Question 1

To prevent subordination of judgment, a CPA should evaluate threats to:

Accepted Answer

A)  Independence and Due Care 
B)  Objectivity and Integrity 
C)  Integrity and Due care 
D)  Independence and Scope of Services 
A)  Independence and Due Care 
B)  Objectivity and Integrity 
C)  Integrity and Due care 
D)  Independence and Scope of Services

Question 2

Describe the basic features of the Revised AICPA Code of Professional Conduct.

Accepted Answer

Emphasizes the public interest as the co

Question 3

The confidentiality standard in the AICPA code provides a blanket exception to the rule in each of the following situations except:

Accepted Answer

A)  In response to a validly issued court summons 
B)  To provide information to the PCAOB in its inspection process 
C)  To defend oneself in an ethics investigation 
D)  In response to a successor auditor's request 
A)  In response to a validly issued court summons 
B)  To provide information to the PCAOB in its inspection process 
C)  To defend oneself in an ethics investigation 
D)  In response to a successor auditor's request

Question 4

Why don't auditors prepare financial statements, as well as audit them?

Accepted Answer

A)  It would take away a job from the controller of the company 
B)  It would not eliminate errors in the financial statements 
C)  It would be a conflict of interest and violate ethical standards 
D)  It would not streamline the process and be effective 
A)  It would take away a job from the controller of the company 
B)  It would not eliminate errors in the financial statements 
C)  It would be a conflict of interest and violate ethical standards 
D)  It would not streamline the process and be effective

Question 5

The growth in consulting services raises questions about which professional obligation?

Accepted Answer

A)  Objectivity 
B)  Confidentiality 
C)  Competence 
D)  Conflicts of interest 
A)  Objectivity 
B)  Confidentiality 
C)  Competence 
D)  Conflicts of interest

Question 6

Personal values link to:

Accepted Answer

A)  Ethical judgment and motivation 
B)  Ethical motivation and action 
C)  Ethical sensitivity and action 
D)  Ethical sensitivity and judgment 
A)  Ethical judgment and motivation 
B)  Ethical motivation and action 
C)  Ethical sensitivity and action 
D)  Ethical sensitivity and judgment

Question 7

Why is professional judgment important in accounting?

Accepted Answer

Professional judgment is the basis for d

Question 8

Professional judgment is influenced by:

Accepted Answer

A)  Organizational values 
B)  Personal code of ethics 
C)  Cognitive biases 
D)  Organizational dissonance 
A)  Organizational values 
B)  Personal code of ethics 
C)  Cognitive biases 
D)  Organizational dissonance

Question 9

Impairments of independence can occur when:

Accepted Answer

A)  A CPA owns a direct financial interest in a client 
B)  A CPA owns a material indirect financial interest in a client 
C)  Immediate family members of the CPA are in violation of the independence rules 
D)  All of the above 
A)  A CPA owns a direct financial interest in a client 
B)  A CPA owns a material indirect financial interest in a client 
C)  Immediate family members of the CPA are in violation of the independence rules 
D)  All of the above

Question 10

One of the contributions of the Treadway Commission Report and the work of the Committee of Sponsoring Organizations (COSO) was:

Accepted Answer

A)  To establish a voluntary process for peer review 
B)  To identify red flags that might lead to fraud 
C)  To identify the tone at the top for management to create an ethical culture 
D)  To establish peer review requirements for CPAs 
A)  To establish a voluntary process for peer review 
B)  To identify red flags that might lead to fraud 
C)  To identify the tone at the top for management to create an ethical culture 
D)  To establish peer review requirements for CPAs

Question 11

Which of the following is NOT a component of the KPMG Professional Judgment Framework?

