Question 1

The tendency for decision-makers to put more weight on information that is consistent with their initial beliefs or preferences is called the:

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 2

A young man by the name of Mr. Hicks works at an accounting firm which has a written ethics code of conduct. The code specifically outlines the duties and obligations that every employee must follow without question. One of rules states that every accountant should not lie under any circumstances.
Last week Mr. Hicks sent out a finalized tax return to the Wrong client. The Wrong client called Hicks and informed him that he was sending the tax return back to him overnight. Meanwhile the Right client called Hicks and wanted to know where the tax return was. Hicks told the Right client that he sent it to the wrong address and he will send out the return the next day. The Right client was irritated and called the partner of the firm.
The partner scolded Hicks and wanted to know why he told the client he sent the return to the wrong address. The partner said he should have told the client that the return was in the 2nd partner review or some other excuse to cover up the mistake. Hicks explained that the ethics code of conduct specifically states that he should not lie under any circumstances and he was just following his ethical duty. The partner grinned and told Hicks that the next time this happens he should consult with the partner first.
Using the ethical decision making model and ethical theories, justify the positions of the partner, Hicks or an alternative solution.

Accepted Answer

Hicks has attempted to be honest with th

Question 3

The principle of ethical behavior in the AICPA Code that asks questions directly related to ethical courage is:

Accepted Answer

A)  Independence 
B)  Objectivity 
C)  Integrity 
D)  Due care 
A)  Independence 
B)  Objectivity 
C)  Integrity 
D)  Due care

Question 4

Which of the following is NOT an outright restriction on providing nonattest services for an attest client?

Accepted Answer

A)  Tax services 
B)  Financial information systems design and implementation 
C)  Appraisal or valuation services 
D)  Internal audit outsourcing services 
A)  Tax services 
B)  Financial information systems design and implementation 
C)  Appraisal or valuation services 
D)  Internal audit outsourcing services

Question 5

CPAs in business face threats to independence just as CPAs in public practice. Which of the following threats do not exist for CPAs in business?

Accepted Answer

A)  Adverse interest threat 
B)  Advocacy threat 
C)  Self-interest threat 
D)  Management participation threat 
A)  Adverse interest threat 
B)  Advocacy threat 
C)  Self-interest threat 
D)  Management participation threat

Question 6

George has been asked by his audit client to provide income tax services including tax planning. Prior to providing such services, George should be certain that:

Accepted Answer

A)  He first completes the audit 
B)  He assesses threats to independence 
C)  The CEO pre-approves the performance of such services 
D)  The board of directors is informed about such services 
A)  He first completes the audit 
B)  He assesses threats to independence 
C)  The CEO pre-approves the performance of such services 
D)  The board of directors is informed about such services

Question 7

A conflict of interest exists when:

Accepted Answer

A)  A professional service or relationship creates a situation that might impair completion of the audit 
B)  A professional service or relationship creates a situation that might impair objective judgment 
C)  Professional skepticism fails to meet objective standards 
D)  All of the above 
A)  A professional service or relationship creates a situation that might impair completion of the audit 
B)  A professional service or relationship creates a situation that might impair objective judgment 
C)  Professional skepticism fails to meet objective standards 
D)  All of the above

Question 8

The KPMG Professional Judgment Framework defines judgment as:

Accepted Answer

A)  The process of reaching a decision or drawing a conclusion where there are a number of possible alternative solutions 
B)  The process of making a judgment where there are a number of possible virtues 
C)  The process of acting in accordance with the AICPA Code 
D)  The process of deciding when giving voice to one's values 
A)  The process of reaching a decision or drawing a conclusion where there are a number of possible alternative solutions 
B)  The process of making a judgment where there are a number of possible virtues 
C)  The process of acting in accordance with the AICPA Code 
D)  The process of deciding when giving voice to one's values

Question 9

Which of the following is NOT a safeguard to mitigate threats to compliance with the rules for CPAs in business or reduce them to an acceptable level?

