Question 1

Under the "Joint Ethics Enforcement Program" (JEEP), the jurisdictional groups may act independently or jointly.

Accepted Answer

A) True 
 B)False

Question 2

Which one of the following points out that members are often asked to render professional services to clients of third parties who may have obtained the clients as the result of their own advertising and solicitation efforts?

Accepted Answer

A)  Interpretation 502-3 
B)  Interpretation 502-2 
C)  Interpretation 502-4 
D)  Interpretation 502-5 
E)  Interpretation 502-1 
A)  Interpretation 502-3 
B)  Interpretation 502-2 
C)  Interpretation 502-4 
D)  Interpretation 502-5 
E)  Interpretation 502-1

Question 3

Within the context of the AICPA's Code of Professional Conduct, the "public interest" is defined as the collective well being of the community of people and institutions served by CPAs.

Accepted Answer

A) True 
 B)False

Question 4

The code of Professional Conduct has six ethical principles. List those principles and define each one.

Accepted Answer

1.Responsibilities: Members shoul

Question 5

To be meaningful, codes of ethics should be above the law but below the ideal.

Accepted Answer

A) True 
 B)False

Question 6

When the client is a financial institution, and the loan is made under normal lending conditions, which of the following loan types would be considered a violation of the independence rule?

Accepted Answer

A)  home mortgages that are a material percent of the appraised value of the property 
B)  direct loans that are not material in relation to the borrower's net worth 
C)  unsecured loans obtained by the member and guaranteed by her firm 
D)  loans of any type, as there are no exceptions to this rule 
E)  indirect loans that are not material in relation to the borrower's net worth 
A)  home mortgages that are a material percent of the appraised value of the property 
B)  direct loans that are not material in relation to the borrower's net worth 
C)  unsecured loans obtained by the member and guaranteed by her firm 
D)  loans of any type, as there are no exceptions to this rule 
E)  indirect loans that are not material in relation to the borrower's net worth

Question 7

In order for a gift from a client to impair independence, it would have to be material in relation to the assets of the client.

Accepted Answer

A) True 
 B)False

Question 8

During the 1990's there has been an increase in the percentage of consulting services provided by the Large CPA firms.

Accepted Answer

A) True 
 B)False

Question 9

Match between columns
                        Premises: Explains circumstances in which independence may be considered to be impaired as a result of litigation or the expressed intention to commence litigation.
Provides guidance on how various alternatives to “traditional structures” effect independence due to changes in the manner in which CPAs are structuring their practices.
Addresses financial interests and business relationships that impair independence.
A member issuing a report on a governmental client’s general purpose financial statements generally must be independent of the client, but independence is not required with respect to a related organization if the client is not financially accountable for the organization and the required disclosure does not include financial information.
Provides guidance when a member is asked to serve as an honorary or trustee for an attest client.
Independence will generally be considered to be impaired if, during the period of a professional engagement or at the time of expressing an opinion, a member’s firm had any joint business activity with the client that was material to the CPA’s firm or to the client.
Provides guidance on independence for engagements that are more limited in scope than an audit of general purpose financial statements.
Explains various ways in which a financial interest in a nonclient that has a significant influence on a client may impair independence with respect to a client.
Outlines important responsibility the client’s management must take in order to preserve independence.

Accepted Answer

The Answer of 101-1 and 101-2 and 101-3 and 101-4 is...

Question 10

The CPA Vision Project identified five core values associated with the CPA profession. Which one of the following is not one of the five core values.

Accepted Answer

A)  Integrity. 
B)  Objectivity 
C)  Competence. 
D)  Consistency 
E)  Continuing education and lifelong learning. 
A)  Integrity. 
B)  Objectivity 
C)  Competence. 
D)  Consistency 
E)  Continuing education and lifelong learning.

Question 11

Reflecting concern over the effect management consulting services (MCS) provided to an audit client may have on independence, the following are now prohibited:

Accepted Answer

A)  all MCS for audit clients 
B)  certain MCS for audit clients 
C)  certain MCS for SEC audit clients 
D)  all MCS for SEC audit clients 
E)  all MCS for publicly-held audit clients 
A)  all MCS for audit clients 
B)  certain MCS for audit clients 
C)  certain MCS for SEC audit clients 
D)  all MCS for SEC audit clients 
E)  all MCS for publicly-held audit clients

Question 12

In which one of the following situations would independence not be impaired?

