includes a questioning mind and a critical assessment of audit evidence is considered which of the following?

Which of the following is included in the AICPA Code of Professional Conduct?

Which of the following describes a situation in which moral duties or obligations conflict and one action is not necessarily the correct action?

Under the AICPA definition,who among the following would not be considered a covered member?

A CPA may only practice public accounting in which of the following forms?

A contingency fee is where no fee will be charged unless a specified finding or result is attained.

The SEC is concerned with situations between an auditor and a public company that allow the auditor to act as management of the client.

A CPA firm is not considered independent when it performs which of the following services for a publicly traded audit client?

Individual state boards of accountancy and state societies of CPAs have mostly adopted Rules of Conduct established by the AICPA.

Auditing: Integral to the Economy

Corporate Governance and Audits

Audit Risk,business Risk,and Audit Planning

Internal Control Over Financial Reporting

Performing an Integrated Audit

A Framework for Audit Evidence

Tools Used in Gathering Audit Evidence

Auditing for Fraud

Auditing Revenue and Related Accounts

Audit of Acquisition and Payment Cycle and Inventory

Audit of Cash and Other Liquid Assets

Audit of Long-Lived Assets and Related Expense Accounts

Audit of Longer-Term Liabilities, equity, acquisitions, and Related-Entity Transactions, long-Term Liabilities, and Equity

Ensuring Audit Quality in Completing the Audit

Auditors Reports

Professional Liability

Advanced Topics Concerning Complex Audit Judgments

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