Accepted Answer

A)  Independent external audit 
B)  Tone at the top 
C)  Independent audit committee 
D)  Whistleblower hot line 
A)  Independent external audit 
B)  Tone at the top 
C)  Independent audit committee 
D)  Whistleblower hot line

Question 10

During the investigations by the House Subcommittee on Oversight and Investigations, a question that was raised was:

Accepted Answer

A)  Why was fraud allowed to occur at some many companies? 
B)  Where was the board of directors in all these frauds? 
C)  Where were the auditors? 
D)  Why did the internal controls fail in so many frauds? 
A)  Why was fraud allowed to occur at some many companies? 
B)  Where was the board of directors in all these frauds? 
C)  Where were the auditors? 
D)  Why did the internal controls fail in so many frauds?

Question 11

Statement on Standards for Tax Services No. 1 establishes as a basic principle of providing tax services that the CPA:

Accepted Answer

A)  Must have a good faith belief that the tax return position will be accepted by the IRS 
B)  Must have a good faith belief that the tax return position has a realistic possibility of success if challenged by the IRS 
C)  Can never recommend a tax position to the client when it is more likely than not to be challenged by the IRS 
D)  Can never recommend a tax position to the client without disclosing it to the SEC 
A)  Must have a good faith belief that the tax return position will be accepted by the IRS 
B)  Must have a good faith belief that the tax return position has a realistic possibility of success if challenged by the IRS 
C)  Can never recommend a tax position to the client when it is more likely than not to be challenged by the IRS 
D)  Can never recommend a tax position to the client without disclosing it to the SEC

Question 12

Which of the following is NOT something the CPA should do in tax planning?

Accepted Answer

A)  Uncritically accept the client's explanations for assumptions and representations 
B)  Establish the relevant background facts 
C)  Consider the reasonableness of the assumptions and representations 
D)  Consider the business purpose and economic substance of the transaction, if relevant to the tax consequences of the transaction 
A)  Uncritically accept the client's explanations for assumptions and representations 
B)  Establish the relevant background facts 
C)  Consider the reasonableness of the assumptions and representations 
D)  Consider the business purpose and economic substance of the transaction, if relevant to the tax consequences of the transaction

Question 13

To whom does the CPA owe ultimate allegiance in carrying out professional obligations?

Accepted Answer

A)  Stockholders 
B)  Public interest 
C)  Client 
D)  Stakeholders 
A)  Stockholders 
B)  Public interest 
C)  Client 
D)  Stakeholders

Question 14

The Navistar International case examines:

Accepted Answer

A)  Whether Deloitte followed all provisions of the AICPA Code 
B)  Whether PwC followed all provisions of the AICPA Code 
C)  Recording of revenue in the proper period 
D)  Recording of round-trip transactions 
A)  Whether Deloitte followed all provisions of the AICPA Code 
B)  Whether PwC followed all provisions of the AICPA Code 
C)  Recording of revenue in the proper period 
D)  Recording of round-trip transactions

Question 15

The most significant change in the Revised AICPA Code of Professional Conduct is:

Accepted Answer

A)  A conceptual framework approach for evaluating ethics violations 
B)  The creation of three sections: one for members in public practice, members in business, and one for other members 
C)  Eliminating Code coverage for members in business 
D)  Clarifying that all CPAs must follow the Independence rule regardless of professional services 
A)  A conceptual framework approach for evaluating ethics violations 
B)  The creation of three sections: one for members in public practice, members in business, and one for other members 
C)  Eliminating Code coverage for members in business 
D)  Clarifying that all CPAs must follow the Independence rule regardless of professional services

Question 16

One reason independence in appearance is used to evaluate threats to independence is:

Accepted Answer

A)  Factual independence is based on unobservable matters 
B)  Independence in appearance links to other rules of conduct 
C)  Threats to independence can only be measured using a safeguards approach 
D)  Threats to independence always exist when perceptions indicate a conflict of interests may exist between the auditor and client 
A)  Factual independence is based on unobservable matters 
B)  Independence in appearance links to other rules of conduct 
C)  Threats to independence can only be measured using a safeguards approach 
D)  Threats to independence always exist when perceptions indicate a conflict of interests may exist between the auditor and client

Question 17

Commercialism versus Professionalism raises issues about:

Accepted Answer

A)  The future of the accounting profession 
B)  Pressures to compromise ethical values that exist in alternative practice structures 
C)  Low-ball bidding for audit services 
D)  Opinion shopping 
A)  The future of the accounting profession 
B)  Pressures to compromise ethical values that exist in alternative practice structures 
C)  Low-ball bidding for audit services 
D)  Opinion shopping

Question 18

Which rule of professional conduct in the AICPA Code does not apply both to internal and external accountants who are CPAs and members of the Institute?