Accepted Answer

A)  direct financial interest in a partnership that invests in a client 
B)  stock owned in client is put in a trust created as an education fund for the member's minor child 
C)  attorney/CPA provides legal service as general counsel for an auditing client 
D)  membership held in a trade association that is a client; member does not serve in a management capacity 
E)  full participation in the managerial decision-making process of an audit client 
A)  direct financial interest in a partnership that invests in a client 
B)  stock owned in client is put in a trust created as an education fund for the member's minor child 
C)  attorney/CPA provides legal service as general counsel for an auditing client 
D)  membership held in a trade association that is a client; member does not serve in a management capacity 
E)  full participation in the managerial decision-making process of an audit client

Question 13

Rule 203 ─ Accounting Principles applies to:

Accepted Answer

A)  audits of GAAP-based financial statements. 
B)  all attest services with GAAP-based financial statements. 
C)  all services with GAAP-based financial statements. 
D)  all services with GAAP and GAAS. 
E)  all services for which standards have been promulgated regarding GAAP, including engagements to report on a comprehensive basis of accounting other than GAAP. . 
A)  audits of GAAP-based financial statements. 
B)  all attest services with GAAP-based financial statements. 
C)  all services with GAAP-based financial statements. 
D)  all services with GAAP and GAAS. 
E)  all services for which standards have been promulgated regarding GAAP, including engagements to report on a comprehensive basis of accounting other than GAAP. .

Question 14

Which one of the following Interpretations of Rule 101 on Independence explains specific exceptions to a general rule?

Accepted Answer

A)  101-5 - Loans from financial institution clients and related terminology 
B)  101-2 - Former practitioners and firm independence 
C)  101-13 - Extended audit services 
D)  101-3 - Accounting services 
E)  101-4 - Honorary directorships and trusteeships of not-for-profit organizations 
A)  101-5 - Loans from financial institution clients and related terminology 
B)  101-2 - Former practitioners and firm independence 
C)  101-13 - Extended audit services 
D)  101-3 - Accounting services 
E)  101-4 - Honorary directorships and trusteeships of not-for-profit organizations

Question 15

Rule 503 in the AICPA's Code of Professional Conduct prohibits commissions and referral fees from:

Accepted Answer

A)  any client. 
B)  audit clients. 
C)  attest clients. 
D)  accounting clients. 
E)  attest clients and some accounting clients. 
A)  any client. 
B)  audit clients. 
C)  attest clients. 
D)  accounting clients. 
E)  attest clients and some accounting clients.

Question 16

Under the automatic disciplinary provision of the bylaws, suspension results when the Secretary of the Institute is notified that a judgment or conviction has been imposed on a member for a crime punishable by imprisonment for more than two years.

Accepted Answer

A) True 
 B)False

Question 17

In order to maintain the appearance of independence, covered members are prohibited from many activities. Please provide the four prohibited activities.

Accepted Answer

1.Covered members cannot have a direct,

Question 18

The main purpose of the "Joint Ethics Enforcement Program" (JEEP) is to:

Accepted Answer

A)  coordinate efforts among the AICPA, state societies and the SEC. 
B)  make enforcement of the Rules more effective and disciplinary action more uniform. 
C)  shift the role of enforcement to the AICPA. 
D)  shift the role of enforcement to the state societies. 
E)  shift the role of enforcement to the state boards. 
A)  coordinate efforts among the AICPA, state societies and the SEC. 
B)  make enforcement of the Rules more effective and disciplinary action more uniform. 
C)  shift the role of enforcement to the AICPA. 
D)  shift the role of enforcement to the state societies. 
E)  shift the role of enforcement to the state boards.

Question 19

The thirteen current Interpretations of Rule 101 are listed below. Place the following numbers in the spaces provided: $$\begin{array} { l l l } 
101 - 1 & 101 - 5 & 101 - 12 \
101 - 2 & 101 - 6 & 101 - 13 \
101 - 3 & 101 - 8 & 101 - 14 \
101 - 4 & 101 - 11 &
\end{array}$$ 
1.Explains circumstances in which independence may be considered to be
impaired as a result of litigation or the expressed intention to commence litigation.
2.Provides guidance on how various alternatives to "traditional structures" effect
independence due to changes in the manner in which CPAs are structuring their practices.
3.Addresses financial interests and business relationships that impair
independence.
4.A member issuing a report on a governmental client's general purpose financial
statements generally must be independent of the client, but independence is not required with respect to a related organization if the client is not financially accountable for the organization and the required disclosure does not include financial information.
5.Provides guidance when a member is asked to serve as an honorary or trustee
for an attest client.
6.Independence will generally be considered to be impaired if, during the period
of a professional engagement or at the time of expressing an opinion, a member's firm had any joint business activity with the client that was material to the CPA's firm or to the client.
7.Provides guidance on independence for engagements that are more limited in
scope than an audit of general purpose financial statements.
8.Explains various ways in which a financial interest in a nonclient that has a
significant influence on a client may impair independence with respect to a client.
9.Outlines important responsibility the client's management must take in order to
preserve independence.
10.Explains some specific exceptions to the general rule concerning the situation in
which a member has a loan to or from the enterprise or any officer, director, or principal stockholder of the enterprise.
11.Addresses circumstances in which the activities of a former partner or
shareholder of an auditing firm would impair the firm's independence.

