Question 1

An unacceptable threat to independence occurs when a CPA performs nonaudit services for an audit client unless the CPA:

Accepted Answer

A)  Assumes all management responsibilities 
B)  Accepts management's responsibility for the services 
C)  Evaluates the adequacy of the services 
D)  Evaluates the results of the services 
A)  Assumes all management responsibilities 
B)  Accepts management's responsibility for the services 
C)  Evaluates the adequacy of the services 
D)  Evaluates the results of the services

Question 2

The PCAOB was formed and instituted a mandatory quality inspection program. What has been the average audit deficiency rate range since the program started?

Accepted Answer

A)  5 to 9% 
B)  10% to 19% 
C)  20 to 29% 
D)  30 to 40% 
A)  5 to 9% 
B)  10% to 19% 
C)  20 to 29% 
D)  30 to 40%

Question 3

Discuss how professional skepticism relates to conducting a proper audit and meeting ethical obligations under the AICPA Code.

Accepted Answer

Professional skepticism includes being a

Question 4

A common requirement/effect of the commissions and contingent fees rule is:

Accepted Answer

A)  A CPA who accepts such a payment always violates independence 
B)  The CPA must disclose the acceptance of such a payment to the firm 
C)  A CPA is prohibited from accepting such a form of payment when engaged in attest services for a client 
D)  The CPA must not turn over any working papers that might constitute client books and records 
A)  A CPA who accepts such a payment always violates independence 
B)  The CPA must disclose the acceptance of such a payment to the firm 
C)  A CPA is prohibited from accepting such a form of payment when engaged in attest services for a client 
D)  The CPA must not turn over any working papers that might constitute client books and records

Question 5

The PCAOB rules prohibit auditors from:

Accepted Answer

A)  Providing certain aggressive tax shelters to their public company audit clients 
B)  Providing tax services to members of the audit client's management who serve in financial reporting oversight roles 
C)  Providing tax preparation and planning services for public company executives 
D)  All of the above 
A)  Providing certain aggressive tax shelters to their public company audit clients 
B)  Providing tax services to members of the audit client's management who serve in financial reporting oversight roles 
C)  Providing tax preparation and planning services for public company executives 
D)  All of the above

Question 6

Which of the following is NOT an example of a conflict situation for CPAs in business that may lead to subordination of judgment?

Accepted Answer

A)  Making or permitting or directing another party to make, materially false and misleading entries in an entity's financial statements or records 
B)  Failing to correct the entity's financial statements or records that are materially false and misleading when the CPA has the authority to record the entries 
C)  Signing, or permitting or directing another to sign, a document containing materially false and misleading information. 
D)  Preparing the financial statements and auditing the same work 
A)  Making or permitting or directing another party to make, materially false and misleading entries in an entity's financial statements or records 
B)  Failing to correct the entity's financial statements or records that are materially false and misleading when the CPA has the authority to record the entries 
C)  Signing, or permitting or directing another to sign, a document containing materially false and misleading information. 
D)  Preparing the financial statements and auditing the same work

Question 7

Under the Sarbanes-Oxley Act, the auditor's responsibility with respect to internal controls can best be stated as:

Accepted Answer

A)  Develop a system of internal controls that help to prevent and detect fraud 
B)  Assess whether the internal controls help to prevent and detect fraud 
C)  Assess management's report on internal controls 
D)  Prepare a report on internal controls to be provided to management 
A)  Develop a system of internal controls that help to prevent and detect fraud 
B)  Assess whether the internal controls help to prevent and detect fraud 
C)  Assess management's report on internal controls 
D)  Prepare a report on internal controls to be provided to management

Question 8

The BDO Seidman v. Hirschberg, 93 N.Y.2d 382 case focuses on:

Accepted Answer

A)  Whether merger and acquisition services should be provided for an audit client. 
B)  Whether a firm's protective covenants are reasonable in scope. 
C)  Whether adequate records and documents are maintained. 
D)  Whether personal relationships between company management and external auditors is allowed. 
A)  Whether merger and acquisition services should be provided for an audit client. 
B)  Whether a firm's protective covenants are reasonable in scope. 
C)  Whether adequate records and documents are maintained. 
D)  Whether personal relationships between company management and external auditors is allowed.

Question 9

Ethical conflicts for CPAs in business can occur when:

Accepted Answer

A)  Obstacles exist to complying with professional and legal standards 
B)  Relationships exist with vendors 
C)  Threats from higher levels of management create constraints to providing accurate and reliable financial statements 
D)  All of the above 
A)  Obstacles exist to complying with professional and legal standards 
B)  Relationships exist with vendors 
C)  Threats from higher levels of management create constraints to providing accurate and reliable financial statements 
D)  All of the above

Question 10

Why do CPAs have to be aware of ethical conflicts in performing professional services and which rules of conduct are most directly affected by the evaluation? How do CPAs assess risks due to ethical conflicts and possible impairments of the rules?

