Question 1

The deep pocket theory represents a misunderstanding whereby shareholders mistakenly believe that they are entitled to recover losses on investments for which the auditor provided an unqualified opinion on the financial statements.

Accepted Answer

A) True 
 B)False

Question 2

Confidentiality is the cornerstone of the auditing profession.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Loans between the auditor and the client are permitted in some circumstances.

Accepted Answer

A) True 
 B)False

Question 5

Understanding contingent fees
A.Define the term "contingent fee."
B.Explain the circumstances under which a CPA may and may not accept a contingent fee.

Accepted Answer

The answer of Understanding contingent fees
A.Define the term "contingent fee."
B.Explain...

Question 6

The Principles of the AICPA Code of Professional Conduct are aspiration in nature; only the Rules of Conduct and their Interpretations are enforceable against members.

Accepted Answer

A) True 
 B)False

Question 7

Under Rule 201,what best describes how an AIPCA member should act?

Accepted Answer

A) With professional competence. 
B) With due professional care. 
C) After adequate planning and with appropriate supervision. 
D) All of the above

Exam 4: Professional Liability and the Need for Quality Auditor Judgments and Ethical Decisions

The deep pocket theory represents a misunderstanding whereby shareholders mistakenly believe that they are entitled to recover losses on investments for which the auditor provided an unqualified opinion on the financial statements.

Confidentiality is the cornerstone of the auditing profession.

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

Loans between the auditor and the client are permitted in some circumstances.

Understanding contingent fees A.Define the term "contingent fee." B.Explain the circumstances under which a CPA may and may not accept a contingent fee.

The Principles of the AICPA Code of Professional Conduct are aspiration in nature; only the Rules of Conduct and their Interpretations are enforceable against members.

Under Rule 201,what best describes how an AIPCA member should act?