Accepted Answer

A)  Independence 
B)  Integrity 
C)  Objectivity 
D)  Due care 
A)  Independence 
B)  Integrity 
C)  Objectivity 
D)  Due care

Question 19

The International Federation of Accountants (IFAC) Policy Position Paper #4, entitled A Public Interest Framework for the Accountancy Profession was designed to accomplish which of the following?

Accepted Answer

A)  To create an international CPA certificate. 
B)  To better evaluate whether the public interest is being served through actions of the profession. 
C)  Establish global corporate disclosure standards from an international perspective. 
D)  Develop guidelines for auditors to express professional judgment. 
A)  To create an international CPA certificate. 
B)  To better evaluate whether the public interest is being served through actions of the profession. 
C)  Establish global corporate disclosure standards from an international perspective. 
D)  Develop guidelines for auditors to express professional judgment.

The tendency for decision-makers to put more weight on information that is consistent with their initial beliefs or preferences is called the:

The principle of ethical behavior in the AICPA Code that asks questions directly related to ethical courage is:

Which of the following is NOT an outright restriction on providing nonattest services for an attest client?

CPAs in business face threats to independence just as CPAs in public practice. Which of the following threats do not exist for CPAs in business?

George has been asked by his audit client to provide income tax services including tax planning. Prior to providing such services, George should be certain that:

A conflict of interest exists when:

The KPMG Professional Judgment Framework defines judgment as:

Which of the following is NOT a safeguard to mitigate threats to compliance with the rules for CPAs in business or reduce them to an acceptable level?

During the investigations by the House Subcommittee on Oversight and Investigations, a question that was raised was:

Statement on Standards for Tax Services No. 1 establishes as a basic principle of providing tax services that the CPA:

Which of the following is NOT something the CPA should do in tax planning?

To whom does the CPA owe ultimate allegiance in carrying out professional obligations?

The Navistar International case examines:

The most significant change in the Revised AICPA Code of Professional Conduct is:

One reason independence in appearance is used to evaluate threats to independence is:

Commercialism versus Professionalism raises issues about:

Which rule of professional conduct in the AICPA Code does not apply both to internal and external accountants who are CPAs and members of the Institute?

The International Federation of Accountants (IFAC) Policy Position Paper #4, entitled A Public Interest Framework for the Accountancy Profession was designed to accomplish which of the following?

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

The tendency for decision-makers to put more weight on information that is consistent with their initial beliefs or preferences is called the:

The principle of ethical behavior in the AICPA Code that asks questions directly related to ethical courage is:

Which of the following is NOT an outright restriction on providing nonattest services for an attest client?

CPAs in business face threats to independence just as CPAs in public practice. Which of the following threats do not exist for CPAs in business?

George has been asked by his audit client to provide income tax services including tax planning. Prior to providing such services, George should be certain that:

A conflict of interest exists when:

The KPMG Professional Judgment Framework defines judgment as:

Which of the following is NOT a safeguard to mitigate threats to compliance with the rules for CPAs in business or reduce them to an acceptable level?

During the investigations by the House Subcommittee on Oversight and Investigations, a question that was raised was:

Statement on Standards for Tax Services No. 1 establishes as a basic principle of providing tax services that the CPA:

Which of the following is NOT something the CPA should do in tax planning?

To whom does the CPA owe ultimate allegiance in carrying out professional obligations?

The Navistar International case examines:

The most significant change in the Revised AICPA Code of Professional Conduct is:

One reason independence in appearance is used to evaluate threats to independence is:

Commercialism versus Professionalism raises issues about:

Which rule of professional conduct in the AICPA Code does not apply both to internal and external accountants who are CPAs and members of the Institute?

The International Federation of Accountants (IFAC) Policy Position Paper #4, entitled A Public Interest Framework for the Accountancy Profession was designed to accomplish which of the following?

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