Accepted Answer

Under the Revised Code, when evaluating

Question 11

A CPA can accept a gift from a client as long as:

Accepted Answer

A)  Adequate safeguards exist to prevent any threats to compliance with the Integrity and Objectivity rule 
B)  Adequate internal controls exist in the client entity to ensure gifts are made without any pre-conditions 
C)  The amount is below what is considered to be a material payment 
D)  Audit services are not provided to the client 
A)  Adequate safeguards exist to prevent any threats to compliance with the Integrity and Objectivity rule 
B)  Adequate internal controls exist in the client entity to ensure gifts are made without any pre-conditions 
C)  The amount is below what is considered to be a material payment 
D)  Audit services are not provided to the client

Question 12

Professional skepticism links to professional judgment through the ethical standards of:

Accepted Answer

A)  Independent thought, objectivity, and intelligence 
B)  Objectivity, intelligence, and reflective thought 
C)  Independent thought, objectivity, and due care 
D)  Honesty, integrity, and due care 
A)  Independent thought, objectivity, and intelligence 
B)  Objectivity, intelligence, and reflective thought 
C)  Independent thought, objectivity, and due care 
D)  Honesty, integrity, and due care

Question 13

The Family Games case deals with the following accounting issue:

Accepted Answer

A)  Whether an audit firm should inform one audit client about fraudulent financial statements of another client 
B)  Whether certain expenditures should be capitalized rather than expensed 
C)  Whether revenue should be accelerated into an earlier period 
D)  Whether depreciation should be reduced by 20 percent to increase earnings 
A)  Whether an audit firm should inform one audit client about fraudulent financial statements of another client 
B)  Whether certain expenditures should be capitalized rather than expensed 
C)  Whether revenue should be accelerated into an earlier period 
D)  Whether depreciation should be reduced by 20 percent to increase earnings

Question 14

An example of a management participation threat is:

Accepted Answer

A)  Establishing and maintaining the budget for audit completion 
B)  Establishing and maintaining internal controls for the client 
C)  Initiating litigation against the client 
D)  Preparing source documents used to generate the client's financial statements 
A)  Establishing and maintaining the budget for audit completion 
B)  Establishing and maintaining internal controls for the client 
C)  Initiating litigation against the client 
D)  Preparing source documents used to generate the client's financial statements

Question 15

A CPA can accept a contingent fee in providing tax services for an attest client if:

Accepted Answer

A)  The CPA discloses this fact to the tax client 
B)  The CPA receives the permission of the client to accept such a form of payment 
C)  The CPA's tax services will be reviewed by a taxing authority 
D)  All of the above 
A)  The CPA discloses this fact to the tax client 
B)  The CPA receives the permission of the client to accept such a form of payment 
C)  The CPA's tax services will be reviewed by a taxing authority 
D)  All of the above

Question 16

An alternative practice structure can best be described as:

Accepted Answer

A)  A form of ownership where a CPA firm owns a public company and audits that company 
B)  A form of structure where a public company provides nonattest services for a client that is also provided with attest services by an affiliate of the public company 
C)  A form of structure where a CPA firm provides nonattest services for a client that is also provided with attest services by a public company 
D)  A form of structure other than LLP and LLC 
A)  A form of ownership where a CPA firm owns a public company and audits that company 
B)  A form of structure where a public company provides nonattest services for a client that is also provided with attest services by an affiliate of the public company 
C)  A form of structure where a CPA firm provides nonattest services for a client that is also provided with attest services by a public company 
D)  A form of structure other than LLP and LLC

Question 17

Independence may be impaired when a partner leaves an audit firm and is subsequently employed by the client if:

Accepted Answer

A)  That partner is in a position to influence the management's decisions with respect to the audit 
B)  That partner is in a position to influence the accounting firm's operations 
C)  That partner serves on the board of directors of the client 
D)  Amounts due the former partner are not material to the firm 
A)  That partner is in a position to influence the management's decisions with respect to the audit 
B)  That partner is in a position to influence the accounting firm's operations 
C)  That partner serves on the board of directors of the client 
D)  Amounts due the former partner are not material to the firm

Question 18

Jacob just joined the firm of Gordon & Towns LLC. Prior to beginning his first group audit assignment, Jacob asks to meet with his mentor, Isaac. He asks Isaac how making judgments in an audit team setting differs from running an audit oneself. What is the best advice for Isaac to give to Jacob?

