Question 1

What are the six Ethical Principles stated in the Code of Professional Conduct?
 Briefly discuss each principle.Are these principles enforceable?

Accepted Answer

The six Ethical Principles of the Code o

Question 2

Companies are required to disclose in their proxy statement or annual filings with the SEC the total amount of audit and non-audit fees paid to the audit firm for the two most recent years.Which of the following is not one of the categories of fees that must be disclosed?

Accepted Answer

A) tax fees 
B) consulting fees 
C) audit-related fees 
D) all other fees 
A) tax fees 
B) consulting fees 
C) audit-related fees 
D) all other fees

Question 3

If an action is considered legal,it must also be considered ethical.

Accepted Answer

A) True 
 B)False

Question 4

The Conceptual Framework for AICPA Independence Standards can be used when making decisions on ethical matters not explicitly addressed in the Code.

Accepted Answer

A) True 
 B)False

Question 5

One of the main reasons people act unethically is that they choose to act selfishly.

Accepted Answer

A) True 
 B)False

Question 6

The AICPA's Code of Professional Conduct requires CPAs to maintain the confidentiality of client information.This rule would be violated if a CPA disclosed information without a client's consent as a result of a

Accepted Answer

A) subpoena or summons. 
B) peer review. 
C) complaint filed with the trial board of the Institute. 
D) request by a client's largest stockholder. 
A) subpoena or summons. 
B) peer review. 
C) complaint filed with the trial board of the Institute. 
D) request by a client's largest stockholder.

Question 7

Under the interpretations to the AICPA Code,independence is considered to be impaired if fees remain unpaid for professional services provided more than six months before the date of the current year's report.

Accepted Answer

A) True 
 B)False

Question 8

Ethical frameworks help identify the ethical issues and will always lead to the appropriate course of action.

Accepted Answer

A) True 
 B)False

Question 9

In the AICPA Code of Professional Conduct,the sixth principle of professional conduct,entitled "Scope and Nature of Services," applies to members of the AICPA who work in public practice,business,government,or education.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a True statement regarding the enforcement mechanism for CPA conduct?

Accepted Answer

A) The PCAOB has the authority to investigate and discipline registered public accounting firms. 
B) All disciplinary action by the AICPA must go through the Joint Trial Board. 
C) Disciplinary actions taken by the AICPA are not disclosed to the public. 
D) Only a few states have adopted the AICPA rules of conduct. 
A) The PCAOB has the authority to investigate and discipline registered public accounting firms. 
B) All disciplinary action by the AICPA must go through the Joint Trial Board. 
C) Disciplinary actions taken by the AICPA are not disclosed to the public. 
D) Only a few states have adopted the AICPA rules of conduct.

Question 11

The members of a client's "audit committee" should be

Accepted Answer

A) members of management. 
B) directors who are not a part of company management. 
C) non-directors and non-managers. 
D) directors and managers. 
A) members of management. 
B) directors who are not a part of company management. 
C) non-directors and non-managers. 
D) directors and managers.

Question 12

A CPA performs bookkeeping services for a client and then performs an audit of those financial statements.This is an example of a ________ threat.

Accepted Answer

A) familiarity 
B) self-interest 
C) self-review 
D) management participation 
A) familiarity 
B) self-interest 
C) self-review 
D) management participation

Question 13

Which of the following statements is True when the CPA has been engaged to perform an audit of financial statements?

Accepted Answer

A) The CPA firm is engaged and paid by the client;therefore,the firm has primary responsibility to be an advocate for the client. 
B) The CPA firm is engaged and paid by the client,but the primary beneficiaries of the audit are those who rely on the financial statements. 
C) Should a situation arise where there is no convincing authoritative standard available,and there is a choice of actions which could impact a client's financial statements,the CPA is free to endorse the choice which is in the investors' interests. 
D) The CPA firm has primary responsibility to the FASB. 
A) The CPA firm is engaged and paid by the client;therefore,the firm has primary responsibility to be an advocate for the client. 
B) The CPA firm is engaged and paid by the client,but the primary beneficiaries of the audit are those who rely on the financial statements. 
C) Should a situation arise where there is no convincing authoritative standard available,and there is a choice of actions which could impact a client's financial statements,the CPA is free to endorse the choice which is in the investors' interests. 
D) The CPA firm has primary responsibility to the FASB.

