Exam 11: Conflicts of Interest

A CPA provides services to two clients in the same industry. Both clients have been informed of this fact and have acknowledged their approval in writing. As a result:

The concept of "discounting," in the context of accountant conflicts of interest, means that:

A CPA provides professional services to several businesses in its community. One such client is Primetime Bank, the largest bank in town, and another client is Aeropenetics, Inc., a large aerospace manufacturer. Aeropenetics, Inc. has a large outstanding loan balance owed to Primetime Bank, and it lately has been experiencing severe liquidity problems. Aeropenetics is a privately-held company and its liquidity problems are not generally known to the public or to Primetime Bank. In preparing the Allowance for Uncollectible Loans account for Primetime Bank, the CPA must decide whether or not to take into account Aeropenetics' liquidity problems. It learned of these liquidity problems during the course of preparing cash flow budgets for Aeropenetics. a. What ethical principles are relevant to the CPA's decision? b. What court cases are relevant to the CPA's decision? c. What decision should the CPA reach?

If a conflict of interest arises during the course of providing professional services, a professional accountant:

A CPA's duty to be free of conflicts of interest is most closely related to the AICPA Code of Professional Conduct's Principle of:

An accountant's conflict of interest:

Due to the conflict of interest rules, a CPA may:

A CPA performs tax advisory services, but it does not provide tax return preparation services. For this CPA, the most significant conflict of interest that is likely to arise is between:

A CPA usually charges $3,000 to prepare a corporate income tax return, including all supplemental schedules. This CPA has agreed to charge the CFO of a mid-size corporation only $10 to prepare the CPA's personal tax return and $5,000 to prepare the corporation's tax return. This CPA:

If a CPA leaves a job in public accounting to commence work as a member of a company's internal accounting staff, this CPA:

Refer to the above question. After learning that one of the three shareholders has a need for increased dividend cash flow immediately, the CPA should:

An Oklahoma CPA provides management advisory services to a large public utility that provides electrical power throughout Oklahoma and is the only supplier of electricity to residential users in Oklahoma. The CPA has been asked to prepare a request for a utility rate increase that will be submitted to state regulators for their approval. The CPA:

A CPA has been asked by an engaged couple to help them budget the amount that they can afford to spend on their upcoming wedding. Both the groom and the bride approached the CPA together and met with him together. The CPA has no prior relationship with either of these individuals. The groom and the bride each have agreed to pay one-half of the CPA's fees. The CPA:

Many companies adopt policies that preclude key employees from owning stock in company suppliers. Companies establish this type of policy to:

The IFAC code of conduct recognizes the concept of "implied consent." Implied consent, in the context of conflicts of interest, means that:

When a CPA leaves her job working as an IRS Revenue Agent to accept a job in the Tax Department of a public accounting firm, she primarily:

An accountant and a prospective client are contemplating entering into a professional relationship in which the accountant will provide monthly bookkeeping services and annual tax return preparation services for this client's hair salon. The accountant's teenage daughter told this prospective client that her father is "an amazing accountant," which facilitated the professional introduction. The accountant's daughter works for this prospective client as a receptionist. In all likelihood, the accountant:

What is "implied consent," in the context of conflicts of interest?

When can a CPA provide services to all partners in a client partnership? When can it not provide services to all client partners without obtaining their consent?