Accepted Answer

A)  Clarify issues and conclusions 
B)  Clarify issues and objectives 
C)  Gather and evaluate information 
D)  Articulate and document rationale 
A)  Clarify issues and conclusions 
B)  Clarify issues and objectives 
C)  Gather and evaluate information 
D)  Articulate and document rationale

Question 12

Tax avoidance transactions are often called:

Accepted Answer

A)  Earnings management 
B)  Tax shelters 
C)  Employee fraud 
D)  Attest services 
A)  Earnings management 
B)  Tax shelters 
C)  Employee fraud 
D)  Attest services

Question 13

One of the differences between the ethical obligations of CPAs and lawyers is:

Accepted Answer

A)  Lawyers are obligated first and foremost to the public interest while CPAs are obligated to their clients' interests 
B)  Lawyers are obligated first and foremost to the client's interest while CPAs are obligated to the public interest 
C)  Lawyers and CPAs both must be independent of their clients 
D)  Lawyers and CPAs must exercise objective judgment 
A)  Lawyers are obligated first and foremost to the public interest while CPAs are obligated to their clients' interests 
B)  Lawyers are obligated first and foremost to the client's interest while CPAs are obligated to the public interest 
C)  Lawyers and CPAs both must be independent of their clients 
D)  Lawyers and CPAs must exercise objective judgment

Question 14

Diane is a CFO at We Do What We Want, Inc. She was just instructed by her boss, the CEO, to accelerate the recording of revenue into an earlier year to meet financial analysts' earnings projections. In order to meet the ethical standards of the accounting profession, Diane must be certain that she:

Accepted Answer

A)  Blows the whistle on the financial wrongdoing 
B)  Reports the matter to the SEC 
C)  Informs the external auditors 
D)  Works through the chain of command within the company to avoid subordinating judgment 
A)  Blows the whistle on the financial wrongdoing 
B)  Reports the matter to the SEC 
C)  Informs the external auditors 
D)  Works through the chain of command within the company to avoid subordinating judgment

Question 15

Safeguards implemented by the attest client include each of the following except:

Accepted Answer

A)  Proper oversight by client management 
B)  Management participation in the client by the attest firm 
C)  Policies and procedures to address ethical conduct 
D)  The tone at the top set by executive management 
A)  Proper oversight by client management 
B)  Management participation in the client by the attest firm 
C)  Policies and procedures to address ethical conduct 
D)  The tone at the top set by executive management

Question 16

Ethics rules in the AICPA Code apply to:

Accepted Answer

A)  Individual CPAs who are licensed by state boards of accountancy only 
B)  Individual CPAs who are licensed by state boards of accountancy and accounting firms 
C)  Licensed accounting firms and certain members of alternative practice structures 
D)  Individual CPAs who are licensed by state boards of accountancy, licensed accounting firms, and certain members of alternative practice structures 
A)  Individual CPAs who are licensed by state boards of accountancy only 
B)  Individual CPAs who are licensed by state boards of accountancy and accounting firms 
C)  Licensed accounting firms and certain members of alternative practice structures 
D)  Individual CPAs who are licensed by state boards of accountancy, licensed accounting firms, and certain members of alternative practice structures

Question 17

EY partner Pamela Hartford violated Independence Rules when:

Accepted Answer

A)  She prepared financial statements and provided attest services for her audit client 
B)  She identified the firm's protective covenants are reasonable in scope. 
C)  She refused to maintain adequate records and documents. 
D)  She maintained a personal relationship with a member of company management. 
A)  She prepared financial statements and provided attest services for her audit client 
B)  She identified the firm's protective covenants are reasonable in scope. 
C)  She refused to maintain adequate records and documents. 
D)  She maintained a personal relationship with a member of company management.