Question 14

CPA firms are required to be independent when performing any professional service.

Accepted Answer

A) True 
 B)False

Question 15

A rationalization method that can easily result in unethical behavior is the argument that "everybody does it."

Accepted Answer

A) True 
 B)False

Question 16

CPAs are prohibited from which of the following forms of advertising?

Accepted Answer

A) self-laudatory advertising 
B) celebrity endorsement advertising 
C) use of trade names,such as "Awesome Auditors" 
D) use of phrases,such as "Guaranteed largest tax refunds in town!" 
A) self-laudatory advertising 
B) celebrity endorsement advertising 
C) use of trade names,such as "Awesome Auditors" 
D) use of phrases,such as "Guaranteed largest tax refunds in town!"

Question 17

Interpretations of the AICPA Code of Professional Conduct are dominated by the concept of

Accepted Answer

A) independence. 
B) compliance with standards. 
C) accounting. 
D) acts discreditable to the profession. 
A) independence. 
B) compliance with standards. 
C) accounting. 
D) acts discreditable to the profession.

Question 18

Under Sarbanes-Oxley,the audit committee of a public company

Accepted Answer

A) must meet on a monthly basis. 
B) must be comprised entirely of financial experts. 
C) is responsible for the oversight of the work of the independent auditor. 
D) should have at least one independent member. 
A) must meet on a monthly basis. 
B) must be comprised entirely of financial experts. 
C) is responsible for the oversight of the work of the independent auditor. 
D) should have at least one independent member.

Question 19

The provisions of the Sarbanes-Oxley Act are most likely to allow which of the following non-audit services for audit clients?

Accepted Answer

A) appraisal or valuation services (e.g.,pension,post-employment benefit liabilities) 
B) financial information systems design and implementation 
C) internal audit outsourcing 
D) tax consulting 
A) appraisal or valuation services (e.g.,pension,post-employment benefit liabilities) 
B) financial information systems design and implementation 
C) internal audit outsourcing 
D) tax consulting

Question 20

The CPA must not subordinate his or her professional judgment to that of others in any

Accepted Answer

A) engagement. 
B) audit engagement. 
C) engagement excluding tax services. 
D) engagement where the opinion of a specialist is used. 
A) engagement. 
B) audit engagement. 
C) engagement excluding tax services. 
D) engagement where the opinion of a specialist is used.

Exam 4: Professional Ethics

What are the six Ethical Principles stated in the Code of Professional Conduct? Briefly discuss each principle.Are these principles enforceable?

Companies are required to disclose in their proxy statement or annual filings with the SEC the total amount of audit and non-audit fees paid to the audit firm for the two most recent years.Which of the following is not one of the categories of fees that must be disclosed?

If an action is considered legal,it must also be considered ethical.

The Conceptual Framework for AICPA Independence Standards can be used when making decisions on ethical matters not explicitly addressed in the Code.

One of the main reasons people act unethically is that they choose to act selfishly.

The AICPA's Code of Professional Conduct requires CPAs to maintain the confidentiality of client information.This rule would be violated if a CPA disclosed information without a client's consent as a result of a

Under the interpretations to the AICPA Code,independence is considered to be impaired if fees remain unpaid for professional services provided more than six months before the date of the current year's report.

Ethical frameworks help identify the ethical issues and will always lead to the appropriate course of action.

In the AICPA Code of Professional Conduct,the sixth principle of professional conduct,entitled "Scope and Nature of Services," applies to members of the AICPA who work in public practice,business,government,or education.

Which of the following is a True statement regarding the enforcement mechanism for CPA conduct?

The members of a client's "audit committee" should be

A CPA performs bookkeeping services for a client and then performs an audit of those financial statements.This is an example of a ________ threat.

Which of the following statements is True when the CPA has been engaged to perform an audit of financial statements?

CPA firms are required to be independent when performing any professional service.

A rationalization method that can easily result in unethical behavior is the argument that "everybody does it."

CPAs are prohibited from which of the following forms of advertising?

Interpretations of the AICPA Code of Professional Conduct are dominated by the concept of

Under Sarbanes-Oxley,the audit committee of a public company

The provisions of the Sarbanes-Oxley Act are most likely to allow which of the following non-audit services for audit clients?

The CPA must not subordinate his or her professional judgment to that of others in any

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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