Accepted Answer

A)  They are not the same 
B)  Groups are not prone to judgment traps and biases 
C)  Groups are prone to making quick decisions in order to avoid conflict 
D)  Good judgment principles apply only in group settings since other are involved 
A)  They are not the same 
B)  Groups are not prone to judgment traps and biases 
C)  Groups are prone to making quick decisions in order to avoid conflict 
D)  Good judgment principles apply only in group settings since other are involved

Question 19

Which of the following is NOT a common judgment tendency?

Accepted Answer

A)  Availability tendency 
B)  Confirmation tendency 
C)  Overconfidence tendency 
D)  Decision making tendency 
A)  Availability tendency 
B)  Confirmation tendency 
C)  Overconfidence tendency 
D)  Decision making tendency

Question 20

What is the purpose of the confidentiality rules in the AICPA Code? Describe the specific provisions and when confidentiality requirements might be waived.

Accepted Answer

The confidentiality of information gaine

An unacceptable threat to independence occurs when a CPA performs nonaudit services for an audit client unless the CPA:

The PCAOB was formed and instituted a mandatory quality inspection program. What has been the average audit deficiency rate range since the program started?

Discuss how professional skepticism relates to conducting a proper audit and meeting ethical obligations under the AICPA Code.

A common requirement/effect of the commissions and contingent fees rule is:

The PCAOB rules prohibit auditors from:

Which of the following is NOT an example of a conflict situation for CPAs in business that may lead to subordination of judgment?

Under the Sarbanes-Oxley Act, the auditor's responsibility with respect to internal controls can best be stated as:

The BDO Seidman v. Hirschberg, 93 N.Y.2d 382 case focuses on:

Ethical conflicts for CPAs in business can occur when:

Why do CPAs have to be aware of ethical conflicts in performing professional services and which rules of conduct are most directly affected by the evaluation? How do CPAs assess risks due to ethical conflicts and possible impairments of the rules?

A CPA can accept a gift from a client as long as:

Professional skepticism links to professional judgment through the ethical standards of:

The Family Games case deals with the following accounting issue:

An example of a management participation threat is:

A CPA can accept a contingent fee in providing tax services for an attest client if:

An alternative practice structure can best be described as:

Independence may be impaired when a partner leaves an audit firm and is subsequently employed by the client if:

Jacob just joined the firm of Gordon & Towns LLC. Prior to beginning his first group audit assignment, Jacob asks to meet with his mentor, Isaac. He asks Isaac how making judgments in an audit team setting differs from running an audit oneself. What is the best advice for Isaac to give to Jacob?

Which of the following is NOT a common judgment tendency?

What is the purpose of the confidentiality rules in the AICPA Code? Describe the specific provisions and when confidentiality requirements might be waived.

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

An unacceptable threat to independence occurs when a CPA performs nonaudit services for an audit client unless the CPA:

The PCAOB was formed and instituted a mandatory quality inspection program. What has been the average audit deficiency rate range since the program started?

Discuss how professional skepticism relates to conducting a proper audit and meeting ethical obligations under the AICPA Code.

A common requirement/effect of the commissions and contingent fees rule is:

The PCAOB rules prohibit auditors from:

Which of the following is NOT an example of a conflict situation for CPAs in business that may lead to subordination of judgment?

Under the Sarbanes-Oxley Act, the auditor's responsibility with respect to internal controls can best be stated as:

The BDO Seidman v. Hirschberg, 93 N.Y.2d 382 case focuses on:

Ethical conflicts for CPAs in business can occur when:

Why do CPAs have to be aware of ethical conflicts in performing professional services and which rules of conduct are most directly affected by the evaluation? How do CPAs assess risks due to ethical conflicts and possible impairments of the rules?

A CPA can accept a gift from a client as long as:

Professional skepticism links to professional judgment through the ethical standards of:

The Family Games case deals with the following accounting issue:

An example of a management participation threat is:

A CPA can accept a contingent fee in providing tax services for an attest client if:

An alternative practice structure can best be described as:

Independence may be impaired when a partner leaves an audit firm and is subsequently employed by the client if:

Jacob just joined the firm of Gordon & Towns LLC. Prior to beginning his first group audit assignment, Jacob asks to meet with his mentor, Isaac. He asks Isaac how making judgments in an audit team setting differs from running an audit oneself. What is the best advice for Isaac to give to Jacob?

Which of the following is NOT a common judgment tendency?

What is the purpose of the confidentiality rules in the AICPA Code? Describe the specific provisions and when confidentiality requirements might be waived.

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