Question 18

The ethical issue in the Beauda Medical case is:

Accepted Answer

A)  Whether an audit firm should inform one audit client about malfunctioning equipment at another client that the former plans to buy 
B)  Whether an audit firm should inform one audit client about fraudulent financial statements of another client 
C)  Whether certain expenditures should be capitalized rather than expensed 
D)  Whether revenue should be accelerated into an earlier period 
A)  Whether an audit firm should inform one audit client about malfunctioning equipment at another client that the former plans to buy 
B)  Whether an audit firm should inform one audit client about fraudulent financial statements of another client 
C)  Whether certain expenditures should be capitalized rather than expensed 
D)  Whether revenue should be accelerated into an earlier period

Question 19

An example of a self-review threat is:

Accepted Answer

A)  Establishing and maintaining the internal controls for the client 
B)  Preparing source documents used to generate the client's financial statements 
C)  Promoting the client's securities through investment banking activities 
D)  Borrowing money from the client 
A)  Establishing and maintaining the internal controls for the client 
B)  Preparing source documents used to generate the client's financial statements 
C)  Promoting the client's securities through investment banking activities 
D)  Borrowing money from the client

Question 20

Describe the characteristics of the KPMG Professional Judgment Framework.

Accepted Answer

KPMG developed a framework of the elemen

To prevent subordination of judgment, a CPA should evaluate threats to:

Describe the basic features of the Revised AICPA Code of Professional Conduct.

The confidentiality standard in the AICPA code provides a blanket exception to the rule in each of the following situations except:

Why don't auditors prepare financial statements, as well as audit them?

The growth in consulting services raises questions about which professional obligation?

Personal values link to:

Why is professional judgment important in accounting?

Professional judgment is influenced by:

Impairments of independence can occur when:

One of the contributions of the Treadway Commission Report and the work of the Committee of Sponsoring Organizations (COSO) was:

Which of the following is NOT a component of the KPMG Professional Judgment Framework?

Tax avoidance transactions are often called:

One of the differences between the ethical obligations of CPAs and lawyers is:

Diane is a CFO at We Do What We Want, Inc. She was just instructed by her boss, the CEO, to accelerate the recording of revenue into an earlier year to meet financial analysts' earnings projections. In order to meet the ethical standards of the accounting profession, Diane must be certain that she:

Safeguards implemented by the attest client include each of the following except:

Ethics rules in the AICPA Code apply to:

EY partner Pamela Hartford violated Independence Rules when:

The ethical issue in the Beauda Medical case is:

An example of a self-review threat is:

Describe the characteristics of the KPMG Professional Judgment Framework.

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Organizational Ethics and Corporate Governance

Fraud in Financial Statements and Auditor Responsibilities

Legal, Regulatory, and Professional Obligations of Auditors

Earnings Management

Ethical Leadership and Decision-Making in Accounting

Filters

Exam 4: Ethics and Professional Judgment in Accounting

To prevent subordination of judgment, a CPA should evaluate threats to:

Describe the basic features of the Revised AICPA Code of Professional Conduct.

The confidentiality standard in the AICPA code provides a blanket exception to the rule in each of the following situations except:

Why don't auditors prepare financial statements, as well as audit them?

The growth in consulting services raises questions about which professional obligation?

Personal values link to:

Why is professional judgment important in accounting?

Professional judgment is influenced by:

Impairments of independence can occur when:

One of the contributions of the Treadway Commission Report and the work of the Committee of Sponsoring Organizations (COSO) was:

Which of the following is NOT a component of the KPMG Professional Judgment Framework?

Tax avoidance transactions are often called:

One of the differences between the ethical obligations of CPAs and lawyers is:

Diane is a CFO at We Do What We Want, Inc. She was just instructed by her boss, the CEO, to accelerate the recording of revenue into an earlier year to meet financial analysts' earnings projections. In order to meet the ethical standards of the accounting profession, Diane must be certain that she:

Safeguards implemented by the attest client include each of the following except:

Ethics rules in the AICPA Code apply to:

EY partner Pamela Hartford violated Independence Rules when:

The ethical issue in the Beauda Medical case is:

An example of a self-review threat is:

Describe the characteristics of the KPMG Professional Judgment Framework.

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Organizational Ethics and Corporate Governance

Fraud in Financial Statements and Auditor Responsibilities

Legal, Regulatory, and Professional Obligations of Auditors

Earnings Management

Ethical Leadership and Decision-Making in Accounting

Filters