Accepted Answer

1.101-6
4.101-10
7.101-11
11.1

Question 20

The unpaid fees ruling would not apply to:

Accepted Answer

A)  unbilled fees. 
B)  fees for nonaudit services. 
C)  fees outstanding from a client in bankruptcy. 
D)  unbilled fees from a client that has recently emerged from bankruptcy. 
E)  fees outstanding from a client that has performed a troubled debt restructure. 
A)  unbilled fees. 
B)  fees for nonaudit services. 
C)  fees outstanding from a client in bankruptcy. 
D)  unbilled fees from a client that has recently emerged from bankruptcy. 
E)  fees outstanding from a client that has performed a troubled debt restructure.

Under the "Joint Ethics Enforcement Program" (JEEP), the jurisdictional groups may act independently or jointly.

Which one of the following points out that members are often asked to render professional services to clients of third parties who may have obtained the clients as the result of their own advertising and solicitation efforts?

Within the context of the AICPA's Code of Professional Conduct, the "public interest" is defined as the collective well being of the community of people and institutions served by CPAs.

The code of Professional Conduct has six ethical principles. List those principles and define each one.

To be meaningful, codes of ethics should be above the law but below the ideal.

When the client is a financial institution, and the loan is made under normal lending conditions, which of the following loan types would be considered a violation of the independence rule?

In order for a gift from a client to impair independence, it would have to be material in relation to the assets of the client.

During the 1990's there has been an increase in the percentage of consulting services provided by the Large CPA firms.

The CPA Vision Project identified five core values associated with the CPA profession. Which one of the following is not one of the five core values.

Reflecting concern over the effect management consulting services (MCS) provided to an audit client may have on independence, the following are now prohibited:

In which one of the following situations would independence not be impaired?

Rule 203 ─ Accounting Principles applies to:

Which one of the following Interpretations of Rule 101 on Independence explains specific exceptions to a general rule?

Rule 503 in the AICPA's Code of Professional Conduct prohibits commissions and referral fees from:

Under the automatic disciplinary provision of the bylaws, suspension results when the Secretary of the Institute is notified that a judgment or conviction has been imposed on a member for a crime punishable by imprisonment for more than two years.

In order to maintain the appearance of independence, covered members are prohibited from many activities. Please provide the four prohibited activities.

The main purpose of the "Joint Ethics Enforcement Program" (JEEP) is to:

The unpaid fees ruling would not apply to:

Auditing and the Public Accounting

Financial Statement Audits and

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Audit Sampling in Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Auditing Investments and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters

Exam 3: Professional Ethics

Under the "Joint Ethics Enforcement Program" (JEEP), the jurisdictional groups may act independently or jointly.

Which one of the following points out that members are often asked to render professional services to clients of third parties who may have obtained the clients as the result of their own advertising and solicitation efforts?

Within the context of the AICPA's Code of Professional Conduct, the "public interest" is defined as the collective well being of the community of people and institutions served by CPAs.

The code of Professional Conduct has six ethical principles. List those principles and define each one.

To be meaningful, codes of ethics should be above the law but below the ideal.

When the client is a financial institution, and the loan is made under normal lending conditions, which of the following loan types would be considered a violation of the independence rule?

In order for a gift from a client to impair independence, it would have to be material in relation to the assets of the client.

During the 1990's there has been an increase in the percentage of consulting services provided by the Large CPA firms.

The CPA Vision Project identified five core values associated with the CPA profession. Which one of the following is not one of the five core values.

Reflecting concern over the effect management consulting services (MCS) provided to an audit client may have on independence, the following are now prohibited:

In which one of the following situations would independence not be impaired?

Rule 203 ─ Accounting Principles applies to:

Which one of the following Interpretations of Rule 101 on Independence explains specific exceptions to a general rule?

Rule 503 in the AICPA's Code of Professional Conduct prohibits commissions and referral fees from:

Under the automatic disciplinary provision of the bylaws, suspension results when the Secretary of the Institute is notified that a judgment or conviction has been imposed on a member for a crime punishable by imprisonment for more than two years.

In order to maintain the appearance of independence, covered members are prohibited from many activities. Please provide the four prohibited activities.

The main purpose of the "Joint Ethics Enforcement Program" (JEEP) is to:

The unpaid fees ruling would not apply to:

Auditing and the Public Accounting

Financial Statement Audits and

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Audit Sampling in Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Auditing Investments and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters